Health Insurance: Defined!

speech therapy evans ga occupational therapy augusta pediatricHealth Insurance: Defined

Oh, health insurance. Can’t live with it, can’t live without it. But why does it have to be so confusing?

Just like with any other medical expenses, a child’s insurance is typically billed when they receive speech, feeding, or occupational therapy. But if only it was as simple as that. Each kid comes in with different factors that affect whether or not the service is covered by insurance. Some of these factors could be: diagnosis, procedure codes, deductible amounts, co-pays…. Whew. See why answering insurance questions is not a one-size-fits-all response?

As we journey the winding road of insurance together, I have put together a list of common insurance terms that we use daily. Maybe, just maybe, this will help clear the insurance fog.

(*Side Note: To see what insurances Therapy Trails is in-network with, click here.*)

Allowed Amount: This is the maximum dollar amount that your insurance company will pay for a service.

When a medical provider performs a service, they bill using a CPT code (see below). Your insurance company then looks at this code and decides how much they will pay for the service. Take this situation: A provider bills $100 for a service. The insurance company then looks at the billed service and decides to pay only $60 for this service. $60 is therefore the allowed amount. The patient may then be responsible for the difference ($40 in this example) that was not paid by insurance. This amount is different for every insurance and even for the type of plan you have. The allowed amount is applied to your deductible. Anything you pay that is in addition to this allowed amount is typically not applied toward your deductible. So, in our example above, the $60 allowed amount will go towards your deductible, but the $40 difference in not added to the deductible.

Co-Insurance: The percentage of a medial cost that you will pay, after you have met your deductible.

To understand co-insurance, you need to also understand what a deductible is. So, keep reading below! After you have made several medical payments out of pocket during the year, you will reach your deductible. Once you have hit this dollar amount, insurance will then pay for a percentage of a cost, while you pay the other part. So, for example, let’s say your coinsurance is 20%, and your insurance company is responsible for 80%. If you have met your deductible, but you have a service that is $1000, you will be responsible for the 20% of this cost ($200), while insurance will pay for the 80% ($800).

Co-Payment: A fixed dollar amount that you are responsible for on a covered medical service.

This fixed amount is usually very different for each individual insurance policy and plan. The co-pay is set by your insurance company, and it is usually due at the time of service. For example, if speech therapy is considered a “covered” service by your insurance company, your insurance company may require you to pay a $20 co-pay for every visit, while insurance (typically) pays the remaining amount, up to the total allowed amount.

Covered Services: These are the services that your insurance plan considers as benefits and “covered” by insurance.

Although a service may be considered “covered”, that doesn’t necessarily mean that insurance will pay for 100% of the charges. This is where co-insurance, co-payments, and deductibles come into play. Every insurance company and individual plan differs in what they consider “covered” and “not covered.” Therefore, it is hard to predict in advance if a service will be covered. Take this for example: Your child is receiving speech therapy. However, she just recently started occupational therapy too. Although speech therapy was considered covered by insurance, the occupational therapy visits may not be covered because your insurance plan does not consider the occupational CPT code as a benefit.

Deductible: The sum of money that you are responsible for before your insurance starts to pay for covered services.

If you have a deductible, your insurance company sets a certain price point that you are required to pay, before the insurance company pays anything. This means that you have to pay for medical bills in full, until you have spent the amount of your deductible. So, let’s say your deductible is $1000, and you’ve had no medical bills so far this year. Then you have a medical bill that is for $500. You are responsible for the entire $500. Then, you have another medical expense that is $500. You are still responsible for this amount. However, you have now paid $1000 total, which is the total for the deductible. Now, any medical expense will go through insurance. After the deductible has been met, you will only be responsible for co-pays or co-insurance, as insurance should cover the rest. But only for services they consider “covered services.”

In-Network: Medical facilities are considered “in-network” if they have a contract with a particular insurance company.

If a medical office or clinic states that they are in-network with your insurance company, this means that they have signed a contract with that insurance, and have agreed to reimbursement rates for the services they provide. Typically, an office or clinic will agree to discounted rates, in order to be considered in-network with that insurance company. Because of these pre-negotiated rates, a patient will typically pay less for services performed by a provider that is in-network, than a provider that is considered out-of-network. For example, if a medical facility charges $200 for a service, they may have a negotiated rate with the insurance company, meaning they will accept $140 for this service, instead of the full price of $200. As a patient, you benefit from this lower reimbursement rate.

Out-of-Network: Medical facilities are considered “out-of-network” if they do not have a signed contract with a particular insurance company.

Medical offices and clinics may not be in-network with your insurance company. This means that they have not agreed on any negotiated reimbursement rates with your insurance. Because they have not signed a contract for (typically discounted) reimbursement rates, patients tend to pay more for services performed by out-of-network providers. For example, if a medical facility charges $200 for a service, a provider that is considered out-of-network will require you to pay the full $200. (See above for an in-network example)

Procedure Codes (CPT): Current Procedural Terminology are codes assigned by the medical provider, that describes the type of service they performed on the patient.

There is a code for literally every type of procedure that may be performed in the medical field. Everything from x-rays to doctor’s visits to speech and occupational therapy has a designated CPT code. These codes are communicated with insurance companies. Then the insurance company then looks at the code and determines what amount they will reimburse the provider for that service. The insurance company determines the reimbursement based on the negotiated contract with the provider (i.e., in-network). The reimbursement rate for a particular CPT code may be different depending on the office or facility you receive the service.

For a full list of medical insurance terms visit this glossary.