One of the most frequent questions we get from practitioners is: what is the allowed amount for my services?
The answer is: it depends. It can vary quite a bit, even across plans from the same insurance company.
Allowed amounts are a form of cost control placed on health care by payers and are based on a combination of factors, like type of service provided, the credentials of the practitioner, and the geographical region where the service took place.
To dive deeper, though, it’s important to keep in mind who actually pays for health care–it’s not health insurance companies but actually employers that fund most of the care. Most individuals and practitioners alike are surprised to hear that 70% of employees in the US are covered by these “self-insured” employers. The role of the insurance company in these arrangements is only to run the program, provide the network and offer wellness programs.
PPO plans with the healthiest coverage are typically ones provided by these large, self-insured employers.
These employers view health insurance as a key element of their employees’ benefit packages and are fairly liberal with allowed amounts for services.
For others, like those who work for smaller employers, or who get their insurance through the ACA marketplace, allowed amounts can be more constrained. Insurers walk a tight balance, however–they’ve been prevented in the past from under-pricing these amounts in order to suppress reimbursements. One big lawsuit by the state of New York resulted in a massive fine and the creation of a non-profit database to help insurers guide their out-of-network reimbursements. The resulting Fairhealth database allows individuals, practitioners, and payers to review what the going rates are for various types of services across the country.
To see how out-of-network deductibles, allowed amounts, and coinsurance all fit together to get your clients reimbursed, see our blog, Reimbursement 101.