What is a Provider? Really.
By John Di Saia, M.D.
The term "Provider" in the health insurance context is a really a matter of contract. An insurance company considers a doctor a provider if he or she has signed a contract with them. This contract limits the physician in several ways, such that many Southern California area plastic surgeons (and other sub-specialists) have decided to drop these contracts. Does that mean the doctor canít take care of you? No. To know what your insurance company will and will not cover, you should ask them.
But what exactly does it mean?
Letís discuss what provider status does (both good and bad) for you and your surgeon.
An insurance company plan provider has one advantage: namely, listing in that planís healthcare provider literature. What does this mean to a sub-specialist? Not much. Most patients donít find their plastic surgeon looking through a provider book. Your family doctor generally refers you to a plastic surgeon as a result of good experience. This is more often than not the case. If your physician is a member of an HMO, he may refer you to the only surgeon in the plan who accepts the HMOís rates. This may not be so good. The disadvantages start here.
By becoming a provider under your insurance company, your surgeon gives up some of his rights. Some of these can affect your care. Firstly, the specialist agrees to accept the planís payment schedule. The problems start here as this schedule changes usually several times a year and these rates invariably go down. The second point is almost always news to the patient: the doctor is required by contract to collect your co-pay (at office visits) and your share of cost after insurance pays their portion of the bill. To not collect these fees constitutes a breech in the physicianís agreement with the insurance company, which can result in fines of to $10,000 or forfeiture of the insurance planís responsibility for the care rendered.
The subject of insurance coverage is generally confusing, so letís illustrate with an example:
You go to your doctor with a mole on your chest that seems to be changing. He recommends a plastic surgeon who you see in consultation. The mole is biopsied later requiring removal with a large pad of extra tissue as it is a melanoma.
First, letís say your plastic surgeon is a provider under your insurance
plan. You usually get a form in the mail some months after the care is
rendered entitled "Explanation of Benefits" or EOB. This form is from your insurance
company detailing receipt of a claim from your doctorís office. The itemized
accounting for which the doctor is billing is listed. You may see a billed
amount, an allowed amount, a co-pay amount and an amount paid. You may
also see a provider discount column. The billed amount is your surgeonís
usual charge for the service. The allowed amount is the planís contracted
limit for that service. These are the numbers that are falling through
the floor. The co-pay amount is the patientís share of costs as far as
the insurance company is concerned. The amount paid is the amount insurance
paid on the claim. The provider discount is the amount the doctor fails
to collect for being a member of the plan. Hereís an example:
|Billed Amount||Allowed Amount||Provider Discount||Co-pay||Amount Paid|
You may say: "Oh, this never really happens."
Sorry, but it does.
This example is from my own billing for a melanoma I removed in 2000. What would the difference be if the doctor was not a member of the plan? The patient would be billed for some or all of the amount that the insurance company did not pay. Furthermore, if he wished he could negotiate the amount owed and not violate a contract with the plan as providers are not under contract to the insurance company.
The bottom line here is that cost for doing business in medicine (in particular plastic surgery) is large and reimbursement is falling like a stone. The plastic surgeon who performs reconstructive surgery is faced with a choice. Firstly, he can do the work quickly using inexpensive poor quality materials to try to make a living. This may not be so good for your ultimate outcome. Another choice would be to not do the work at all. The final choice is to drop provider status, so costs not reimbursed can billed to the patient. I personally have chosen the later route.
Quality care costs money. In most cases, the care I provide in reconstructive surgery is reimbursed so poorly, it is rarely even cost neutral. I look at my cosmetic practice as a subsidy to reconstructive surgery. Fortunately cosmetic surgery is thriving in Orange County.
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