If generalizations are possible, would health insurance UCR billing rates (Usual Customary and Reasonable) be higher if based on 80% of the HIAA recommended rate, or 110% of the medicare negotiated rate?

January 28, 2010 9:43 AM

If generalizations are possible, would health insurance UCR billing rates (Usual Customary and Reasonable) be higher if based on 80% of the HIAA recommended rate, or 110% of the medicare negotiated rate?

I have a choice between two health insurance plans. One sets the UCR for out-of-network care at 80% of HIAA, the other sets it at 110% of the negotiated medicare rates. Both insurance companies are very evasive about providing specific details regarding these rates. I would appreciate it if anyone in the industry could offer suggestions as to which I might expect to be the higher rate of reimbursement in general, if there is a way to generalize at that level.

posted by worstkidever to Health & Fitness (3 answers total)

The out-of-network reimbursement rate is not a great basis for choosing a health plan, unless you absolutely must continue seeing some doctor who is out-of-network for both plans - on either one of those bases, the cost to you for getting care out of network will be substantial, and impossible to calculate until well after you receive care. I would advise you to choose your plan based on the size of the network of participating providers, and the in-network benefit - in particular, whichever plan has lower deductibles, lower rates of co-insurance and a lower out-of-pocket maximum in-network (assuming they're roughly comparable in premiums).

Medicare reimbursement rates are public information, and you can find the rates for physician fees in the Medicare Physician Fee Schedule and for hospital fees for outpatient care here in OPPS Addendum B. The physician file includes a .pdf that gives detailed instructions on how to calculate reimbursement amounts, but the basic rule of thumb on the physician side is that one Relative Value Unit is worth just over $36. In each case there're also locality adjustments to the reimbursement amounts, and rules for bundling the reimbursement of related services, but I'm just going to assume your eyes have glazed over at this point - I can walk you through if you're morbidly curious.

The Medicare reimbursement calculation for an inpatient hospital stay is a little more complicated. Let's just leave it at saying an inpatient admission to a hospital you're out-of-network for will be ruinously expensive for you under either UCR basis.

HIAA hasn't even existed for about seven years - it's part of AHIP now, and maintenance of the old HIAA UCR database passed over to Ingenix, a subsidiary of UnitedHealthcare. I would be a little wary of trusting the Ingenix database, as it's been the subject of several class action lawsuits over Ingenix scrubbing the data to artificially deflate the charge levels in them. The database is proprietary so you can't look up specific rates in it on your own, in any case. (Full disclosure, I work for a company that competes with Ingenix in providing some services, though not compiling UCR data).

My gut would be that even with all of their manipulation, 80% of the Ingenix 50th Percentile UCR is probably still higher that 110% of Medicare reimbursement more often than not, but that's just a guess based on my experience - hopefully you can see now why this is sort of a complicated question.
posted by strangely stunted trees at 4:47 PM on January 28, 2010

Response by poster: STT: That was just the well informed explanation I was hoping for. Thanks so much!

I started to understand the complexities last week when my current provider had incorrect information on one of my doctors and reimbursed me at a much lower rate than usual.

This definitely won't be the only thing we consider, but I'm just not up for changing doctors every time I change benefits, so we end up out of network a lot. I thought I was cynical enough not to be surprised that my HIAA option actually owns the database they use to set the UCR rates, but I really hadn't considered that possibility. But if they publicized that, I suppose it would make it even less defensible that they are only offering me 80% of what their internal DB says is actually usual, customary, and reasonable.

Thanks again.
posted by worstkidever at 8:26 PM on January 28, 2010

I thought I was cynical enough not to be surprised that my HIAA option actually owns the database they use to set the UCR rates, but I really hadn't considered that possibility.

Yes, welcome to the magical world of health care reimbursement in the US. I keep trying to calibrate my sordidness-ometer upwards, and the reality still shocks me.
posted by strangely stunted trees at 9:21 PM on January 28, 2010