Types of Out-of-Network Reimbursement
Most health plans have a “network,” a group of doctors, hospitals and other healthcare providers who agree to take your insurer’s rate. Some plans may not cover any services you get from providers who are not in the network. Others cover part of your care when you get services from other providers. But, plans may differ in how they decide how much they will pay out-of-network providers. Many of them develop their own “usual, customary and reasonable” (UCR) charges to help work out what they will pay out-of-network providers. Others use Medicare’s payment (fee) schedule.
- UCR charges. Most plans pay for out-of-network care based on a percentage of UCR charges. Those reflect what providers typically charge for a specific procedure in a given geographic area. Health plans make their own decisions about what is usual and customary. They may use resources such as FAIR Health, however, to help them make these decisions.
- Medicare fee schedules. Medicare’s payments are usually lower than payments from commercial health insurers. Some insurance plans use Medicare fees as a basis for reimbursing service for out-of-network providers. They then multiply that fee by a certain percentage to set the maximum amount that they will pay for that procedure.
The rate is often less than what your doctor charges. If you go out of network, your insurer may pay for part of the bill. You will pay the rest.
If your insurer uses the Medicare fee schedule to set its out-of-network reimbursement rates you can use the FH Medical Cost Lookup to estimate your out-of-pocket costs. Just select the “Medicare-Based” button on the right-hand side of your results page.
You may have the option to choose between plans—one that reimburses based on a percentage of UCR charges, and one that reimburses based on a percentage of Medicare fees. If so, you can compare your estimated out-of-pocket costs for services you receive out of network for both plans by using the FH Medical Cost Lookup. Select the “Compare Both” button on the right of the results page.
What is Medicare?
Medicare is the federal health insurance program that covers tens of millions of elderly and disabled Americans, helping to pay for the care that they need. In fact, Medicare covers so many Americans that it currently pays for almost 30% of the hospital care and 20% of the physician and clinical services in our country.
Medicare also plays an important role for health insurers. Since the program pays for such a large share of medical care in the U.S., some insurance plans use its rates to help them determine how much they will pay for out-of-network care for their own members. This can affect your out-of-pocket costs.