Health insurers' customary charges to be revamped on clarkhoward.com

Since the late '80s/early '90s, Clark has been receiving calls from people in dispute with their health insurers about "reasonable and customary" charges. This is a tactic used by insurers to shift costs away from themselves and onto consumers.

Say, for example, your doctor bills your insurer $100 for a procedure. Typically, the insurer might cover 80% and you would pay 20% after meeting a deductible. But using the guise of "reasonable and customary" charges, the insurer goes back to the doctor and says it's only reasonable for him or her to have charged $50 for the procedure. Suddenly, the insurer is only paying $40 (80% of $50) and you get stuck picking up the remaining $60 tab.

In a massive conflict of interest, insurers were actually using an internal database to calculate what level of reimbursement they would give out-of-network providers for reasonable and customary charges. A new settlement between UnitedHealth and the state of New York, however, will change all that.

Under the settlement, UnitedHealth will pay $50 million to build a more transparent database. In a predictable move, the company admitted no wrongdoing whatsoever.

If you're locked in an ongoing dispute with your insurer, Clark advises the following: Go to other doctors in your area and ask them what they would charge for the procedure in question. That will build a consensus to show that the charge should be closer to what your doctor says instead of what your insurer says -- and that gives you leverage to negotiate.

What others are saying

UCR and R&C
These terms have been used for years to describe Usually Customary and Reasonable or Reasonable $ Customary. Until a few years ago out-of-network reimbursements were almost always based on an independent survey of charges by procedure and by region produced by HIAA. The health plans paid on a percentile of UCR (R&C), generally 80th percentile. That meant that the fee set for reimbursement would be sufficient to cover 80% of the providers in that area. Over the years that changed to internal schedules and or scheduled reimbursements based on a percentage of their in-network contracted reimbursements. It is unforunate that there has been little transparency on where/how they determine out of network reimbursements and I am glad that there is an effort to force transparency. That being said, insurers should not have to pay the stated percentage of the billed charges REGARDLESS of what those charges are. I have seen endless abuse on the part of providers to overcharge trying to "balance bill" patients. Insureds, however, need to do a better job at "shopping" providers. Price and quality are not synonymous and until we learn to shop our providers for both we are never going to get the best healthcare or control the spiraling costs. Georgia is doing something to help get the information we need to do that and, though still incomplete, it is called www.georgiahealthinfo.com. Transparency is coming, whether providers and insurance companies want it or not.
By Elena Merino, The Meridian Group, Inc. @ 03/15/09 11:41:51 PMreport abuse
Health insurance
I work for a small health insurance company in the medical management department. When a patient needs services outside of the local network or "out-of-network" the provider is under no obligation to accept the health insurance allowable fee schedule as payment in full, and the patient may be balance billed by the provider. In-network providers are obligated to accept the health insurance fee schedule as payment in full because they operate within the contract with the health insurance company. You will always receive the highest level of benefit when you use an in-network provider. An out-of-network provider is free to charge the patient and the insurance company any charge they wish because they do not have a contract with the insurance company. I have seen highly inflated charges from out-of-network providers because the provider takes advantage of the situation when a patient much have medical care outside of the local network. As far as ambulance charges most insurance companies use the Medicare allowable as payment in full. We always they to negotiate with the out-of-network providers for a lower price for the patient, but frequently we are told no negotiation allowed until the bill reaches over $50,000.00. I hope health care reform will address this issue and prevent out-of-network providers from overcharging insurers and patients.
By Mary Beth Rank @ 03/13/09 02:45:20 PMreport abuse
Health Care costs
For those of you battling the insurance companies, think about how many people they employ to specifically block payments! I think a large part of health spending could be saved by firing those people and fining the insurance companies for not sticking to the terms of their agreements! Why yes, I am bitter...
By Medical Student @ 03/13/09 01:47:37 PMreport abuse
$$$ ambulance ride
One time I was in an auto accident and had to take an ambulance to the hospital. I was charged about $800 and insurance supposedly covered 100%. They only paid $475 and said that was 100% of what was allowed for that area. I squawked and told them that was the only ambulance service in the area so I suggest they allow more! They did end up paying it, but you have to stick to your guns!
By Brad @ 03/12/09 07:44:28 PMreport abuse
Health Care
It's good to see the State of NY on top of this. With all the bureaucrats spinning in circles, I am always surprised to see something get done by any government.
By Buzz G @ 03/12/09 05:24:04 PMreport abuse

UCR and R&C

These terms have been used for years to describe Usually Customary and Reasonable or Reasonable $ Customary. Until a few years ago out-of-network reimbursements were almost always based on an independent survey of charges by procedure and by region produced by HIAA. The health plans paid on a percentile of UCR (R&C), generally 80th percentile. That meant that the fee set for reimbursement would be sufficient to cover 80% of the providers in that area. Over the years that changed to internal schedules and or scheduled reimbursements based on a percentage of their in-network contracted reimbursements. It is unforunate that there has been little transparency on where/how they determine out of network reimbursements and I am glad that there is an effort to force transparency. That being said, insurers should not have to pay the stated percentage of the billed charges REGARDLESS of what those charges are. I have seen endless abuse on the part of providers to overcharge trying to "balance bill" patients. Insureds, however, need to do a better job at "shopping" providers. Price and quality are not synonymous and until we learn to shop our providers for both we are never going to get the best healthcare or control the spiraling costs. Georgia is doing something to help get the information we need to do that and, though still incomplete, it is called www.georgiahealthinfo.com. Transparency is coming, whether providers and insurance companies want it or not.

By Elena Merino, The Meridian Group, Inc. @ 03/15/09 11:41:51 PMreport abuse

Health insurance

I work for a small health insurance company in the medical management department. When a patient needs services outside of the local network or "out-of-network" the provider is under no obligation to accept the health insurance allowable fee schedule as payment in full, and the patient may be balance billed by the provider. In-network providers are obligated to accept the health insurance fee schedule as payment in full because they operate within the contract with the health insurance company. You will always receive the highest level of benefit when you use an in-network provider. An out-of-network provider is free to charge the patient and the insurance company any charge they wish because they do not have a contract with the insurance company. I have seen highly inflated charges from out-of-network providers because the provider takes advantage of the situation when a patient much have medical care outside of the local network. As far as ambulance charges most insurance companies use the Medicare allowable as payment in full. We always they to negotiate with the out-of-network providers for a lower price for the patient, but frequently we are told no negotiation allowed until the bill reaches over $50,000.00. I hope health care reform will address this issue and prevent out-of-network providers from overcharging insurers and patients.

By Mary Beth Rank @ 03/13/09 02:45:20 PMreport abuse

Health Care costs

For those of you battling the insurance companies, think about how many people they employ to specifically block payments! I think a large part of health spending could be saved by firing those people and fining the insurance companies for not sticking to the terms of their agreements! Why yes, I am bitter...

By Medical Student @ 03/13/09 01:47:37 PMreport abuse

$$$ ambulance ride

One time I was in an auto accident and had to take an ambulance to the hospital. I was charged about $800 and insurance supposedly covered 100%. They only paid $475 and said that was 100% of what was allowed for that area. I squawked and told them that was the only ambulance service in the area so I suggest they allow more! They did end up paying it, but you have to stick to your guns!

By Brad @ 03/12/09 07:44:28 PMreport abuse

Health Care

It's good to see the State of NY on top of this. With all the bureaucrats spinning in circles, I am always surprised to see something get done by any government.

By Buzz G @ 03/12/09 05:24:04 PMreport abuse

Listen Live:

Clark On Demand:

Clark's Advice:

Consumer Action Center:

Quick Links:

Clark Media:

Call The Show:

Mar 12, 2009 -- Health insurers' customary charges to be revamped

What others are saying