Understanding your insurance benefits – How to read between the lines
Having a baby is a major medical event. One would hope that after all those insurance premiums, this major medical event would be covered. Fortunately, pregnancy and birth are usually part of normal insurance coverage. But what is with those hefty bills you get at the end??? Let’s define some standard terms for a better understanding.
Your first question should be about network participation. If the provider and/or facility participate with your plan, they will be IN NETWORK. What this means is that when billed, the charges will be applied to in-network rates and costs. The network gives the provider a reduced fee for service generally and then the provider gets paid quickly and will be listed in their provider directory. If the provider and/or facility are out of network, then the costs will be higher, or perhaps not covered at all. If you find this is the answer you are given, then ask about your plan itself. Do you have out-of-network coverage? Many plans, especially HMO’s, do not have out-of-network coverage. Those plans that do, such as PPO or POS plans, often have a higher deductible and co-insurance applied to them. This may cost more but it also allows you more flexibility and choices for care. Call Member Services at the number on the back of your card. With the information from your insurance card such as member name, ID numbers, and group number, along with the provider information, they can tell you about network participation.
The next item of business is the deductible. This is the amount that you will have to pay out of pocket before the plan will begin paying your bills. In this day and age, this amount is increasing at record rates as the cost of healthcare increases as well. To make matters more complicated, sometimes maternity care is not subject to deductible at all, but rather preventive care. This varies from plan to plan. But generally speaking, most maternity care is subject to a deductible.
Each year, a deductible will need to be met. Most plans roll over on January 1st, but some plans roll over on a different calendar day, depending on when the employer initiated plan coverage. You should know this information. With long-occurring care such as prenatal care lasting many months, your deductible may roll over in the middle of your pregnancy and you may have to pay two deductibles for some of those services. This often results in substantially higher out of pocket costs overall for the duration of your care.
Next up is co-insurance. Once your deductible is met, the plan will often cost share the remainder of the bills. Some plans do not have co-insurance, but rather pick up 100% after you meet the deductible. Again, each plan is different. For instance, a plan may have a $1000 deductible and then pay for 90% after that. If you are billed $2000 for a service, you would owe $1000 for the deductible and then 10% of the other $1000, which is $100. The total of your bill would be $1100. Make sense?
Out-of-pocket maximum refers to the maximum amount you would have to pay out of pocket each year before they would pick up 100%. Again, I am seeing much higher deductibles and out-of-pocket maximums these days as the cost of healthcare increases. Once the deductible is met, the co-insurance kicks in which then accumulates until it hits this maximum. With large medical events such as maternity care, it’s not uncommon to meet this maximum.
And lastly, family plans often have their own set of rules. Each PERSON will need to meet a deductible, and then a maximum out-of-pocket as well. If multiple people have healthcare during the plan year, often each of those individual deductibles will need to be met but the maximum for the plan may or may not happen with another member and so the maximum out-of-pocket for the second person using the major healthcare benefits may be variable. It’s all about math.
Now, let’s make this all make sense.
Take pregnant person #1. This person has a healthcare plan that has a deductible of $2000, a co-pay of 20%, and a maximum of $6000 out of pocket. If this person has a hospital birth and the costs incurred total $20000 (which, by the way, is the average delivery fee in NH as published in the state), the person would have to meet the $2000 deductible and then 20% of the remaining $18000, or $3600. This totals less than their maximum out-of-pocket of $6000, so they would owe a total of $5600 to the hospital and providers and the insurance would pick up the rest.
Compare this with midwifery care in a birth center. Same person. The cost for a birth center birth and all prenatal care is around $7000. Once they pay their $2000 deductible, the remaining $5000 is subject to the 20% rule, which is just $600. In total, the person would owe $2600 total for their care. Person #1 would save $3000.
Now, let’s add a twist to this. Say this person has a deductible that rolls over on January 1st. Their baby is due in March. One would think that they would have to meet both deductibles for this care. That is partially true. Likely their first visit, any labs they had performed, maybe an ultrasound, and any out-of-the-ordinary visits would be billed to that deductible, but the global fee (see definition later in this article) would be billed to next year’s plan year. So, in essence, they would be likely to meet this year’s deductible with those extra services but still have to meet next year’s deductible with the remainder of their maternity care. They would still owe the full amount to the provider next year, even though the services span two plan years. So yes, they would maybe need to satisfy both deductibles, in part or in whole. Having a baby can become expensive, for sure!
Pregnant person #2 has a high deductible plan of $5000 and a maximum of $10000 out of pocket per year, 20% cost sharing after deductible, and the baby is being born in this plan/calendar year. They have labs performed which cost $900 and two ultrasounds totaling $2600. The bill for global services (birth and prenatal care) comes to the same $20000. They would owe out of pocket for the labs and ultrasounds with a total of $3500 ($900+$2600), meet the rest of the deductible of $1500 ($5000-$2500) and then the remaining 20% would be $3700. This total would be $8700 out of pocket.
$5000 deductible: $3500 for labs and ultrasounds, $1500 for global care
Global care is $20000. $1500 is towards the deductible, leaving $18500 left to satisfy.
Multiply $18500 by 20%, this would be $3700.
Add: $5000 deductible + $3700 cost sharing= $8700
Now, if they received the labs and ultrasounds in the two different years as in the example above, it changes dramatically. The labs and ultrasounds would cost them $3500 in the first year. Then, in January, the plan rolls over. The birth costs that $20000. Now they have to meet the deductible of $5000 and 20% of the remainder for the new year, which is $3000 ($15000 x 20% = $3000). Total for the new year is $8000 plus the total from last year was $3500, meaning that their maternity care in total would be $11,500.
Contrast that with birth center care for the same scenario. The same deductible and maximum out-of-pocket. Year 1 would be the same $3500, but in year 2 when the global fee is billed, the deductible would remain $5000 and the co-insurance at 20% would be $400, making the total out-of-pocket for the maternity care would be $8900. Person #2 would save $2600.
What is a Global Fee?
Maternity care is most often billed as GLOBAL. What this means is that all prenatal care which is routine and customary will be rolled into a lump sum bill that is billed on the day the baby is born. This includes routine prenatal care, labor, birth, and immediate postpartum care. Things outside of this global fee would include things like the initial intake visit with a history and healthcare teaching, any problem visits, laboratory tests, ultrasounds, and postpartum visits. This is driven by the insurance industry and is contractual, meaning, providers MUST bill global unless there is a specific reason that it can’t be. The issue with this case is that most people don’t get a bill for services until long after the baby has been born and the global care has been billed and settled.
I have been asked many times before by people transferring into our care mid-pregnancy- why do I owe you money when the other provider hasn’t billed me anything and hasn’t said that I owe them?
There is a law in the State of NH that requires insurance companies to pay for midwifery services in the birth center setting with midwives. It also clearly states that it can’t be subject to any additional deductible and/or co-insurance, which means that the above rules all apply and at no greater cost to the person. In fact, it is generally less expensive as the total cost of care in a birth center is a fraction of what it is in a hospital. If the provider is billing globally, as is required by insurance companies, the person won’t see a bill until months after the baby has been born. Performing this level of benefits coordination requires time, specialized training, and a commitment to transparency. We believe that families should be involved in their care, coordination of benefits, and decision-making at every level. Most hospital-based practices believe that it is up to the individual person to coordinate their own benefits and know their plan limits and that bills are payable once the baby is born. It truly isn’t their responsibility to understand your benefits. In our effort to remain transparent and helpful, we hope that our education on insurance benefits helps to address some of the regular questions we hear regularly. In the end, the provider does not control the insurance company and their benefits, payments, and rates, but rather, the person has a contract with their insurance provider and thus holds the power in the relationship. I hope this helps to understand a little bit about the complexity of insurance billing and payments surrounding maternity care.