How much do I owe for out-of-network care?
Looking at Medicare- vs. “usual and customary”-based reimbursement
By Robin Gelburd
Many Americans with private health insurance have plans that reimburse for out-of-network care. But consumers often don’t realize the wide variation in reimbursement rates among insurers and the implications for their wallets.
At FAIR Health, the independent not-for-profit corporation dedicated to bringing transparency to healthcare costs and out-of-network reimbursement, we have noticed that differences in formulas can make a big difference in reimbursements. A number of private health plans are now basing out-of-network reimbursement rates on a percentage of Medicare fees – as opposed to the usual, customary and reasonable (UCR) standards that reflect actual provider charges.
Medicare-based reimbursement formulas, generally 110% to 140% of the fee set by Medicare, often result in reimbursement amounts that are much lower than those calculated under UCR. If their insurer uses a Medicare-based reimbursement method, consumers often will have to pay a larger portion of their medical bills out-of-pocket when they seek out-of-network services.
What’s even more perplexing is how the numbers work out. Contrary to what consumers might expect, a reimbursement that is 140% of a Medicare-based fee (a standard percentage) is often much lower than one that is 70% of a UCR-based fee, since Medicare payments are usually substantially lower than market rates to begin with.
To help consumers understand these two formulas for calculating out-of-network reimbursement, FAIR Health has introduced a new online tool called Medicare Compare. Simply go the FAIR Health Medical Cost Lookup, enter your provider’s location and the medical procedure, and click on “Compare” to see Medicare- and UCR-based reimbursement amounts side by side. We hope consumers will find the tool useful when they are choosing among alternative health plans that reimburse out-of-network care differently. For consumers already in a plan that reimburses out-of-network bills on the basis of Medicare, the tool can help estimate how much they will have to pay out-of-pocket if they choose to go out-of-network.
Be sure to ask your insurer or contact FAIR Health if you have any further questions about Medicare- and UCR-based reimbursement.
Robin Gelburd is president of FAIR Health.