Posted on Mar 21, 2016
As a provider of sleep therapy and other homecare remedies to thousands of New Englanders, we are often caught in between our patients and their insurance companies when issues pop up with their care. In an already complicated industry and a space where things are becoming more and more convoluted, leading to frayed nerves and avoidable delays in care. From copays to deductibles, to prior authorizations to reimbursement, it seems as if the most basic definitions in health insurance are changing under our feet. When our patients get upset it means a lot of calls and work for our customer service team to fix things that are often basic misunderstandings.
Fixing these basic misunderstandings can go a long way towards solving most cases of “confused care.” It is in this spirit that we present our first list of commonly confusing healthcare terms!
Probably the most common word used in health insurance, a co-payments is simply a fixed-fee that a policy holder - that’s you - pays for health care services. The cost is fixed and determined by your health care provider and your plan, and can be adjusted on a year-to-year basis, plan-wide. A frequent use of a co-payment is to pay for a doctor’s office visit. They are fixed, and due with each of your visits. Co-payment is frequently confused with co-insurance, which is a similar but different term.
Co-insurance and co-payment are often used interchangeably by providers, which is a frequent mistake and an easy one to make! Co-insurance is a very specific arrangement in which a policy holder pays for a portion of the cost of a medical bill due after insurance pays, and it can vary widely according to what total charges were. A common co-insurance payment would be 20-30%.
Out-of-pocket costs is a catchall term for anything you spend on healthcare outside of your monthly premium. This term covers your deductible, co-payments and co-insurance payments. There may also be other out-of-pocket costs - such as fees, parts bought outside of your replacement schedule, and other expenses, that fall into the “out-of-pocket” category. The good news is that most insurers specify an “out-of-pocket maximum,” above which they cover every penny spent on your care.
Prior authorization, Pre-Authorization and Pre-certification
Now we’re getting into really and unnecessarily confusing territory! All three are basically asking for the same thing - a policy holder or care provider seek permission prior to submitting a major medical claim - but are all slightly different. Why are there three terms for what is essentially the same thing? We have no idea. The only slight differences are that pre-authorization must be obtained by the patient/policy holder, pre-certification must be carried out by a physician, and prior authorization can be obtained by a patient or provider. So, if your insurance provider is asking for a prior authorization form, you can check with us, if they’re asking for a pre-certification form, call your doctor, and if they’re asking for a pre-authorization form, check your records. Believe it when we say, we don’t like this part of health insurance either!
Wellness Office Visit vs Office Visit
Though they can feel like the same thing, a wellness office visit and an office visit are NOT the same! A wellness office visit is the fancy medical term for a checkup or physical - an annual preventative visit to the doctor to make sure that you are still healthy. An office visit is when you visit the doctor’s office with the intention of figuring out why you’re sick or to obtain a referral for medical care. If you do make an office visit, it is subject to your co-payment schedule. To figure out how much you have to pay for the visit, simply look at your insurance card for the OV code and the number listed next to it.
WATCH OUT FOR
Bundled payments that aren’t actually bundled! A “bundled payment” is a payment structure in which a patient makes one single payment for care, and it is up to the various providers to split up the payment as they see fit. Historically, patients have paid for care under a “fee-for-service” model in which each group involved with care - an anesthesiologist, surgeon, hospital, etc - are paid separately by the insurance provider or the patient. Though some payments look bundled - such as for a surgical visit to a hospital - they actually are not, and patients can be caught in a confusing web of who owes money to who. The best bet is to wait for the bill from your insurance company and pay them. This is a situation in which an insurance company is truly helpful, as they act as the clearinghouse for all costs related to your care and can sort through things a lot faster and more accurately than you can.
Did you find this primer helpful? If so, let us know on our Facebook page and Twitter feed and we’ll get to work on putting a second one together because there’s always more in the wide, wild world of healthcare to explain!