How To Escape Common Health Insurance Traps

Health insurance does not cover every medical cost. The average American pays $1,200 out of pocket each year. Here are seven of the most common traps that prevent consumers from getting the most from their health insurance...

TRAP: Failing to appeal a denial for coverage. If your health insurer denies a claim for service, don't assume the battle is lost. Submit an immediate appeal in writing.
Get the name of the insurance company's medical director and send your appeal—by certified mail—directly to him/her. Save copies of all written correspondence. For phone calls, keep a diary. Record the date, the contact name and a conversation summary. In your letter, stick to the specifics of your appeal. If possible, quote from your member contract section of your insurance plan information booklet to back up your appeal.
If your appeal is denied, don't give up. Most states guarantee an external appeal in which a third party objectively reviews your case. Contact your state insurance department for more information.

TRAP: Failing to inquire about "UCR" limits or fee schedules on out-of-network health services. "UCR" stands for "usual, customary and reasonable" medical charges. These are defined as an average cost for a given medical service in your region.
A fee schedule typically assigns a reimbursement value to every service a physician provides. Most health plans use UCR limits or a fee schedule. Unlike HMOs, which restrict your choice of doctors, preferred-provider organizations (PPOs) and point-of-service plans allow users to consult out-of-network physicians. However, the user must pay a percentage of the cost.
BEWARE: The percentage paid by the health plan applies only to the UCR rate or fee schedule for that service.
EXAMPLE: Let's say your plan covers 80% of the cost for a visit to an out-of-network specialist. Let's also say the specialist charges $200, but your health plan has determined that the service should cost $100. The insurer will reimburse 80% of $100—only $80. You must pay the remaining $120 yourself. Before consulting a doctor from outside of your network, find out your insurance company's UCR limit or fee schedule for the service or procedure. If there is a significant difference between the doctor's fee and the reimbursement rate, explain your situation to your doctor. He may be willing to negotiate a lower rate.

TRAP: Failing to keep track of your requests for referrals. Because referrals to specialists are costly for managed-care companies, some may process them slowly. To prevent a long delay, monitor your requests closely.
Do not see a specialist until the referral has been approved. Once your doctor has agreed to the referral, make sure both your doctor and your plan follow through. If you don't hear back within one week, call your doctor's office manager to follow up.

TRAP: Failing to find out which prescription drugs are covered by your plan. Health plans typically have a list of approved medications. If your doctor prescribes a drug that isn't on this "formulary," you may wind up paying for it. Call your insurer's customer service department to make sure a drug prescribed for you is on your plan's formulary before you order it.
If the drug is not covered, talk to your doctor about substituting another drug. If your doctor still prefers the drug, request that he call and ask the insurer to make an exception.

TRAP: Failing to ensure that your treatment is "medically necessary." Most insurers cover only procedures and services they deem "medically necessary."
EXAMPLE: Rhinoplasty—nose reconstruction—for cosmetic reasons typically is not covered. But the procedure may be covered if it is medically necessary to correct a breathing problem.
If you consult a doctor for any health condition, be sure he indicates on your chart the necessity for the medical service or procedure. If your plan denies reimbursement, ask your doctor to write a letter explaining the medical necessity.

TRAP: Failing to use preventive and wellness services covered by your health plan. Many insurance companies offer preventive and wellness services at no cost. These may include flu shots...weight-loss and smoking-cessation programs...cancer screenings...and case management for diabetes, high blood pressure and other chronic health conditions. Read your member handbook carefully and see an employee benefits person at your company.

TRAP: Failing to take advantage of your COBRA options. Few people realize that they can maintain the health insurance they receive through an employer if they lose their job or become self-employed. This right is guaranteed for 18 months under a federal law known as the Consolidated Omnibus Budget Reconciliation Act (COBRA). If you leave an employer that paid for your health insurance, ask the company's human resources department about COBRA coverage. You must pay the entire premium yourself, but the breadth of coverage and corporate rate almost always beat what you can purchase as an individual.

Source: Paul Lerner and Julie Lerner, brother-and-sister coauthors of Lerner's Consumer Guide to Health Care: How to Get the Best Health Care for Less. Lerner Communications. Paul is an AIDS activist. Julie is a five-year survivor of non-Hodgkin's lymphoma. For more on health insurance, visit www.Iernerhealth.com.