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By JENNIFER STEINHAUER
pening an "explanation of benefits"
letter from a health insurance company is a little like playing blackjack
in a casino: Chances are you're going to
lose; the question is how much.
While the majority of Americans insured
through their employers are now enrolled in
H.M.O.'s, and thus make minimal co-payments on doctor's visits, a lot of us -- me included -- still get medical care the old-fashioned way, paying the doctor up front, filing
a claim and waiting for reimbursement. The
same system applies to patients in preferred provider plans who choose to see doctors outside the network.
What makes this seem like a losing gamble is that reimbursement checks rarely
come close to covering the doctor bill. Rather, the insurance company pays some portion of what its explanation-of-benefits form
calls a "reasonable and customary" fee.
Meaning what, exactly? I
doubt that "reasonable and
customary" is the $95 that my
pediatrician (who is outside
my preferred provider network) charges for a hepatitis
B vaccine; my informal survey indicates that this is high,
even by Manhattan standards.
I also suspect that it isn't the
$17 my insurance plan deemed
"reasonable and customary"
for the polio vaccine he billed
at a fairly typical $40.
Conspiracy theorists might
conjure images of nurses sitting in a wood-paneled study,
eyeballing claims in a sinister way -- and
paying 40 percent of whatever a doctor
charges.
In fact, the process is a lot more complex,
even if the results are equally unsatisfying.
ost
insurers rely on data produced
for years by the Health Insurance
Association of America. (It recently sold the operation to a company called Ingenix.) Doctors are surveyed by region to
see what they will accept as payment for
procedures. That data is organized into percentile groups; "H.I.A.A. 80," for instance,
is the fee that 80 percent of doctors in a region will accept for a service. Many also factor in Medicare reimbursement rates.
But you can't assume that anything close
to H.I.A.A. 80 is what your insurance means
by "reasonable and customary." Instead,
insurance companies present the data to
employers, who choose the level upon which
they wish to base reimbursements.
In other words, "reasonable and customary" is very much in the eye of the beholder.
To you and me, the costs of those calculations can add up quickly. Say your eye doctor charges $500 for a comprehensive exam.
Now assume that your employer has opted
for H.I.A.A. 80 as its "reasonable and customary" rate, and that the surveys peg that
fee for the exam at $200. If your benefits
cover 80 percent of "reasonable and customary," you get a check for $160. You were
holding 12; you've just drawn a queen.
Now, you probably want someone to
blame. Obviously, your boss or union is a
good place to start. "Most people don't understand that it is their employer who sets
their reimbursement rate," said Edward
Kaplan, a vice president at the Segal Company, a benefits consulting
firm. "I have seen some set
it at 50 percent of H.I.A.A."
Then there is your doctor,
who may be inflating rates
to help keep the H.I.A.A. averages high. The doctor will
argue that costs are rising
by the minute, but you end
up having to bridge the gap.
Whoever is at fault, there
still are times, experts say,
when explanation-of-benefits forms are just crazily
out of whack. Reimbursements like the $13.60 I received for that polio vaccine
-- 80 percent of $17 -- are probably worth
challenging.
"Never underestimate incompetence,"
said Helen Darling, a senior consultant at
Watson Wyatt, another benefits consultant.
Or you could just give up and join an
H.M.O. The reason I haven't is that I like
having an attentive pediatrician five minutes from my apartment who doesn't make
me wait.
To help contain the costs of such
luxuries, I may establish a flexible medical
spending account -- a plan that lets pretax
dollars be set aside for paying medical bills.
Check to see if your employer offers one.
The accounts are ideal for people who can
roughly predict their medical costs.
The tax
advantage lets your money go further; you
can even use the account for over-the-counter goods like contact lens cleaner. The
catch is that if you don't spend every cent
you set aside, you lose it at the end of the
year.
"It is a great thing that most working people do not take advantage of," Ms. Darling
said.