What is the difference between coinsurance and copayments? Or how about the differences between HMOs, PPOs and EPOs? Medical provider offices and healthcare agencies assume that their patients fully understand their health insurance plans. However, after a treatment or service is performed, health professionals are finding that their patients are not fully aware of how their insurance coverage works. The frustrations that patients experience with their insurance plan is sometimes inadvertently directed at their healthcare providers. As health insurance cost increase, medical providers must do more in order to help their patients understand their financial responsibilities. Educating patients so that they better understand their insurance coverage and benefits is crucial for creating a great patient experience.
The goal is not to help the insurance companies, but to decrease the number of unpaid balances and create a better experience for your patients. At one time, it was enough for the front office staff to simply verify a patient’s insurance coverage. But, the trend of rising copays and high-deductible insurance plans is making this approach more challenging. Patients may experience surprise and angry when they discover the amount they are required to pay out-of-pocket. It is better to educate patients upfront, then to pursue them later for over-due unpaid balances. For many patients, frustration also arises due to the unfamiliar vocabulary that is used in health insurance plans. Again, the goal is to create a great patient (customer) experience. Medical providers have no control over an insurance plan’s details, but they can control how patients understand and react to their plan.
Educating patients about their health plans is not a waste of time. Medical offices should clearly communicate insurance plan details with their patients. In this way, patients will fully understand a practice’s payment policy. Discussing the medical bills does not have to be overly complex, but a lack of insurance literacy among some patients makes this more difficult. For example, the term insurance coverage does not mean that everything is already paid for a patient. That patient will still have a certain level of financial responsibility for any service, medication or treatments. Just because an insurance plan covers specific treatments or services, does not mean that all financial cost for that patient is covered. This may seem evident for people who work with health plans every day, but not for some patients who rarely use their insurance. Healthcare practitioners should work to avoid the following sequence of events from ever happening to their office:
[Step 1] A new patient schedules an appointment.
[Step 2] Medical office staff verifies the new patient’s insurance benefits.
[Step 3] The patient receives treatments or services.
[Step 4] Later, the patient receives a surprisingly large bill from the health insurance company.
[Step 5] Patient becomes angry, refuses to pay and never returns to your medical office.
Steps four and five a problematic and are not helpful in developing a good patient/provider relationship. To minimize this occurrence, between steps two and three, there should have been some insurance plan education. This is a great opportunity to take the time and make sure patients understand what the monetary cost is for them. Having an attitude that it is not your responsibility, will not help medical practices or healthcare facilities in the long run. Angry patients will only create more write-offs and potentially damage your practice’s reputation. Healthcare providers already feel pulled in a thousand directions. Having their office staff provide insurance consultation to their patients may just seem like more busy work. However, this now part of a well-rounded approach to creating a great patient experience. It is within your practice’s self-interest to have patients understand their health plan’s copays, coinsurance and deductibles. The fact that you have spent some time helping them understand will create a more positive patient experience. In addition, your office will experience fewer delayed payments and write-offs.
Here is a basic list of common health insurance terms that all patients should know. There are numerous other terms and phrases that patients should understand, but this list is a good place to start.
Premium = The financial amount that a patient has to pay in order to gain access to a health insurance plan.
Deductible = The price that a people pay for access to health care services before their insurance plans start to cover any cost. If a person chooses to pay a higher deductible, this generally means a lower premium.
Copay = The amount that a patient has to pay upfront for a healthcare related service or treatment. The rest of these expenses are usually covered by their insurance plan.
Coinsurance = The percentage of any medical bill that patients must pay, due to hospitalizations or similar treatments, after their deductible has been met.
Formulary = Also called a drug list, this is a list of the prescription drugs that a person’s insurance plan covers. If a physician prescribes any medication, not on the plan’s formulary, the person will have to directly pay (out of pocket) for the medicine.
Provider = Any healthcare professional or institution.
In-network = A situation where the healthcare provider has made a deal with a patient’s insurance plan to accept a set amount of money for specific treatments. The provider is not allowed to charge patients more than this set amount.
Out-of-network = A situation where the healthcare provider has not made a deal with an insurance plan. In this case, the provider can bill a patient directly for the financial amount that they believe their services are worth.
POS (Point of Service) = A type of insurance plan where patients pay less if they use doctors, hospitals and other healthcare providers that belong to the plan’s network. POS insurance plans require patients to get a referral from their primary care provider in order to see a specialist.
EPO (Exclusive Provider Organization) = An insurance plan option where services are covered only if a patient uses doctors, specialists or hospitals in the plan’s network (except in an emergency).
HMO (Health Maintenance Organization) = An insurance option that gives you access to a smaller network of providers, but also generates lower copays and deductibles. But, if you see a health professional who is not in your HMO network, you will have to pay all of the expenses.
PPO (Preferred Provider Organization) = An insurance option that usually provides you with the maximum choice of health care providers. However, some in-network services are covered at a higher rate.
Additional terms and their definitions are available at the U.S. government’s Bureau of Labor Statistics website.
Insurance is a complex subject and constantly changing environment. The staff at Advanced Billing & Consulting Services (ABCS) understand the complexity and changing nature of the industry. For additional questions about insurance, credentialing or other related services such as digital marketing or medical billing — please contact us. Check back in the future for updates on this topic.
Educating Patients, Health Plans