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How do I determine my financial obligation when visiting non-participating providers?

It is common practice for medical insurance plans to pay benefits for the services of non-participating providers based on usual and customary allowances. The collection and standardization of the information for usual and customary allowances is done by organizations such as CMS (Centers for Medicare and Medicaid Services) and Ingenix, both of which are widely used within the health care industry for all populations.

You are responsible for paying the amount applied to your deductible, your coinsurance, and the difference between what the doctor charges and the usual and customary allowances. For non-network claims the usual and customary allowance is applied first, and then your deductible and coinsurance are applied. Therefore, in addition to your applicable deductible, coinsurance and/or co-payment, you are responsible for any amount above the usual and customary allowance for that particular service. Only the usual and customary (U&C) allowances are applied to your deductible and out-of-pocket maximum.

Example #1 (assumes PPO Plan enrollment and annual deductible has been satisfied): If your doctor charges $1,500 for a certain procedure and your plan pays 80% of the U&C charges (which CMS determines to be $1,000), then you would have to pay 20% of $1,000 ($200), plus the $500 over the U&C for a total of $700.

For this example, the participant pays: For this example, the plan pays:
$500 (provider charged more than U&C)  
$200 (coinsurance) $800 (80% of U&C allowance)
$700 total amount of pocket  

 

Example #2 (assumes PPO Plan enrollment and nothing previously applied toward annual deductible): If your doctor charges

$1,500 for a certain procedure and your plan pays 80% of the U&C charges (which CMS determines to be $1,000), then you would have to satisfy your deductible ($350) and would be responsible for 20% of remaining $650 of charges after deductible ($130), plus the $500 over the U&C for a total of $980.

For this example, the participant pays: For this examples, the plan pays:
$500 (provider charged more than U&C allowance)  
$350 (deductible)  
$130 (20% coinsurance) $520 (80% of U&C allowance after deductible)
$980 Total amount of pocket  

 

Example #3 (assumes PPO Plan enrollment, deductible has been met, and there is no CMS established U&C allowance): If your doctor charges $1,500 for a certain procedure and there is no CMS established U&C allowance, then the total amount allowed by the plan would be $975 (65% of billed charges) and the plan would pay 80% of the allowed amount ($780). You would have to pay 20% of $975 ($195), plus the $525 over the allowed amount for a total of $720.

For this example, the participant pays: For this example, the plan pays:
$525 (amount above 65% of billed charges)  
$195 (20% coinsurance) $780 (80% of amount allowed by the plan)
$720 Total amount of pocket  

Reviewed 2016-08-09