Here are a few terms to help you better understand your insurance plan.
Appeal: Relates to a request made to the health plan for a reconsideration of an adverse decision or a denied claim. (A health plan could deny coverage due to billing errors, lack of medical necessity, or because the benefit is excluded.)
Co-insurance: A set percentage of costs shared between the insured and the health plan. For an 80/20 co-insurance, the insurer pays 80% and the insured pays 20%. The cost sharing stops when medical expenses reach the plan’s out-of-pocket maximum. Some plans have a 100% co-insurance, and all medical expenses are paid by the health plan after the deductible is met. Co-insurance rates may vary for in or out-of-network providers.
Co-payment (Co-Pay) : A set dollar amount the insured pays for each covered service. For a $25 co-pay, the insured pays $25 for every eligible service. Co-payments may vary for in or out-of-network providers.
Deductible : An annual, set dollar amount the insured must pay for medical expenses before their health plan benefits go into effect. After the deductible is met, the insured may pay nothing or they may have to pay a co-insurance. Deductibles may vary for services received in or out-of-network.
Out-of-pocket maximum (Out-of-Pocket Limit): The maximum dollar amount the insured pays, during a policy year, before the health plan pays 100% of the allowed amount. (This amount does not include balance-billed charges, premiums or services not cover by the plan. Some health plans do not apply out-of-network payments, co-insurance payments, co-payments, deductibles or other expenses towards the out-of-pocket maximum.)
Pre-Determination : A review process conducted by the health plan to determine if services are medically necessary and covered under the policy. The pre-determination of benefits is dependent upon information submitted before service. Payment is dependent upon information submitted after service. (A pre-determination approval typically guarantees payment of a claim. However, payment can be affected by the patient’s previous use of benefits, and the insurance company may deny the claim if there is a change in the patient’s condition and the service is no longer determined to be medically necessary.)
Prior Authorization: A request to the health plan for permission of service before service is rendered to the insured. (Prior Authorization requests are very common for rare disease services. A Prior Authorization approval does not guarantee payment. The health plan could grant approval to a specific provider in which case, the service must be rendered and billed by the approved provider. Claims submitted for prior-approved services rendered and billed by a different provider would be denied.)
Procedure Code (HCPCS Code): A 5 digit code that consists of a letter followed by 4 numbers. The code is used by insurance providers to classify a service or a medical supply for coverage a billing purposes.
Reimbursement Code: An 11 digit numerical code used to identify medical foods and enteral formulas. Medical foods and enteral formulas are not considered a drug and therefore are not assigned National Drug Codes (NDC). The reimbursement code simply follows the NDC format and is often referred to as (NDC) by payers. Find your reimbursement code here.