Tip – Copays Charged…

One thing I hate more than anything is surprises. Especially when it comes to financial expense. I recently heard from a dear client who was upset and complaining about a co-payment he would be paying today for a CT Scan (“Cat Scan”). The co-payment was going to be $295 and that seemed outrageous to him.

You should know this is a Medicare Advantage plan member; not ACA. He actually said he thought the copay was $311 and that number is not even within the range of allowable co-pays…. so I was concerned.

I called his insurer to see if I could figure out what was going on. The CSR was very helpful and actually took a few moments to pull up his Summary of Benefits and Evidence of Coverage. This was wise since I was sitting on my end looking at the Summary of Benefits and would have nailed her if she misspoke. For his plan, under Diagnostic Tests, it showed that co-pays would be anywhere from $40-$295. This would include CT Scans. A CT Scan is a diagnostic imaging test.

So, bottom line, the $295 was within the acceptable guidelines under the plan. So, at this point, I inquired about how that amount is calculated; who decides what a co-pay should be for a particular item. The answer according to the CSR; it’s up to the provider. She explained that a provider has a price for a product or service (that makes sense) and they; the insurer, negotiates a lower price, which is the amount that the insurance company will pay, and then the provider sets the copay for that item; probably based upon market averages, I would guess.

In this case, the procedure without insurance would cost about $725. That’s what the doctor would charge if someone came in without insurance. The insurance company has negotiated that rate down to $311. That is the amount that they will pay the provider. And the provider has decided on a $295 co-payment from patients. So, all in all the provider is collecting $605 for the procedure instead of his normal $725 he/she would like to get.

In Medicare Advantage plans, benefits “OVERALL” must equal or beat those offered under original Medicare parts A and B. That does not mean each line item for each service should equal or beat the benefits offered under Medicare.

In this case, I just do not feel the plan offers patients much value. It does not mean that the plan is a bad one or anything, but on this item, it just does not help. If Medicare approved (as only an example) a cost for that procedure of $700 then without the plan and using only original Medicare benefits, a patient might be expected to pay 20% of that charge, which would only be $140… or half of the $295 co-pay he is paying by having an insurance plan.

Sometimes it works out like this. Other times, you save a bunch. For instance, let’s say you had a one night stay in a hospital. Well, under original Medicare, you would pay the first $1,300+ of that bill before Medicare took over. Under these types of plans, you would pay your nightly copay; $250-$300. So, in this case, you would save $1,000-$1,050.

Get it?

Overall by the end of the year, and in talking to 100s of clients, they usually find that these plans save them some money.