If a doctor is in-network with an insurance company and the patient wants a refund for what they paid out of pocket, what are the mechanics of the transaction? Here, you likely have more than two parties. You have the patient and the physician, of course. You also have an insurance carrier.
I’ll explain.
First vignette:
Let’s assume the doctor is in network with BCBS insurance company. The specific policy the patient has makes her responsible for 10% coinsurance. Let’s assume the doctor charged the patient $1,000 for the procedure. The carrier pays the doctor 90%, or $900. The doctor balance bills the patient her 10% coinsurance, or $100. And collects it.
Say the patient demands her $100 back, and the doctor is OK with that, in exchange for a release.
So far, so good. At least between the doctor and the patient.
But we also have to think about the carrier.
In the carrier’s mind, the patient was forgiven her 10% ($100) obligation.
So, the carrier recalculates the total bill as $900. ($1,000 – the forgiven patient obligation of $100).
And the carrier’s 90% obligation is now actually 90% of $900 = $810.
So, in theory, the doctor needs to give an additional $90 to the carrier. $90 is the difference between what the carrier originally paid ($900) and what the carrier should have paid when repriced ($810).
In this example, the doctor refunded the patient $100. And because of the forgiven patient obligation, the carrier should be repaid $90.
Next vignette:
What if the doctor is not in network with the carrier? And the same deal takes place. Here, the doctor has no obligation to the carrier. But he should instruct the patient to refund the carrier an additional $90. Will the patient do it? Doubtful. Because then they will only have netted $10. Much less than the $100 they expected.
Final vignette:
What if the patient has a hybrid procedure. Part covered by insurance, part not covered by insurance. A rhinoplasty (nose job) illustrates this point. The patient may have a cosmetic problem (a hook on their nose); and they may have nasal obstruction because of a deviated septum. The cosmetic portion is cash-pay, out of pocket. It is not covered by insurance. The deviated septum is covered by insurance. A hybrid procedure.
Now the patient wants her money back for the cosmetic procedure. Fine. As long as the release specifies the refund is covering the cosmetic portion of the procedure, the math is simple. It’s just two parties. The doctor and the patient. There are no insurance considerations.
But, if the patient wants all of her money back (for what she paid), then the carrier must be considered.
Example. Cosmetic rhinoplasty. $1,000 (cash pay out of pocket). Combined with repair of deviated septum. $1,000, covered by insurance. Carrier pays 90% or $900. Patient pays 10% coinsurance.
In total the patient paid $1,100 out of pocket. $1,000 for the cosmetic procedure. And $100 for the co-insurance of the procedure reimbursed by insurance.
If the patient wants her $1,100 back, the doctor ALSO needs to reimburse the carrier $90. Why? The $1,000 septal deviation procedure was repriced from $1000 to $900. The carrier only pays 90% of $900 = $810. So, the doctor needs to reimburse the carrier $90.
Here, the doctor will pay the patient $1,000 (her out of pocket for the cosmetic procedure). Plus, doctor will reimburse the patient her $100 coinsurance. The patient will receive a check for $1,100.
Next, the doctor will reimburse the carrier $90 because of the repriced insurance deviated septum procedure.
The doctor will have written checks totaling $1,190.
Easy, right?
What do you think?
I fully disagree – also an MD, JD – currently practicing law after 27 years in medicine – and it is ILLEGAL to do no out of pocket in your first scenario. You cannot waive the co-insurance or copay. PERIOD. FULL STOP.
In the first vignette, to the extent there is any refund, it is a refund to both the insurance company and the patient, pro-rata based on the insuring agreement. This assumes that both the carrier and the patient have ALREADY paid what they were obligated to pay as memorialized per the insuring agreement. Dr. London, there is no waiver of coinsurance or copay. It is a repricing of the full cost of the procedure performed. Putting the toothpaste back in the tube.
Trying to imagine a situation where a medically necessary and appropriately provided medical service warrants consideration of a refund.
No. This article is flawed from start to finish.
Why would any doctor refund a cosmetic procedure that was done? why give a refund on a septoplasty or any surgery as a matter of fact, that was performed? An ABN solves the insurance issue, FYI. If a doctor is out of network, why would he/she need to refund anything? Refunds are done if the pt does not have anything done, not after a procedure is completed. Agree with other doc, this article makes no sense.
Refunds in the elective cosmetic space are done for all sorts of reasons. Ask your colleagues. The first reason is the patient is quite unhappy with the outcome and the result is actually suboptimal. This individual paid a fortune to receive a result. And now they are Exhibit A for why no one should come to your practice. Yes, I know all patients heal differently. And healing is a function of biology. But patient selection is within the domain of the surgeon, and many refunds that are tendered, can be justified in my opinion, because the patient was a poor candidate for surgery in the first place. They may have body dysmorphic disorder, for example. Or their expectations were unrealistic.
Of course, one can just say, “Hey I did what we agreed to do. Sorry it didn’t work out for you.” Good luck with that. The Internet is the great neutralizer. They will deliver bile on review sites, Reddit, and Facebook. To your credit, Dr. Campano, you look very good online with 263 reviews. So, you are more likely to weather a storm. Still, angry patients will find a forum to vent. And that can include the Board of Medicine. While I appreciate a concern that tendering a refund would open the floodgates for more disgruntled patients demanding cash, that has not been my experience. It has also not been the experience of your colleagues.
Don’t kill the messenger. Ultimately, the doctor needs to decide whether or not a partial or full refund makes sense. The point of the article is what one needs to do to be compliant if an insurance carrier made some of the payment.