By Martine G. Brousse
"The Medical Bill Whisperer... and insurance stuff too"
Patient Advocate, Certified Mediator
November 3, 3023
The insurance’s “Allowance” rules how much your insurance eventually pays, and applies to your liability. It is the most important item on your Explanation Of Benefits.
Let’s explore in details what it is and what is means for you.
A. What is the “allowance”?
1. It is the insurance’s “Allowance” is the $ amount deemed usual, customary of and fair value of a medical service or item
2. It is the beginning number for the calculation and application of your policy benefits
3. It is what your insurance says your Dr or hospital is due. (Note: this does not mean it is acceptable to the provider, see #C below)
4. The “allowance” is set by contract if the provider is In Network. This means the provider has agreed to accept the amount listed as “allowance” as payment in full.
5. If the provider is Out of Network ("OON"), the allowance becomes an internal calculation, based on arbitrary or pre-set standards that only apply to itself. The provider is not forced to accept it as payment in full.
B. What does it mean for you: In Network
1. Allowance = total amount due to the provider
· Due in full by you, if applied toward your unmet deductible (the portion you must pay first, before your insurance opens its checkbook)
· Due partially by you and by your insurance if applied toward your co-insurance/share of cost
· Due completely by your insurance once you have met your total yearly liability
2. The provider must write off the difference between the amount they billed and the allowance. This discount is your incentive for using in network providers.
C. What does it mean for you: Out of Network
1. Allowance = Maximum amount that your insurance might pay once you have met your deductible and/or your total yearly share of cost
2. The provider has no contract & probably won't accept the allowance as payment in full.
3. The provider can and will likely bill you for the full amount billed minus any insurance payment. Your final liability is based on the total amount billed NOT the OON allowance
4. Out of Network allowances are notoriously small and much lower than for In Network providers. This is your “punishment” for using Out of Network providers.
D. Special circumstances
1. Special circumstances can force an insurance to raise the allowance from low Out of Network to higher In Network:
· Emergency conditions
· OON services were rendered at an In Network hospital
· State and Federal laws (AB72 in CA for example, No Surprise Bill Act…)
· There is no available, experienced, adequate, trained In Network provider that meets your need
. Your out of network provider has signed a one-time special agreement with your insurance to accept In network rates. Providers then usually accept to extend a discount.
. Your insurance has issued a one-time authorization to cover a service or treatment at the In Network rate for an Out of Network provider, but the provider has refused a one-time agreement. Then, the reinsurance will pay the higher rate, but you will be liable for the difference between the amount billed and whatever the plan paid.
. You have started a treatment or protocol, and cannot stop or delay it within causing irreparable damage (chemotherapy for example) but your current In network provider is not contracted with your new plan. Per your new policy's "Continuation of Care" provision, your new plan can be forced to continue paying your OON provider at the higher In Network rate until treatment is over, or you can safely transfer care.
1. it is always to patients’ best financial interest to use In Network providers, or at least an In Network hospital. You can locate one by using the search feature through your online insurance portal or by getting a list from the insurance phone rep.
2. Do audit your Explanations of Benefits to confirm your claims are being processed (and paid) at the right rate.
3. Do audit your medical bills to make sure In Network providers have adjusted off their billed amount to the contractual allowance, or per special State or federal legal mandates.
Martine Brousse was a long-time Billing Manager for Physicians before switching to the side of patients in 2013. The move has allowed her to apply her deep expertise and vast experience of the intricacies of resolving all types of medical bill and claim payment issues in ways that directly and positively impact her clientsʻ finances.
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@martine brousse 2023@ the medical bill whisperer 2023