What is a deductible?

A deductible is an amount of money that you are required to pay out of pocket each year before your health insurance company will begin to pay for items and services you receive.

Why are my out of pocket expenses continuing to increase?

Most employers are forced to increase the amount of the deductible you are responsible for in an effort to maintain the overall cost of the policy.  The more cost the insurance company can shift to the members in the form of deductibles and co-payments the lower the premium they can charge for the plan.

What is the difference between a co-payment and a deductible?

A co-payment is established by the plan as part of the benefit package and is a fixed amount depending upon the service provided.  An example of a co-payment would be the amount you have to pay when you go to your primary care doctor for a visit.  You may have a different co-payment for a visit to a specialist or an emergency room.  This payment will remain the same at each visit.  A deductible will vary depending upon the service being performed and the amount your insurance company would normally pay for that service.

Why would I have to pay a deductible expense?

When you have a service such as a lab test done a claim is sent to your insurance company for payment.  If you have not met your deductible, which means you haven't paid the amount you are required to pay out of pocket before your health plan will begin paying, the cost of the test is applied to your deductible.  You are then required to pay for the test yourself.  You will continue to pay for items and services until you have paid out an amount equal to your deductible.  Your health plan will then begin to pay.

What determines how much I pay towards my deductible when a claim is not paid?

The amount you pay towards your deductible is determined by the amount your insurance company would have paid the supplier of the service if your deductible had been met.  This means if you had a lab test and your insurance company would normally pay the lab $10.00 for the test you have to pay $10.00.  The $10.00 is then subtracted from your deductible amount.

What is the advantage of me using an independent provider such as East Side Clinical Laboratory instead of a hospital affiliated lab?

The advantage of using an independent provider such as East Side Lab instead of a hospital affiliated lab is that your deductible payment will be less.  The reason it will be less is because independent providers typically charge and are paid less than hospital labs for the same services.  Since the independent provider is paid less the resulting charge to you for your deductible payment is less as well.

If I have a certain amount to pay as a deductible before my insurance plan will pay for services why does it matter where I have my services performed?

The reason it matters is because by using the lower cost provider you will ultimately pay less out of pocket.  Let's say you have an annual deductible of $500 and you need a certain test done on a monthly basis.  If you use an independent provider that would normally be paid $10.00 for the test you would end up paying $120.00 over the course of the year for those tests.  If you were to use a hospital affiliated lab that was normally paid $40.00 for the test you would end up paying $480.00 over the course of the year for the same tests.

Why are hospitals paid more than independent providers?

Hospitals are paid more than independent providers because hospitals generally have more negotiating power with the insurance companies. *  Insurance companies must have the hospitals in their provider networks in order to operate their plan and be able to offer all the services only a hospital can provide.  The larger the hospital or hospital network the more negotiating leverage they have with the insurance companies and the higher fees they can demand.

   * See Insurance Commissioners report at http://www.ohic.ri.gov/   Titled: Variations in Hospital Payment Rates by Commercial Insurers in RI  Janurary 7, 2010

Why are hospital charges so much higher than independent providers' charges?

Hospital charges are higher because they have much higher overhead (operating) costs and these higher costs are passed on to the consumer in the form of higher charges.  These higher charges may be warranted for testing and services provided in the hospital but there is no reason these higher costs should be passed on to services performed in the community at large.

Is there any difference in the quality of the testing done by independent providers?

No. The quality of the testing is the same.  All independent providers must be licensed and meet the same high quality standards as those imposed on the hospitals.  We all utilize state of the art equipment, employ licensed personnel to perform the testing and are certified by accrediting agencies.  Unless a facility meets all of these requirements they are not allowed to remain in business.

How could using independent providers lower the cost of health care in general?

Using independent providers instead of hospital affiliated providers for services such as lab, x-ray and therapy could lower the overall cost of health care because the independent providers receive on average lower payments from your insurance company.  These lower payments will decrease the overall amount your insurance company has to pay for the same number of services and this will help to keep the cost of your health insurance premiums and those paid by your employer lower.