Health Advocacy: Insurance Billing Terminology

Insurance shminsurance. You've paid your premium, you're done, right? Not if you're wearing your Health Advocate Hat. Understanding a few basic terms around your health insurance can take a lot of stress out of your life, particularly in relation to the documents you receive from your insurance company. While learning how to read documentation can sound a bit boring, doing so will not only make you a better health advocate, but can also save you money.

Most of us never took a "How to Read Health Insurance Documentation" class in high school. It can be tempting to toss aside those letters they send you, but knowing how to read them gives you leverage in any interaction with your health insurance company. This leverage is extremely important when negotiating unexpected charges or overpayments. Let's dive into some basic insurance billing terms.

Explanation of Benefits: "This is Not a Bill"

You've seen an Explanation of Benefits, the notices that come to your house and say "This is Not a Bill," after a visit with a practitioner. They always say they're not a bill, but there is a section which implies that you are responsible for additional payment. What is that about?

Providers charge individuals a different rate than they charge insurance companies. Why? Because this is how we have set up health insurance billing here in the USA. For example, I charge a flat fee of $80 for follow-up visits for non-insurance patients. That $80 includes everything that may happen in a visit: your consultation, acupuncture treatment, moxa, cupping, massage, the heat lamp, lifestyle advice, etc.

However, when I work with insurance companies, I bill the company based on units of time, as well as services provided. If your appointment consisted of a consultation, acupuncture with a heat lamp, moxa, and cupping, I would bill the insurance company individually for each of these things. These services are billed at predetermined rates depending on how much time each service took. I may end up billing the insurance company more or less than the $80 that I bill an individual. Remember that a non-insurance patient cannot decide how much of the $80 they want to pay, they simply pay $80. An insurance company, on the other hand, decides how much of the billed amount is "allowed."

This "allowed amount" is extremely important. Whatever fees are not considered part of the "allowed amount" become the "Patient's Responsibility." The "Patient's Responsibility" is what it looks like you owe on those "This is Not a Bill" notices. This is your insurance company telling you how much your provider charges for a particular service, and how much your insurance will not cover. Since your provider billed the company at this rate, your insurance is telling you that your provider may seek to collect the difference between the amount billed and the amount paid by the insurance company. Contact me with any questions about your personal "Patient Responsibility." Iam always happy to discuss the technicalities of your individual case.

Meeting Your Deductible

When you choose a health plan, you will likely have a deductible. Your deductible is the amount you pay out-of-pocket before your insurance company will pay for anything.

Common sense leads you to believe that the amount you pay to your provider is the amount you've paid towards your deductible. But as you're starting to notice, health insurance in the USA doesn't have a lot to do with common sense.

Remember, your provider may charge you a different rate than they bill to your insurance company. Your insurance company does not know how much your provider charges you. All they know is how much your provider bills them. Since providers bill individuals at different rates than they bill insurance companies, you may meet your deductible faster or slower than you'd expect. To find out if you have met your deductible, call your insurance company.

Billing Terminology: "Coinsurance"

After your deductible is met, you will pay your provider a copay (the amount of which is predetermined by your insurance company), and the insurance will pay the rest, right? Well, not quite. There's also this little thing called "coinsurance."

After your deductible is met, you will pay a copay and your insurance will pay the rest of your bill, minus your coinsurance. What the heck is coinsurance? This is a percentage of the fee assessed which your insurance company expects you to pay. Coinsurances do not apply to all visits. You can learn which ones they apply to by looking at the details of your plan. Many insurance companies that cover acupuncture expect you to pay a coinsurance for your treatment.

To find out what your coinsurance will be, look at the name of your health plan. For example, if your plan is titled, "_____$500/25% _____," your deductible is $500, and your insurance company expects you to pay a 25% coinsurance on any fees assessed at certain visits after your deductible is met.

Deductible, Copay, Explanation of Benefits, & Coinsurance In Action

Whew, that was a lot of explanation. Let's look at a hypothetical example to pull it all together:

• Joe Bob is coming in for acupuncture. He has graciously asked me to check his benefits prior to arriving, and I have learned that his plan covers acupuncture, he has already met (i.e. paid for) his $250 deductible, his copay is $15, and he has a coinsurance of 25%.
• At his visit, Joe Bob pays me his $15 copay. He receives a consultation, acupuncture, cupping, and massage.
• For Joe Bob's services, I bill his insurance company a total of $180.
• Joe Bob's insurance decides to "allow" $65 of these charges.
• Joe Bob's insurance company issues me a check for $48.75 (that is, 75% of the allowed amount of $65).
• Joe Bob then gets an Explanation of Benefits from his insurance company saying that he may be responsible for $131.25.  This is the total of the $115 the plan does not cover (ie. "not allowed" amount) added to the 25% coinsurance, $16.25. If you have any questions about an Explanation of Benefits that you have received and what payments you may owe, please contact me directly. I am always happy to discuss your individual case with you either over the phone or in person.

Let's say you get an actual bill in the mail, how do you know if it is correct? Read more here to learn how to determine whether you have been overcharged and, if necessary, negotiate the costs of treatment with your insurance company.