Provider Excess Loss—How to get your claims paid
The key point in getting your claims paid is understanding the wording in your policy.
Why is it important to understand the wording in your policy? For the simple reason that, it can affect how, if, or how much reimbursement you receive from your stop-loss claims.
Shown below are common words seen in provider excess loss policies. Understanding these terms will help ensure that you utilize your stop-loss coverage to its full benefit. Misunderstanding them can adversely affect the benefits you could receive from your coverage.
Claims Basis: The allowable period of time in which:
- Allowable claims can incur;
- Allowable claims can be reported and paid;
- Allowable claims can be submitted for reimbursement.
Carriers are very strict in reference to when a claim is paid, reported and submitted for reimbursement.
As an example:
- Typical stoplLoss policies allow you 12 months (the policy period) to incur the claims,
- Then usually 6 months after expiration of the policy, for the insured to report and pay the claims, and
- Then, usually 6 or 7 months after the expiration of the policy, to submit the claims for reimbursement from the carrier.
If you miss any of these deadlines, the charges will be disallowed. This means the claim being submitted MUST be in the excess-loss insurance carrier’s office by the deadline or the entire claim is not eligible for reimbursement.
Coinsurance: The percentage applied to the eligible claim amount prior to reimbursement. The percentage is applied after the deductible has been met.
This is important as your finance department may assume after subtracting the deductible that whatever is left will be reimbursed. However, that is not true. The carrier applies a coinsurance level to the claim after the deductible and that will be the reimbursed amount. Typically it is 90% or 80%. The reason for this is that the carrier wants the client to maintain an interest in the claim so that case management or oversight continues.
A. In-Network (contracted): Services provided by providers within the Insured’s network or by any other provider who has a contract with the Insured.
B. Out-of-Network (non-contracted): Services provided by providers outside the Insured’s network or who did not have a contract with the Insured.
This is probably one of the most overlooked and confusing items and one that can reduce the amount of your claim. Carriers consider providers to fall under one of the two categories above. If you have purchased coverage that allows for a higher amount for non-contracted providers you must identify those providers to the carrier when submitting claims. Otherwise the carrier will assume all the providers are contracted and hold the claim to the lower claim schedule.
Covered Plans: The name and the type of plan covered under the stop-loss/excess loss contract – for example, Medicare, Commercial, Exchange etc.
Policies should be reviewed to ensure that all types of members for each HMO is shown, otherwise should a claim be submitted and that membership is not shown, the claims will not be eligible for reimbursement.
Deductible: The amount subtracted from the eligible claim amount prior to reimbursement from the insurance carrier. The deductible is applied after the maximum allowable schedule is applied to the eligible services.
While the definition is self-explanatory, the thing to keep in mind is that the deductible applies after all the charges for the claim have been adjusted to the fee schedule as shown in the policy.
Effective Date: The first day that the stop-loss coverage is in place and effective.
Eligible Services: The services covered under the stop-loss coverage.
Covered services should be spelled out in the policy. If the service is not shown, the charge can be rejected by the carrier. As an example, a hospital who has purchased stop-loss coverage. Coverage is shown for inpatient stays but no reference is made for SubAcute (SNF, ECF, Rehab).
Insurance Carrier: The insurance company which is providing the coverage for the stop-loss coverage. Can also be called the insurer or stop-loss carrier.
Managed Care Organizations: The health plan which is capitating the Insured for services under an agreement.
All policies reflect the HMOs that are covered under the stop-loss policy. If the health plan is not shown or a new health plan contract is entered into mid-year and the carrier is not advised, claims will not be eligible for reimbursement.
Maximum Allowable: The highest possible amount allowed for a service or procedure, subject to reasonable and customary and the amount actually paid.
Another way to say this is the fee schedule that the carrier applies to all charges. It will state the maximum allowed for any service. As an example for physician claims you may have 100% RBRVS as the fee schedule. This means that any charge will be subject to the lesser of the amount billed, the amount paid or 100% RBRVS. Different types of services have different fee schedules. For example, pharmaceuticals typically have a percentage of what Medicare would pay for the drug and also have a per member per contract year limit. This is one of the most misunderstood points and the reason for most claim reductions.
Maximum Benefit: The highest possible amount that the insurance carrier will pay for a member during a contract year and/or lifetime and/or for all members for the policy period.
Per Diem: The allowable charge per day for any hospital service.
Value Added Services: Additional services or programs offered to the Insured. There may be a charge by the insurance carrier for some of the services provided.
One last point to know–the person who purchases the stop-loss coverage is often not the person who submits or reports the claims. Unless they are advised of the stop-loss policy and its definitions, covered services, exclusions and limitations, claims can be overvalued or undervalued. A good broker always implements and trains the personnel who will be reporting the claims for a stop-loss policy.
At McPhee & Associates we have specialized in Capitation Stop-Loss/Provider Excess Loss insurance for over 30 years. We recommend that you choose a broker who has experience and understands how to use this type of insurance to ensure the highest benefit to your company.
Executive Vice President