No. of Recommendations: 33

Let the patient beware. Going outside your insurer’s network of preferred doctors or hospitals could be even more hazardous to your financial health than you suspected.

The broad investigation that New York’s attorney general announced last week, questioning the “reasonable and customary” calculations on which insurers base reimbursements for out-of-network medical services, raised the lid on a particularly confusing part of the nation’s health care system.


Through the insurer’s calculations, for example, a $100 charge for a doctor’s office visit may be assigned a “reasonable and customary” value of $60. And so the insurer, paying 80 percent of that amount, reimburses the patient only $48. The remaining $52 comes from the patient’s pocket.

Ingenix, the company that provides the information insurers use to calculate those reimbursements, defends the accuracy of its data. Ingenix, owned by one of the nation’s largest health insurers, UnitedHealth Group, says its data is based on the actual billed charges that it gathers from insurers nationwide.

But some consumers have started questioning those methods — like Errol Reiter, a 59-year-old consultant in a small Oregon city, Medford, who is suing his insurer, Aetna, in small-claims court.

Mr. Reiter has been insured by Aetna for the last 10 years and said he had generally “just grinned and bore it” when his benefit statements showed the insurer was paying only a fraction of his actual out-of-network medical bills. But then he had an opportunity to compare benefits statements for two exams he had — one in network and the other out — to which Aetna assigned the same medical code.

The in-network exam was conducted by a nurse-practitioner in Medford in April 2006. Aetna paid $92.70 for the visit, and Mr. Reiter owed nothing. Last July, he went to a doctor at the Mayo Clinic in Scottsdale, Ariz., who is not under contract with his insurer.

The Mayo doctor charged him $149.80. What surprised Mr. Reiter was that Aetna calculated the prevailing charge for that exam as just $90. He found it odd that Aetna would say that an exam conducted by a well-regarded doctor at the prestigious Mayo Clinic, in a metropolitan market, had a lower prevailing value than the exam conducted at a contracted discount rate by a nurse-practitioner in his small home city.


The sooner we take for-profit health insurers out of the healthcare equation, the better.

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