Healthcare Insurance

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Fee-for-Service Plans

 

 

Fee-for-service health insurance plans (also known as indemnity plans) are what people think of as traditional health plans. Insurance companies pay the fees for covered services, generally after you pay a deductible. This type of plan allows you to choose any doctor, and you can change doctors at any time. You can go to any hospital, anywhere in the country. Fee-for-service policies usually offer comprehensive coverage, which is a combination of basic coverage and major medical coverage. 

Basic Coverage

Basic coverage includes benefits for expenses you incur during a hospital stay, such as:

Hospitalization, including room and board and regular nursing services during the hospital stay.

Other hospital charges, such as inpatient X rays, lab tests, anesthesia, supplies, and medications.

Surgical expenses, including surgeons' charges and other charges for surgery both inpatient and outpatient.

Physician expenses, including visits to the doctor's office and visits the doctor makes to the patient at home or in the hospital.  

This plan may not cover preventive care, such as physical exams, so you may have to pay these expenses yourself.

You usually receive benefits during a hospital stay for a set number of days and generally the plan has a maximum amount that it pays per day. In both cases, you're likely to be responsible for the balance of the charges. A plan may pay for extended home care for a short time or not at all. Some plans don't pay for prescription expenses. 

Some indemnity plans pay a fixed amount to the provider or to the insured person, regardless of the amount charged for the actual expense. Scheduled plans set a maximum amount they pay for each service. These amounts reflect the reasonable and customary (also called usual and customary) fees for such services in the same geographic area in which they are provided. You may have to pay the difference in cost, in addition to the deductible and coinsurance you've already paid, between what your provider charges and the reasonable and customary fee. Before your treatment, ask your provider to submit a pre-treatment review to the insurance company so that both you and the provider know up front what the insurance company will pay and what your cost will be for the procedure. Avoid paying the difference in cost between what your provider charges and the reasonable and customary fee by asking your doctor to accept your insurance company's payment of the reasonable and customary fee as payment in full. If this tactic doesn't work, consider looking for another doctor who will accept this amount. 

Major Medical Coverage

Major medical coverage, normally purchased along with basic coverage, supplements basic policy benefits by covering the major expenses of a catastrophic illness or injury. Major medical coverage comes into play when basic coverage benefit amounts are used up. After the insured pays the deductible (toward the amount for covered charges that basic coverage did not pay), major medical insurance may reimburse expenses for the greater portion of covered charges. These charges may include unpaid, covered hospital expenses such as: 

Hospital room and board.

General nursing services.

Additional hospital services.

Surgeon and physician's fees.

Anesthetics.

Anesthesiologists' services

Charges incurred out of the hospital, such as for home care for extended periods and prescriptions.  

Also, these policies usually include a maximum level of benefits. The maximum amount the insurance company will pay for a particular service or over the lifetime of the policy is called a cap.  Most major medical coverage includes an annual out-of-pocket maximum clause.  This provision limits the initial amount (deductible and coinsurance) that you must pay during a set period, usually a year.  After you pay this amount, the insurer pays 100 percent of all remaining, covered expenses that you incur during that period. 

Understanding Costs

Enrollees in a fee-for-service plan pay a monthly premium. After they meet the deductible, members share subsequent covered expenses with the insurance company. For example, assume that you have a $2,500 deductible. You pay the first $2,500 of covered expenses within a calendar year. You may then share the cost of the next covered expense you incur.  To receive payment for fee-for-service claims, you most likely have to fill out claim forms and send them to your insurance company. Sometimes your doctor's staff fills out claim forms for you. Keep receipts for all your medical expenses. Without receipts, you have no way of tracking whether the insurance company considered and appropriately reimbursed every expense you submitted.  

Keep your needs in mind and ask some of the following questions during your investigation of fee-for-service plans: 

What is covered?

What are the limitations?

What is the total annual cost?

What is the total annual deductible?

What is the total annual coinsurance?

What is my maximum out-of-pocket expense?

What is the lifetime maximum the insurer will pay?  

Blackburn Group, Inc.
Penfield, NY 14526-0052
(585) 586-4530,  (585) 586-7479 fax,  Email: sales@blackburngroup.com
  

RiskPro is a registered trademark of Blackburn Group, Inc. 

Copyright 2006 Blackburn Group, Inc. All rights reserved.