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Does my doctor accept this insurance?

by Tony Novak, CPA, MBA, MT
 updated 11/20/2011

Switching from an employer-provided health plan to private individual health insurance can be stressful. With the increasing number of layoffs and corporate downsizing, the number of people who must make this transition is at record level and continues to increase. Online medical insurance services like FreedomBenefits.net make the transition easier by offering personal professional assistance to help answer individual questions. Advisers report that one of the most common questions from individuals changing health plans is whether their current doctor will accept the new medical insurance plan. This question reveals a lack of understanding about how medical insurance contracts work and how the medical profession handles patient billing. In order to feel more comfortable with the change in health plans, it helps to understand a bit more about the common billing practices of the medical profession.

Health plans provided by an employer or a student plan offered by a University tend to offer coverage from a defined list of medical providers. There are limited benefits or no coverage when receiving treatment from providers outside of the designated network, so finding a provider who accepts the insurance plan has been critically important under the prior group health plan.

In contrast, private individual medical insurance plans usually provide coverage with all doctors and hospitals equally regardless or where you may live, travel or seek medical treatment. The insurance company is responsible only for reimbursing the policyholder for medical expenses incurred, unless that right to be reimbursed is assigned to someone else. There is no list of participating providers. The question of whether the doctor accepts the insurance is not as relevant as the doctor’s procedures for handling patient billing.

The vast majority of doctors, medical facilities and hospitals in the United States handle patient and medical insurance billing using a method that has become known as “assignment of claim” that works this way:

First, the insured pays the policy deductible directly to the doctor. A policy deductible is financially beneficial to patients because they save more in insurance premium than the amount that they pay to the doctor directly. (For example, a policy with a $1000 deductible might be $1500 less expensive than a policy with $0 deductible, so the patient saves at least $500 with the high deductible policy design). This is also a great deal for the doctor who usually accepts a fraction of the billed amount from insurance companies. A doctor earns significantly more from a patient who pays cash for treatment.

After the policy deductible is met, the doctor usually asks the patient to sign an “assignment of claim” form. This is a legal contract that gives the doctor or his billing company the right to submit your medical bills directly to the insurance company and receive the payment directly from the insurer. In return, this contract removes the risks associated with “balance billing” from the patient. The patient gives up the right to be reimbursed directly by the insurance company. One of the reasons this procedure is so widely used by the medical profession today is because it saves time and collection expense for the doctor. The medical provider typically contracts with a medical billing service that specializes in handling these “assigned” claims. This procedure also removes the paperwork burden from the patient and eliminates the risk paying the balance of the bill not covered by the insurance company. In effect, the doctor is opting into the insurance company’s payment system on a case-by-case basis without the need to enter into any formal network arrangement.

Since private insurance companies generally pay doctors more than Medicare or HMOs for providing a specific treatment, doctors have fewer complaints about this billing system.

Doctors are free to avoid accepting an assignment of claim. A few doctors make it clear that they work only on the basis of “cash at time of treatment” regardless of the insurance that may be available. It always makes sense to discuss your doctor’s specific billing policy at the earliest possible opportunity.

Patients who wish to take advantage of the low cost of high deductible private health insurance but still enjoy the price discounts of preferred provider networks can enroll in an inexpensive PPO plan through Ehealthdiscountplan.com. These plans offer a money-back satisfaction guarantee to ensure that savings are realized as expected. In addition, using a participating doctor in combination with these plans ensures that billing will be handled automatically under the PPO agreement, without any guesswork or negotiation required by the doctor or patient.

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