Hidden Things You Need to Know About Health Plans

Despite the deluge of information that reaches people shopping for health insurance policies during open season, certain things remain difficult to learn. Maddeningly, they are often the things you want to know most.

After 15 years of experience representing policyholders in their fights against insurance companies, Washington lawyer Rhonda D. Orin has learned what individuals want and need to know from their health plans. Here is her summary .

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Let’s start with the basics: how much a plan will pay for services and procedures. There’s no way such information should be secret. But it is. When you read a health-plan brochure, you will see page after page of descriptions about what the plans will and will not cover, how to appeal denials and what rules apply to coverage disputes. But actual dollar amounts? Forget it.

What you’ll see instead are vague promises that the plans will pay rates that are “usual and customary”--a term of art that comes with variations like “usual, customary and reasonable (UCR)” or “allowable benefits.” But these promises can easily turn into problems for you.

The main problem arises the minute you see a doctor outside the plan’s network. You’ll quickly discover that “usual and customary” does not mean that the plan will reimburse you an amount that is “usual and customary” for doctors to charge. Instead, you’ll find that the plan reimbursement usually does not match the bill--and the difference, which can be substantial, is the responsibility of you-know-who.

The term “usual and customary” is a misnomer. Instead of reflecting what really is usual and customary, these rates essentially reflect what the plans believe--if only as a theoretical matter--that physicians and others should charge.

You may be thinking that you can avoid this problem by sticking with the doctors who participate in the network. That way, all you have to worry about is the co-pay.

But staying in network won’t make the problem disappear. A service fee has a way of becoming your problem when it’s so low that it drives the good doctors off your plan. Unfortunately, many service fees do just that.

Things would be simpler if health plans would spell out, during open season, exactly what rates they plan to pay--at least to reimburse members for out-of-network services.

* Turnover rate among physicians. Another mystery about health plans is how often their participating physicians come and go. Turnover among physicians can reveal a great deal about the character and value of a health plan. In addition, the turnover rate is an important statistic for anyone concerned about continuity in health care. After all, most people would like to have the same doctors on Dec. 31 that they started with in January. But the turnover rate of a health plan can be hard to find.

Although health plans presumably know their own turnover rates, they do not provide any information about it in their brochures. They don’t answer questions about turnover rates over the telephone, either. The only information they can be relied upon to provide is a disclaimer that they cannot control which physicians participate, and that members should not choose a plan based on its physicians. Which, as the plans well know, everybody does.

For many plans, the reason for such nondisclosure may be that their turnover rates are nothing to boast about. According to one health-care specialist, it’s not good when turnover rates exceed 10%--the national average, according to the National Committee on Quality Assurance, a health insurance information center. But at times, they do.

If you really want to find out a particular plan’s turnover rate, your best resource may be your computer. Use search terms like the plan name and “physician turnover,” and there’s a decent chance you will stumble upon a Web site of an entity that has studied the matter. The national assurance committee occasionally publishes data on the subject.

* Hidden costs. Health plans cost you in lots of different ways. Premiums and deductibles are the most obvious of these. The problem is that you won’t know what a health plan really costs unless you take the time to find out whether there are hidden costs.

Co-payments are a prime example. For straight HMO care, co-payments have been creeping up in recent years, from $5 a few years ago to as much as $20 today. The numbers are even higher for out-of-network services. There, the typical co-payment is in the range of 20% of a physician’s charge. And of course this obligation will be in addition to paying the difference between the doctor’s bill and the amount the plan deems “usual and customary.”

Another example is a plan’s “maximums.” Many plans set lifetime maximums, above which you will not receive additional coverage. These maximums can spell disaster when a covered person suffers a catastrophic illness. A common lifetime maximum is $1 million to $2 million, which means that your health plan will not pay more than that sum for your health care for your entire life. Plans also set maximums for individual kinds of expenditures, such as hospice care, orthodontic care, substance-abuse case, infertility treatments and so on.

It’s not that these maximums can’t be found. They’re in there--somewhere--in any policy that you consider. The trick lies in finding them, and in appreciating that you will need to include them in any comparison of the value of different plans.

* Hidden exclusions. When you read before you buy (you were going to do that, weren’t you?), watch out also for hidden exclusions. Don’t expect to find them neatly labeled. Hunt for them all over; you’ll never guess where they may hide. One favorite place for hiding exclusions is the “definitions” section.

Plans often define a term by stating that it does not include a particular type of problem. Definitions like these serve as exclusions, in that they eliminate coverage on the front end.

Similarly, exclusions can lurk in sections titled “limitations” and “conditions.” You can even find them in sections without headings, like the general introductory statements that sometimes don’t look like they’re important enough to read.