Understanding your insurance claims
Insurance billing and reimbursement can be difficult to navigate. This information is designed to help guide you through the terminology used by insurance companies when processing claims, and to clarify potential scenarios that may arise. This document is for informational use only.
There are countless insurance companies and healthcare plans. Each one is unique and has its own regulations. When Larsen Billing Service receives your Patient Registration Form, a Verification of Benefits (VOB) will be completed. This will help us understand what type of insurance plan you have and any requirements or restrictions associated with that plan. Once the verification has been completed, your provider’s office will be sent a copy of the findings to keep in your file. If you provided your email address on the Patient Registration Form, you will also be emailed a completed copy of these findings.
Note: It is ultimately your (the patient’s) responsibility to understand your benefits. The information obtained in a VOB is for verification purposes only and is not a guarantee of coverage.
Your health insurance plan has many rules and provisions regarding what kind of care will be covered, which providers are covered, various regulations about the submission and processing of claims, and limits of coverage. Limits of coverage may include:
- Limits to your out-of-pocket costs
- Limits to the amount of total benefits for the type of care or procedure, an individual or the family
- Limits on number of routine or preventative visits per person or per year
- Limits that differ based on the level of the provider rendering care
- Exclusions-including place of service or types of care altogether
Frequently Used Terms
Over Usual & Customary or Allowed Amount
This is the portion of the fees for service your insurance company has determined is more than they are willing to pay for the billed service. The billed amount is usually “reduced for usual & customary” or, in other words, a reduced amount is “allowed” by the insurance company. There is no way of knowing what this allowed amount will be until your claim has been processed by the insurance company. If a portion of the fee is considered “over usual and customary,” this does not mean your provider has charged too much. This is an amount that the insurance company has determined is fair compensation for the service rendered and they base their reimbursement on this amount. Each insurance company has their own allowed amounts for each procedure code that we bill. You may be responsible to pay for all, or a portion of, fees for services that may be considered, “over usual and customary.” In other words, you may be responsible for the entire billed amount, not just the amount that the insurance company allows.
Explanation of Benefits. This is what the insurance company sends you to explain how a claim processed. Your provider’s office should also receive a copy; however, if an insurance company is one that sends payments directly to you, your provider’s office will not receive a copy. It is very important that you give, mail or fax a copy of the EOB directly to their office if payment is sent to you.
This is the portion for which you are responsible. If your insurance company pays at 70% of allowed charges (as explained above), 30% would be your responsibility.
This is the amount that you must pay out of pocket for your healthcare before the insurance company will start reimbursing for services. Deductibles reset at either the end of the calendar year or the end of your plan year.
Out of Pocket Maximum
This is the amount in which you pay out of your own pocket for fees for services rendered. This includes your deductible and co-insurance payments. The patient is legally responsible for all deductible and co-insurance amounts.
When a provider is in-network it means three things (all of them must be true):.
- Their practice information is stored within the claims system of the insurance company.
- The provider has applied for inclusion, negotiated pricing, and agreed to the terms of the network.
- Your in-network benefits and the contracted exclusions apply.
Note: Many insurance call center reps and HR managers are not familiar with contracting, despite what they may mistakenly report to you, there is no possible way that you can contract on behalf of your provider.
Many of our clients (your provider) are out-of-network providers. This can mean they are able to provide services un-beholden to the regulations imposed by individual insurance companies. The following is typically true:
- The practice information is stored within the claims system of the insurance company; this is an indicator that the practice has been set up to send claims, or has sent claims in the past, but is not an indicator of successful claims payments, nor of in-network status.
- If an out-of-network provider is set up in a payer’s system, they can usually successfully bill their claims, but they are required to collect the patient portion of the amounts due.
- Your out-of-network benefits, limitations, and exclusions apply to any claims submitted for services performed by a non-network provider.
When a network deficiency is discovered (i.e. no network providers within a certain distance of your home), many times an In-Network Exception can be obtained. With your Verification of Benefits, our specialists will discover if an exception of this type is possible and if so, whom should seek the exception and how.
When we are told that the exception request must come from the Provider, we, as your Provider’s agent, will request and follow up on the exception. If the exception request must come from you as the covered member, we will send you an easily-customizable form letter along with your Verification of Benefits (VOB).
Types of Insurance Plans
PPO plans – Preferred Provider Organization
These plans have both in- and out-of-network benefits and the member can self-refer to see in- and out-of-network providers.
HMO plans – Health Maintenance Organization
Members of HMO plans usually have an assigned primary care physician (PCP) and often referrals will be needed from this PCP before they can see a specialist. Midwives occasionally fall under this “specialist” category. The most important thing to note is that HMO plans most likely have no out-of-network coverage, or coverage for services rendered without a proper referral from the PCP.
EPO plans – Exclusive Provider Organization
EPO members can utilize the providers within their EPO network, but cannot go outside the network for care as there are no out-of-network benefits. The difference between EPO plans and HMO plans is that EPO plans usually don’t require referrals from a PCP for specialists.
POS plans – Point of Service
These plans combine aspects of both HMO and PPO plans. Sometimes the member will have an assigned PCP who will need to make referrals for specialists. These plans usually have both in- and out of network benefits.
These plans typically allow members to direct their own health care and visit whatever providers they like. The insurance company then pays a set portion of the total charges. Because of the freedom they allow members, Indemnity plans are sometimes more expensive than other types of plans.
Insurance Company Disclaimers
“Information given on this call is not a guarantee of payment. All claims will process according to the plan benefits at the time they are received.”
A variation on the above is written into every health plan and is required to be acknowledged during every phone call to insurance when obtaining benefits or claims processing information. Neither the information received by Larsen Billing Service, nor any information you may receive over the phone can guarantee how your claims will pay or process.
Scenario for PPO, POS or Idemnity Plans
Many people who have insurance are surprised when they have a balance due to their provider even after claims have been paid by their insurance company. It is difficult to determine how much an insurance company will pay for services rendered (even after obtaining verification of benefits), and many times there will be an outstanding balance due despite the upfront deposit payment and payments from the insurance company. Below are examples of possible scenarios to help explain why this might happen. These are EXAMPLES only and do not necessarily reflect what your provider charges, nor what your benefit level is.
- Let’s say your benefit level is 70%, your deductible is $500.00, and the fee for service is $4000.00. If the insurance company accepts the full $4000.00 fee, the benefit paid would be $4000.00 MINUS your $500.00 deductible = $3500.00, MULTIPLIED by .70 (70% benefit level), resulting in a $2450.00 payment by the insurance company. This leaves you, the patient, with a $1550.00 ($500.00 deductible and $1050 co-insurance) remaining balance to pay your provider.
- If the insurance company did not accept the full bill of $4000.00 by an out-of-network provider, and decided that $400.00 was over usual and customary, then the benefit paid would be $4000.00 MINUS the $400.00 over usual and customary and MINUS your $500.00 deductible = $3100.00, MULTIPLIED by .70 (70%). This would result in a $2170.00 payment by the insurance company and leaves you, the patient, with an $1830.00 ($500.00 deductible, $400.00 usual and customary and $930.00 co-insurance) remaining balance to pay your provider.
Please remember that if an insurance company chooses not to accept your provider’s full fee, it does not mean they charge too much. By agreeing to work with your provider, you understand that you may still have a balance due after your services are rendered and that you may or may not be reimbursed your full prepaid deposit. Accepting these terms and employing your provider’s services, or those of the birth center, are a binding financial agreement.
Depending on insurance reimbursement, you may receive reimbursement from your provider if you have paid all, or a portion of, your deposit upfront. There is no way of knowing whether you will receive a refund until your claims have processed.
Working with your Insurance Company
Whether you have purchased your own policy, or you or your spouse receive it as part of a benefit package at work, you are a paying customer of your insurance company. This means you have the power to demand good customer service! When your provider is outside of your network, you especially have a relationship with the insurance company that your provider does not. This means that your involvement could improve your chances of being reimbursed, or even increase insurance payment on your claims.
When you receive your Verification of Benefits, please look it over carefully and work with your provider to understand typical charges and your estimated financial responsibility. If you discover that your plan has inadequate coverage for the services that you intend to use, a good place to start is either the member services department of your insurance company, or your human resources department.
When a Claim Denies
The outcome, or ruling, of a claim is determined by the insurance company. Not all rulings are fair, appropriate, or even legal. Most of the time in these cases, we can have the claim reviewed for reconsideration. Sometimes we must appeal or submit a formal request for a change to the processing decision.
Most insurance companies allow the provider or the billing service to initiate the appeal.
Sometimes the insurance company will only accept an appeal request directly from the member; alternatively, there may be times, when it is deemed advantageous for the member (who is the customer of the insurance company) to become involved with the appeal process. When this occurs, Larsen Billing Service can provide templates. Here are some tips you should be aware of:
Tips for a Successful Appeal
- Keep the Explanation of Benefits (EOB) relating to the claim in question. This comes to you from the insurance company. You will need the information found on this form to fight the ruling. The contact information for beginning the appeals process should be listed on the EOB.
- Begin a file to track all correspondences relating to this process. Make and keep copies of ALL CORRESPONDENCES.
- Keep a record of all insurance representatives you talk to relating to this process. Write down names, dates and time contact was made. Ask for reference numbers.
- Call insurance company to verify you have the correct address/fax number for filing the appeal. The initial contact number will be listed on the EOB.
- The claim number, found on the EOB, is an important number. It is to be used on ALL correspondences, both spoken and written, that pertain to the claim(s) in question.
- Follow-up, follow-up, follow-up! After one week of sending the claim, contact the insurance company to verify appeal has been received. If received, ask for the new claim number assigned to the claim. Once you have this information, you can hold off on calling for status for at least 30 days. The appeals process can take up to 45 days before information is available relating to appeal. If appeal has not been received within one week of sending it, continue calling, each day, for two weeks. If appeal is not received within two weeks, ask insurance representative for submittal address and/or fax number. Resubmit your appeal.
- Communicate with your provider and with Larsen Billing Service on the progress of the appeal.
- Write appeal with confidence. Include solid reasoning as to why you feel the claim should be reconsidered, all while limiting your text to one page.
- Include all pertinent information in the appeal letter. Be sure to include: Your name, date of birth, your ID number with insurance company, date(s) of service, billed amount and claim number.
- Be prepared to write and submit a second-level appeal. Often an insurance company will easily dismiss a first-level appeal, forcing the complaint to be moved to the next level, or a second-level appeal. Second-level appeals are most effective when some piece of new information is presented that was not listed in the first-level appeal. This is where you contact Larsen Billing Service to help create this second-level appeal. With most insurance companies, once a second-level appeal denies, you will receive notice that your appeal opportunities are exhausted. This does not mean you should give up. You can do some investigating to find out the name of supervisor of the department. You may even want to go as high as the CEO.
Note: If your provider, or Larsen Billing Service, has sent a first-level appeal and it denies, you may be asked to submit an appeal along with the second level appeal as the patient’s involvement has proven to be very effective in getting proper results.
Frequently asked questions
How have my claims processed?
Claims processing information is distributed by your insurance company to you as the member and to your provider, it is never sent to Larsen Billing Service. Please call your insurance company for this information.
What if my insurance company says they will not cover the services of my Provider?
Larsen Billing Service will work hard to obtain an exception on your behalf. If this is not possible, we suggest you submit a request for coverage to the HR department of your employer and/or contact your insurance company. You are the customer, so you either receive insurance as part of your salary or you pay for it out of your pocket. Therefore, your voice, and your employer’s voice (when appropriate), are very powerful.
How much will my insurance company pay on claims?
Unless your provider is contracted with your plan, we cannot predict the exact amount that an insurance company will pay on a claim, but a few factors come into play:
- Allowed amount: Each insurance company pays claims according to the allowed amount they have determined for each procedure, regardless of the amount that the provider charges for the service. For example, if a provider bills the insurance company $300 for an office visit, the insurance company may only allow $200 and then apply plan benefits from there.
- Deductible: In general, before an insurance company will make a payment on a claim, the yearly deductible needs to be satisfied. If a plan has a $500 deductible, the first $500 that they allow on claims will apply to the deductible. This then becomes the insured’s responsibility. Your deductible is not met simply by you paying $300 in advance to your provider. Your deductible is met by the first claims billed to your insurance company for that year by any provider that your plan deems payable. Therefore, if another provider has billed your insurance company before your current provider does in a calendar year, the previous provider’s claims will be applied to your deductible first. Once the deductible has been met for a calendar year, it is no longer an issue until the next calendar year. (Most plans go by calendar year, but there are a few exceptions to this.)
- Co-insurance: Co-insurance refers to the percentage of the allowed amount that the insurance company does not actually pay out but deems the patient’s portion/responsibility. For example, if a plan pays 70% of the allowed amount, then 30% would be the insured’s responsibility. If that same plan allows $200 for an office visit, and the deductible has already been met, the insurance company would pay $140 and would apply $60 to patient responsibility.
How can I check the progress of my claims as they are processed?
How much do I owe my Provider?
My policy changed (i.e. the policy numbers, the policy renewed, I got a new employer, my coverage was lost, I need to add a dependent); what should I do?
How quickly will my claims be paid?
Claims typically pay 30-45 business days after they have been submitted. Each state has different regulations, so there may be some variation here. There are cases when even more time is required as the insurance company may request medical records or other information in order to process the claim. Your provider has access, through our billing software, to real time claims submission information if you have questions about when a claim was submitted.
How can I get a copy of my claims and personal health information?
Every piece of personal health information utilized by Larsen Billing Service is the property of your provider and is available in their office. However, HIPAA guidelines require us to provide access to a portion of the Designated Record Set as defined in the Business Associate Agreement with the provider. Please contact our office if you wish to request these items; an administrative fee is required.