Most health insurance plans are written with the expectation that plan members will share in the cost of healthcare. Coinsurance is one of these ways.
The coinsurance amount is the percentage that the insurance carrier pays a claim at and the percentage that the patient is expected to pay, out of their pocket, toward the total claim.
One of the first questions the health carrier is asked when they are called to verify benefits and eligibility is, what is the coinsurance amount?
The coinsurance amount is usually the same for all services. But it is not unusual to see a plan that has a lower coinsurance amount for some therapies like occupational, physical, chiropractic, mental health or even for durable medical equipment and supplies. Also, the coinsurance percentage will differ greatly for in network vs. out of network services.
Let's look at the following example:
In the case of ABC Company, the plan is expected to pay 80% of allowed charges, leaving the patient to pay the remaining 20% for in network providers. This plan also pays at 50% of allowed charges for out of network providers; leaving the patient to pay the remaining 50%.
So why is this important?
Revenue management is critical to the work that we do. We need to know what accounts have outstanding balances, why the balance is still due and what the possibility is for collection in full. We also need to collect every dime that is due from a patient, before they leave the office. Understanding the plan’s coinsurance amounts is critical to collecting the right amount upfront.
Real world example
Medical Billers bill claims for medical providers, but when services have been paid in full, upfront, a Medical Biller also may bill a claim so that the patient gets reimbursed. Frequently, patients will call me to complain about the low/no level of reimbursement that they received from their health plans on a claim that I billed. Because I am in the “people business,” I usually have them fax over the EOB to me for review.
Recently, a patient called me with such a complaint. Within two minutes I had figured out what had happened. Her claim was paid at 60% coinsurance instead of the 90% coinsurance amount that she was expecting. In fact, it took me longer to get ahold of the insurance company to fix it, than it did to find out the problem. The coinsurance amount is usually the first thing I focus on when I am reviewing EOB’s for reimbursement.
Coinsurance amounts are fairly predictable. Low coinsurance amounts usually mean that the claim was paid out of network and the higher coinsurance amounts usually mean that the claim was paid in network. This may help you to quickly identify any claims that may not have been paid as expected.
Allowed amounts are critical to reimbursement. See the section on allowed amounts for a full explanation of how the allowed amount will impact claim payment.
I discuss allowed amounts in detail in Chapter 7- Reimbursement.