Estimating a patients out of pocket cost (as an out of network provider)

This article will provide you with more information on estimating a patient's out-of-pocket costs as an out-of-network provider and explain why this estimate is more challenging compared to being an in-network provider.

Estimating out-of-pocket costs for out-of-network providers differs significantly from in-network providers due to the nature of how insurance companies reimburse out-of-network services. Here’s a breakdown of key differences and how they affect the cost estimate:

1. Higher Deductibles and Coinsurance

In-Network Providers: Insurance companies typically negotiate set rates with in-network providers, and patients typically pay lower deductibles and coinsurance rates.
Out-of-Network Providers: For out-of-network services, patients usually face higher deductibles and higher coinsurance rates, making their out-of-pocket costs significantly higher as well.

Example:

In-Network: Coinsurance is 20%, deductible is $1,500.
Out-of-Network: Coinsurance could be 40%, and the deductible could be $2,500.

2. Reimbursement Based on "Usual, Customary, and Reasonable" (UCR) Rates

In-Network Providers: The insurer pays based on pre-negotiated rates between the insurer and the provider.
Out-of-Network Providers: Insurers may reimburse based on UCR rates—the typical amount charged for a procedure in the geographic area. This means that if the provider’s charge exceeds the UCR, the patient will have to cover the difference, known as the balance billing. This is often the largest discrepancy between in-network and out-of-network services. As an out-of-network provider, you typically won’t have direct access to the Usual, Customary, and Reasonable (UCR) rates that the insurance company uses to determine reimbursement for out-of-network services. This lack of transparency can make it challenging to estimate the patient's out-of-pocket costs accurately.

Example:

In-Network: The negotiated rate for the oral sleep appliance is $2,500, and the insurance pays based on that amount.
Out-of-Network: The provider might charge $3,000, but the insurer may consider $2,500 the UCR. The patient would then be responsible for the difference of $500 in addition to the higher coinsurance.

3. No Pre-Negotiated Rate

In-Network Providers: The cost is typically easier to predict because the provider agrees to the insurance company’s set rates for services. In-network providers know this number ahead of time.
Out-of-Network Providers: There is no pre-negotiated rate, so the provider may charge a higher rate for the service. This makes it much harder to predict the exact out-of-pocket cost, as it depends on both the provider’s charges and the insurance company's reimbursement policies.

4. Balance Billing

In-Network Providers: The provider agrees not to bill the patient for more than the agreed-upon in-network rates.
Out-of-Network Providers: If the insurer reimburses less than the provider’s charge, the provider may balance bill the patient for the difference. This is a major difference when estimating out-of-pocket costs, as the patient may be surprised by unexpected charges after the insurance payment.

Here's what you can do:

1. Provide a Range for the Estimated Costs

Since you can’t know the exact UCR rate as an out of network provider, provide a range of estimated out-of-pocket costs for the patient. For example, based on the service you provide and an estimate of the UCR rate, you could say something like:
- "Your appliance typically costs $3,000. Insurance will likely reimburse a portion of this based on their UCR rates. We do not know this exact number, but based off previous insurance reimbursements in this area, we expect that your out-of-pocket cost could range from $1,000 to $1,900, depending on the insurance company's reimbursement and your coinsurance percentage."

If you have never billed medical insurance before, and do not have an idea of what insurance has paid in your area, you can do things such as collect the patients remaining deductible up front, collecting the minimum lab fees up front, or collecting a down payment up front, and will then balance bill the patient the remaining after the claim processes.

This gives the patient a rough idea of what to expect without making a guarantee.

2. Balance Billing

Be Transparent About Balance Billing: It’s important to let the patient know that since you are an out-of-network provider, they may be subject to balance billing (i.e., the patient may have to pay the difference between the amount charged by you and what the insurance reimburses based on UCR rates).
Let the patient know that if there is any discrepancy between what the insurance company pays and what you bill, they will be responsible for covering the balance.

3. Follow Up After Claim Submission

After the procedure is done and the claim is submitted, keep in touch with the patient and the insurance company. Once the claim is processed, you can provide the patient with a more accurate cost breakdown based on what the insurance actually reimbursed.

Final Thoughts:

While the UCR rate isn’t readily available to out-of-network providers, the key is to set clear expectations with your patients. You can do things such as collecting the deductible up front, and balance billing after the claim has been processed. You can also keep a record of all the policies you have billed and what they have paid in the past. However, keep in mind that final costs will only be known once the insurance has processed the claim and the reimbursement has been determined.

Make sure you are transparent with the patient about the potential for balance billing, higher coinsurance rates, and possible discrepancies between what they are charged and what their insurance will cover.