Health insurance is most often a beneficial thing to have. When you get sick or injured, it helps you pay your medical bills. The trick with using your health plan is knowing what it covers and what it doesn’t. There can be unexpected costs if you don’t know how your plan works.
For example, health plans have provider networks, which are selected health care providers you can visit to get the maximum benefit from your insurance policy. It’s always best for your wallet if you see an in-network provider. If you visit a doctor who is not on the list, or “out of network,” you will receive a lesser benefit—or no benefit at all—from your health insurance, depending on your plan. Another potential pitfall in seeing a health care provider that is out of network is the topic of this blog post: UCR charges.
What is UCR?
This abbreviation stands for “usual, customary, and reasonable” charges. It’s a dollar amount your health plan will reimburse for a given health care service in a given geographic area. The UCR amount, which we call the “maximum out-of-network allowable fee” here at WPS in an effort to be more transparent, may not be what you actually are charged. In fact, the actual charges can be more than the UCR charges. This is where it can really cost you.
If your health plan offers coverage for out-of-network providers, then you’ll get some help paying your medical bill. Your plan will pay the allowed amount based on the UCR determination. Anything over the UCR amount is 100% your responsibility. The provider may bill you directly for that difference, which is called “balance billing.” It’s an official-sounding way of saying that you owe the provider the remaining balance for the service.
Let’s say you visit an out-of-network doctor and are charged $1,000. Your health plan might allow $500 (the UCR amount) for the service. If your plan covers 60% of out-of-network costs, then it will pay $300 of that $500 allowed amount. That leaves you responsible for the remaining $200 plus the $500 difference between the UCR amount and the actual billed amount. It’s complicated, right? What all of this means is that, in this example, your $1,000 bill would cost you $700.
Another effect of the UCR amount is that only your portion of the UCR amount is applied toward your annual out-of-pocket maximum. This example would cost you $700, but only the $200 you paid related to the UCR amount counts toward your out-of-pocket maximum. That means that using out-of-network providers can dramatically slow down how quickly you reach your out-of-pocket maximum. The amount you pay directly to a health care provider through balance billing does not count! If you have to pay balance-billed expenses, your costs may be much higher than anticipated.
Use your network!
The lesson here is that it pays to use in-network health care providers as often as possible. If you do need to go out of network for a service, remember that you may be paying more than you expect when the provider is not contracted and UCR amounts come into play.