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Five ways your medical insurance defines deductible

If Merriam-Webster had anything to do with it, the concept of a deductible would be simple — the "amount of money that you have to pay for something (such as having your car fixed after an accident) before an insurance company pays for the remainder of the cost".

With Washington state health insurers though, it turns out things are a lot more complicated. This past year, while making a difficult recovery from knee surgery, I've been encountering these complexities. Here's how the system works:

1) Deductible Double-Standards

Even though the marketing materials for healthcare plans traditionally promote one deductible, there are often actually two deductibles. This year I opted into Lifewise’s $1,000 deductible Gold plan. Here’s the thing though: That $1,000 deductible only applies when I visit medical professionals in the Lifewise network.

When I visit professionals outside the network, even if they are licensed by the State of Washington, I have a fully separate $2,000 deductible. Therefore, my $1,000 deductible plan actually has $3,000 of deductibles. Some plans are worse: The Bridgespan $1,000 deductible plan has $6,000 in combined deductibles. By design, HMOs such as Group Health and Ambetter provide no coverage at all for out-of-network providers; their out-of-network deductible is infinity.

Side note: Even Lifewise itself can't keep track of which doctors are in- or out-of- its network. Though their Explanation of Benefits (EoB) says that the UW Medical Center is in-network, when I visited a doctor there, my payment was applied to my out-of-network deductible. A follow-up phone call revealed that the UW Medical Center is, actually, out-of-network.

One downside of the Affordable Care Act (ACA) is that insurers are now even more restrictive of who they allow into their networks. A handful of providers have told me that insurers purposely limit entry to their network in order to reduce expenses. Seattle's Children's Hospital is even suing the state Office of the Insurance Commisioner because only two of seven plans on the state exchange include it in their network.

When it comes to auto insurance, Washington state law requires insurers allow you to repair your car at the vehicle repair shop of your choice. There's no such freedom with health insurance.

2) Limits on the Number of Visits that Override Your Deductible

Amazingly, even once you’ve met your deductible, insurers can completely set aside your coverage if you exceed visit limits in certain categories of treatment. For example, my current plan provides no coverage for physical therapy after 25 visits — even if my in-network deductible is satisfied.

In other words, if you're hit by an uninsured driver, you get 25 visits of physical therapy and then nothing until you’ve hit the new ACA out-of-pocket limit of $6,350. For those keeping track, that’s $5,350 you’ll have to pay yourself — in addition to the $1,000 deductible you already paid. And, as I'll describe below, many costs you would incur wouldn't count towards the limit, they'll be paid completely out-of-pocket.

Washington state's interpretation of the ACA set a minimum number of physical therapy appointments insurers are required to provide (which actually increased my insurer's visit limit by five). Still, the free marketplace hasn't yet unearthed any insurers that offer a more competitive plan without visit limits. (Don't worry, I'm sure Libertarians are right about other things.)

3) Copays Don't Count Towards Your Deductible

Most Washington insurers require a copay for some provider visits as well as prescription drugs. For example, my plan often requires a $30 per visit copay — 25 percent of a typical $120 medical visit. Copays don't count towards your deductible at all. Don't ask me to explain which visits require copays and how much they are. No matter who I ask, it remains one of life's little mysteries.

Note: You can minimize the impact of copays by shopping around a bit. Bridgespan, for example, has fewer and smaller copays, mostly for prescription drugs.

4) You're Still Responsible for Costs Beyond Your Deductible

Did we say deductible? We meant sort of a partial "deductible". Even after I pay my copay and meet my in-network deductible, Lifewise only pays 80 percent of medical bills. Most other Washington state insurers offer similar plans ranging between 70 and 95 percent coverage.

Math lesson: When the insurer pays 80 percent of costs beyond your deductible, they are actually only covering 80 percent of the 75 percent left after your copay — or what mathematicians might call 60 percent.

Like everything else, the coverage drops even lower when you’re visiting out-of-network medical providers. My insurer pays only 50 percent of costs beyond my deductible. And again, HMOs such as Group Health pay nothing for out-of-network.

The insurers have a friendly-sounding name for this, it's called coinsurance. If copays ensure I have "skin in the game" to self-regulate my use of expensive healthcare services, coinsurance makes sure I have an arm and a leg — or an organ — in the game.

5) Only Allowed Charges and Amounts Count Toward Your Deductible

If healthcare providers perform an uncovered procedure or charge beyond your insurer's allowable rates, you are responsible for paying that cost out of pocket — and it doesn't apply to your deductible. Even after you surpass your deductible, these costs are not covered.

For example, a specialist I see charges $185 for a 90 minute visit. Lifewise only allows $60 of this visit to count towards my deductible, I pay the remaining $125 completely out of pocket on every visit. I've stopped even submitting these invoices in order to preserve my visit limit for services that are covered at a higher rate.

In all of this, the insurer controls the math. During a recent call with Lifewise, it became clear that not even the customer service agent understood why many of my claims had been classified as out-of-network or, in some cases, not covered at all.

At one point she said that coverage rates will often depend on the contracts between Lifewise and the provider, which billing codes were used by the providers and what licensing the provider has. Lifewise doesn't release any of this information to its insured — it's a black box.

What is going on here?

In order to try to understand who's responsible for this system, I spoke to Media Relations Manager Stephanie Marquis and Senior Health Policy Advisor Emily Brice at the Washington State Office of the Insurance Commissioner (OIC) and Rep. Eileen Cody, Chair of the Healthcare and Wellness Committee in the Washington State Legislature.

The OIC is tasked with protecting consumers and making sure that insurers and their policies comply with the law. Marquis pointed me to the Legislature's definition of Essential Health Benefits (EHB), which insurers are required to implement in their policies.

The ACA required the Legislature base the EHB definition on a typical employer plan; it used the 2012 Regence Innova plan. Unfortunately, Washington's health insurance market has had limited competition for much of the last decade — it has essentially been an oligopoly — so none of the plans were very consumer friendly.

Another problem: Because the EHB legislates at a fairly high level, issues such as whether visit limits can override deductibles are left ambiguous.

While the OIC is taking action to ensure that insurers' provide adequate access to care, it focuses much of its energy, admirably, on trying to make the current plan offerings more transparent to consumers. Rep. Cody pointed me to a non-profit study on State Healthcare Pricing Transparency. Most states, including Washington, received an F.

When I said to Rep. Cody that it seemed that the system was rigged to favor the insurance companies, she said, "I won't argue with that."

Both OIC and Rep. Cody agreed that the agency would need more direction from the Legislature to reform these policy structures. Brice suggested that the Legislature could eliminate the visit limit restrictions, although doing so could conceivably leave the state liable for additional costs incurred by the insurers under ACA rules.

Or the Legislature could prohibit insurers from setting separate deductibles for out-of-network vs. in-network providers, though Rep. Cody didn't think that the Legislature is currently considering reform in this area.

One alternative to wrestling insurance companies over provider networks and misleading deductibles would be for the state to regulate the amount they cover for specific patient care procedures, regardless of network. That would allow clients of most providers — aside from HMOs such as Group Health — to visit any licensed healthcare provider and receive clear, consistent and fair coverage.

For the most part, Rep. Cody said she "hasn't heard much from people" about the issues I raised. When I asked if she thought consumers were generally happy with their plans or just feeling powerless to affect change, she said the latter. Both Marquis and Brice at OIC expressed that they need to hear more from consumers. You can file a complaint online at OIC's website; based on my discussions with them, I filed two for some of the problems I've described.

Marquis said that Washington State Patient Bill of Rights offers patients the right to appeal the decisions of their insurance company, perhaps in my case even appealing medically necessary physical therapy that had exceeded my plan limit. However, in reviewing the online materials, I saw no basis for appealing coverage beyond the visit limits.

It's unrealistic to expect consumers to complain about the defined structures of these plans, as they've been approved by the Legislature and by OIC. We're like goldfish in a bowl of water with no idea that air exists.

The plans as designed are not only unfair to consumers, but marketed and implemented in a confusing manner. I laughed out loud when Lifewise wrote me to exclaim that they'd designed a clearer, more transparent Explanation of Benefits. Their new EoBs seemed even more confusing.

Halfway through 2014 on my Gold $1,000 deductible plan, I've spent $2,275 on premiums and more than $3,540 out-of-pocket on deductibles and medical expenses. Even though I've now met both my deductibles, I'm near my visit limits on physical therapy for my knee and will likely be paying out-of-pocket for in-network care for much of the remainder of the year.

Given my discussion with Rep. Cody and the OIC, I don't expect things to change anytime soon.

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