How Medical Billers and Coders Identify Commercial Insurance Carriers

By Karen Smiley

The commercial insurance world revolves on an axis of variety. In fact, an insurance plan seems to exist for just about every situation, and providers see a variety of plans in their daily practices: preferred provider option plans; point of service plans; exclusive provider option plans; health maintenance organizations; high deductible plans; discount plans; and ultra‐specific plans that provide only prescription coverage, vision coverage, or other specialized coverage.

The commercial insurance carrier is the company that writes the check to the provider, but the carrier may or may not be the one who prices the claim. Some carriers participate with payer networks, and the network prices the claims. Others may use third‐party administrators (TPAs) to adjudicate, or price, their claims through their networks.

Preferred provider organizations (PPOs)

A preferred provider organization (PPO) is a network of healthcare providers (doctors, hospitals, and so on) who have contracted with an insurer to provide healthcare services at reduced rates. The network contracts define reimbursement terms for all levels of service for the providers in the network.

Usually, patients with PPO plans are responsible for lower copayments and deductibles when they use a network provider, although they usually either pay higher premiums or have larger out‐of‐pocket costs than members of other plan types. On the plus side, PPO patients usually do not need a referral to see a specialist, but they may need to have certain procedures authorized in advance.

Health maintenance organizations (HMOs)

Health maintenance organizations (HMOs), which gained popularity in the 1970s, are organizations that contract with all types of providers (general practitioners, specialists, labs, hospitals, and so on) to create a patient ­service network from which the patient can choose or to whom the primary care physician can refer.

One benefit of the HMO to patients is lower‐cost healthcare. They usually have lower premiums and little or no copay obligations. However, they must access all healthcare through an assigned primary care physician (PCP) who functions as a gatekeeper to control costs to the insurance company. Before patients can see a specialist, the PCP must refer them. Even with the required referral in hand, patients are still restricted to providers within the HMO’s network.

Some HMOs have no out‐of‐network benefits. In this case — and depending on the provisions of the plan — the cost for the out‐of‐network services provided may fall on the healthcare provider or the patient. If a PPO‐only provider sees an HMO patient, the PPO contract may force the provider to absorb the cost of patient treatment.

If the provider has no contract with the company at all and sees an HMO patient, then the patient may be fully responsible for all costs. As the biller/coder, you’ll see the results of these choices firsthand.

Point of service plans (POS)

Point of service (POS) plans are a combination of PPO and HMO plans. A POS plan allows the patient to choose between PPO and HMO providers. POS members do not have to have a primary care physician, but they can if they want to. If they visit an HMO provider, they receive HMO benefits.

If they choose to visit a PPO provider, they receive PPO benefits. POS patients usually have out‐of‐network benefits as well. Visiting a non-network provider increases the costs for the patients.

Exclusive provider organization plans (EPOs)

Exclusive provider organization (EPO) plans are similar to HMO plans in that they typically require the patient to choose a primary care physician. They also require referrals if the services of a specialist are necessary, and the specialists must also be a network‐contracted provider. The only exception is in the event of an emergency when a network provider is unavailable.

High‐deductible plans

The rising cost of healthcare has given birth to the high‐deductible health plan. HMOs and PPOs started offering these plans in 2003. HMO and PPO deductibles are typically fairly low, but the premiums can become expensive.

The high‐deductible plans offer lower premiums but come with a high deductible. Deductibles in the $5,000 range are common. These plans are a smart choice for the young, healthy adult who rarely visits a doctor. But if that adult breaks a leg, the $5,000 adds up pretty darn quickly.

Some patients with high‐deductible plans have health savings accounts (HSAs) or health reimbursement accounts (HRAs). HSAs are funded pre‐tax by the insured; employers fund the HRAs. In addition, HRAs may or may not be handled by the same carrier; it depends on the group health plan provisions with the employer.

Discount plans

Probably the plans with the fewest advantages for both patient and provider are discount plans. These plans require patients to pay a monthly fee, which gives them access to participating providers. The problem is that the patients pay for the services, supposedly at a discounted price.

These plans are not true health insurance, and plan members are usually shocked when they need to use their “insurance.” It bears repeating, especially in this case: Always verify patient benefits in advance to protect the provider and the patient.