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?
