Most U.S. citizens consider healthcare coverage vital to individual well-being as it ensures their ability to continue doing what they need to do so they can also keep doing what they love. Despite this essential quality, however, healthcare has become increasingly costly in the last decade, with premiums rising over 47%.
For something so many consider a necessity, healthcare has not only grown more expensive, but harder to understand. Labyrinths of customer service phone lines can make opaque billing charges even more difficult to parse.
These issues, among others, have prompted employers and employees to seek alternatives to traditional reimbursement methods. Whether you’re researching possible substitutes or sticking to traditional methods, it’s important to know the ins and outs of medical reimbursement. So, how does medical reimbursement work?
How Does Medical Reimbursement Work?
Healthcare reimbursement is so named because payments to the hospital or healthcare provider occur after the services have been rendered. Once you receive treatment (services) from a medical provider, their office sends the bill to whoever covers your medical costs, like an employer, insurance, government, etc.
The Employer’s Responsibility
With fully insured plans, businesses rely on insurance companies to negotiate rates with providers. The four largest companies are Blue Cross/Blue Shield, United, Cigna, and Aetna (BUCA, to healthcare insiders). These traditional healthcare plans charge employers a fee so their employees can enroll with the insurance company for healthcare under a group plan. The “full” part of this model includes administration and billing services.
Large, self-insured companies can cut out the middleman and contract directly with providers to offer wellness programs and payment reforms. However, their limited networks often only cover lower-cost providers. In these cases, the employer pays for provider reimbursements in an effort to decrease healthcare spend. Under both models, employers are responsible for payments once employees meet their deductible.
The Patient’s Responsibility
If you do not have insurance, you are billed directly. Due to the high prices of many healthcare services, many providers also offer payment plans—they often work like department-store layaway, but you’re paying for medical treatment, not home appliances. While health insurance does cover some medical costs, it’s important to know when the patient is responsible for reimbursement, as well as how—and to whom—to make payments.
Most health insurance requires that patients (or “members”) covered by their plans make a co-insurance payment, or co-pay, as part of their contract. A co-pay refers to a flat fee paid on the spot whenever you visit your doctor or another medical facility.
For example, your insurance plan may require a $50 flat fee for visiting an urgent care facility, whereas an appointment with an in-network physician only costs $20. Depending on the details of your coverage plan, some services, like your annual physical, may not require a co-pay.
Co-insurance refers to the portion of medical costs members must pay after meeting their annual deductible. For example, with a co-insurance of 30%, you pay 30% of the costs for all covered medical services and your insurer pays the remaining 70%. If an MRI is billed as a $2,500 service, you would be responsible for paying 30% under your co-insurance, or $750 of the total amount, not including co-pays.
What Does That Look Like in Real Life?
When you receive an X-ray, or an MRI (magnetic resonance imaging), you first make an appointment with your primary physician. You pay a $20 co-pay for an office visit, and the doctor orders the scan, usually performed in another facility. An MRI machine is basically a long tube-shaped magnet that’s standard equipment in most hospitals, but not in private practices.
The MRI facility may or may not charge a co-pay to perform your scan. The procedure may also require a contrast dye, or if you are claustrophobic, you may receive a mild sedative. After the scan, a radiologist reads the results and sends a report to your doctor.
Different insurance plans have their own rules that determine what services are covered and the networks that provide them; the overlap of specific plans, services, facilities, and providers can further complicate the billing process. For example, if you receive a bill from the MRI facility that lists charges for sedatives, dye, or radiology reports, your insurance may already cover those services as part of the MRI process—but some plans may not.
Sometimes, your insurance company may not pay for services rendered if they are not covered as a part of your contract. This means that you will be responsible for 100% of the billed cost. This often occurs when a patient receives care from a provider outside the insurance provider’s network, especially if there is an in-network option.
Ways To Save Money on Healthcare Reimbursement
Even after reading about how healthcare reimbursement works, you may still be interested in learning more ways to save on your healthcare spend. Luckily, many options are available that can help ease the burden of soaring healthcare prices, maintain quality care, and increase billing transparency.
Clean Claim Reviews: This is an evaluation process that goes well beyond typical reviews; clean claim reviews scrutinize every line item to remove billing errors that otherwise would have been paid. Because up to 80% of all medical bills contain errors, this can lead to huge savings while also helping you better understand the billing process.
Reference-Based Pricing: The reference-based pricing model exists solely to lower the costs patients and employers pay to providers. This data-driven approach is able to compare the costs of services reported by providers with what Medicare pays for the same services. This comparison serves as a baseline to negotiate fair reimbursements. By negotiating from a position of knowledge, a reference-based model will help lower healthcare payments.
How 6 Degrees Health Can Lower Your Healthcare Spend
6 Degrees Health is a collection of experts in the healthcare industry that are dedicated to finding you the perfect cost-containment solution. We are committed to bringing transparency and fairness to healthcare reimbursement—and that means huge savings for you. Using various methods of healthcare cost reduction such as reference-based pricing and clean claim reviews, backed by our proprietary MediVI software, we can offer a solution to lower your healthcare spend by up to 40%.
6 Degrees Health helps employers and employees navigate healthcare protocols to pay what is fair. Speak to a representative today to find out how our reference-based pricing model can help you realize the true benefits of healthcare.