Deductibles in Depth – Understanding Medical Deductibles

A deductible is a fixed amount of medical expenses that a patient must pay in order to qualify for insurance benefits under an insurance program. What exactly does that mean? It means that before an insurance company starts making payments for a patient, the patient must meet their deductible. How does a patient arrive at his own risk? Many people get very confused about how this is actually achieved.

In order for a patient to meet their deductible, claims must be submitted and processed by the patient’s insurance company. When the claims are processed, the amount applied to the deductible will be the amount allowed for the services charged. So, for example, if the claim is for an office visit, 99213 for $80, and the insurance allows $55 for a 99213, then $55 will be applied to the patient’s deductible, not $80.

Deductibles can range anywhere from $50 to $5,000. If it’s a private plan purchased by the patient, the deductible will depend on which plan the patient purchases. Plans with a lower deductible cost more than plans with a higher deductible. If the insurance plan is through an employer, the deductible is determined by the employer and how much they pay for the insurance plan.

Some people mistakenly believe that the patient should pay the amount of the deductible to the doctor and then the claims filed will be paid by the insurance company. They don’t realize that the insurance company must actually receive claims for the patient to apply them to the deductible in order to meet the deductible.

The best thing to do is call the insurance company before seeing the patient and inquire about the amount of the patient’s deductible and whether any of it has already been paid. You should also remember that you don’t know what other providers the patient may have seen and whether or not a claim has been made for those services.

Usually, you must file the claim and wait for the insurance company to process and apply it to the patient’s deductible before you can bill the patient. Many providers are happy to charge the patient upfront if they know the patient has a deductible that has not been met. This is not always the best thing to do as there are many factors that can affect the amount owed by the patient.

For example, if you call when the patient comes in and are told they have a $200 deductible and it has not yet been met, and the patient is seen for an office visit and a urinalysis. The office visit is $80 and the urinalysis is $15 for a total of $95. You let the patient pay the $95 since the deductible is not met. However, you file the claim and the insurance company will allow $60 for the office visit and $12 for the urinalysis. That’s only $72. If you join that insurance company, you can only charge the patient $72 or you’ll break your contract. You already collected $95, so now the patient has overpaid.

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Another problem with pre-collection is that a claim from another provider can beat your claim. If you call when the patient comes in and they tell you that the deductible has not been met, you will charge the patient up front. Then your billing person is sick for a few days or busy with other work and the claim is not submitted until a few weeks after the patient’s visit. (Trust me, this happens often.) In the meantime, the patient goes to the emergency room where they submit their claims electronically the same day the patient is seen and their claim beats yours. Now the patient’s deductible is suddenly met and the insurance company pays your claim. Another overpayment.

If a patient has a deductible, the insurance company usually pays a percentage of the allowable amount once the deductible is met and the patient has a coinsurance. (We’ll talk about co-insurance next month.) Many plans these days are moving away from the deductible/coinsurance and moving more toward the HMO/PPO plans that have established co-pays. However, it’s still critical that you understand exactly how the whole deductible thing works. There are still several deductible plans, including traditional Medicare plans.