Many insurers are now calculating out-of-network reimbursements as a percentage of what Medicare pays rather than the “usual and customary” charges from providers, according to the report. Medicare, on many occasions, could pay less. Patients are then responsible for the difference between what the out-of-network provider pays and what the insurer pays.
Health insurers argue the Medicare-based reimbursement method is fairer and prevents physicians and other providers from abusing the “usual and customary” definition. “It was not infrequent to see an emergency case where 98 percent of the physicians would charge $5,000 [for a case], but some outlier would decide to charge $50,000,” said Mark Wagar, CEO of health insurer Empire in New York, in the report.
However, an explanation of this payment calculation is not easy for patients to find in their health plan guidance resources. Additionally, some hospitals and physicians are justifying their fees, as in-network care provides low reimbursements and charity care is taking up a larger portion of balance sheets.
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