Utah Health Insurance Cost Containment Programs

Those insurance companies which are working in your best interests to keep down costs so that your premiums will be as reasonable as possible also are now using a number of programs to contain claim costs. By keeping claim costs down, you are also working toward keeping your future premium costs down-as well as your own out-of-pocket costs.

We have listed here some of the most frequently used cost containment programs. The first four are those which you yourself can participate to make a difference.

Remember, the only way Americans can truly impact escalating health care costs is to take responsibility as consumers in each medical service purchase.

PRE-CERTIFICATION

Also known as “utilization review,” this is a method to eliminate unnecessary health care services and excessive days of hospitalization.. It is used in particular before a hospitalization recommended by your doctor.

In most cases, it requires that you or your doctor call a specified phone number (usually a toll-free 800 call). The planned treatment is then reviewed with your doctor by a trained medical professional.

Expenses that could be considered unnecessary or inappropriate are discussed and a decision is reached with your doctor. In some cases they are able to reduce the number of days you will stay in the hospital (which is good news for most people, in addition to the savings in expenses!). In other cases alternate forms of treatment may be suggested that can produce the same or better level of care at a lower cost.

For example, it may be suggested that a hospitalization be short-ended by sending you home two days earlier with some home medical care to assist you.

Some insurance companies have saved million of dollars in unnecessary expenses with this program. And many patients have been able to go home sooner or remain home during treatment-and that makes most people much more comfortable.

EXAMPLE:

At an average hospital day cost of $1280, trimming 2 days off a hospitalization can have a significant effect for you.

Hospitalization of 7 Days $8960

Hospitalization of 5 Days $6400

Total Claim Savings $2560

Your out-of-pocket Savings

at a 20% CO-Payment Level $512

PPO NETWORKS

“PPO” is a term that you have probably heard more and more during recent years. It stands for “preferred provider organization” and it means that a group of medical services providers (doctors, hospitals, clinics, or other facilities) have agreed to charge lower rates to certain groups of policyholders in exchange for being put on the “preferred provider list”.

The medical service providers benefit by possibly increasing the number of people they serve. You and your insurance company benefit by keeping down claim costs, your out-of-pocket costs and your future premium costs.

For example, if you are hospitalized for a treatment which would normally be billed by the hospital at $5000, a preferred provider arrangement may have set the negotiated rate at $4000. This means the total claim cost would be lower. It also means that if you have a 20% CO-payment, your out-of-pocket cost will be $200 less that it would be with a non-preferred provider.

EXAMPLE:

Regular Hospital Rate $5000 $1000

Preferred Provider Rate $4000 $ 800

Total Claim Saving $1000

Your Out-of-pocket Saving $ 200

Please remember there are different coinsurance obligations “in” or “out” of your PPO network. This is referred to as a steering mechanism. Your obligation in network could be 80/20 IN NETWORK , but 60/40 out of network. You will have a larger obligation out of network.

In addition, the savings through this type of program help keep overall claim costs down and this helps lower any future premium adjustments needed.

Some insurance companies have even gone a step further by establishing preferred provider networks of specialized hospitals and other medical facilities. In these cases, you may be eligible to receive treatment at a well-known and well-respected quality facility at a lower negotiated rate. Many people are finding that this type of cost containment program will save money as well as increase their peace of mind.

“USUAL, CUSTOMARY AND REASONABLE” REVIEW

Some insurance policies include language which specifies that benefits are based on industry standards for “usual, customary and reasonable” charges. The vast majority of medical providers’ charges come within these norms. However, a few providers’ charges are clearly beyond the scope of reasonableness and are consequently labeled as excessive. Insurance companies which closely monitor this notify providers if their charges exceed the reasonable levels. In almost all cases the medical service providers adjust their billing after they are notified. Some insurance companies use sophisticated computer software programs to determine whether specific medical charges greatly exceed those charged by other doctors and hospitals in the same geographic area.

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