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Understanding How Aetna Pays for Out-of-Network Benefits

Jul 20, 2009

Aetna negotiates rates with doctors, dentists and other health care providers to help members save money. Aetna refers to these providers as being "in the network."

Some of the plans pay for services from providers who are not in the network. Many of those plans pay for out-of-network services based on what is called the “reasonable,” “usual and customary” or “prevailing” charge. Here is how Aetna figures out that charge.

Step 1: Aetna reviews the data
Aetna gets information from Ingenix, which is owned by United HealthCare. Health plans send Ingenix copies of claims for services they received from providers. The claims include the date and place of the service, the procedure code, and the provider’s charge. Ingenix combines this information into databases that show how much providers charge for just about any service in any zip code.

Example: Providers’ charges for removing an appendix are grouped into percentiles from low to high. The higher charges are grouped into the higher percentiles. Charges that fall in the middle are grouped in the 50th percentile. Here is a simplified illustration of a percentile chart for an appendectomy for one zip code:

Percentile Appendectomy
50th $1650
60th $1650
70th $1800
75th $2508
80th  $2625
85th $3110
90th $3110
95th  $3400

Step 2: Aetna calculates the portion Aetna pays

For most of the health plans, Aetna uses the 80th percentile to calculate how much to pay for out-of-network services. Payment at the 80th percentile means 80 percent of charges in the database are the same or less for that service in a particular zip code.

If there are not enough charges (less than 9) in the databases for a service in a particular zip code, Aetna may use “derived charge data” instead. “Derived charge data” is based on the charges for comparable procedures, multiplied by a factor that takes into account the relative complexity of the procedure that was performed. Aetna also uses "derived charge data" for the student health plans and Aetna Affordable Health Choices® plans.

Step 3: Aetna refers to the health plan
Aetna pays the portion of the prevailing charge as listed in the health plan. Members pay the portion (called “coinsurance”) and any deductible.

Sometimes what Aetna pays is less than what the provider charges. In that case, the provider may require members to pay the difference. This is true even if members have reached the plan’s out-of-pocket maximum.

Example: Members use a doctor who is not in Aetna’s network. The doctor charges $120 for a service. The doctor sends the claim to Aetna. The plan covers 70 percent of the “reasonable,” “usual and customary” or “prevailing” charge. Let's say the prevailing charge is $100. And let's say members already met the deductible. Aetna would pay $70. Members would pay the other $30. The doctor may bill members for the $20 difference between the prevailing charge ($100) and the billed charge ($120). In this case, the doctor could bill members for a total of $50.

Aetna may consider other factors to determine what to pay if a service is unusual or not performed often in the area. These factors can include:

Please note that this general description does not apply to every case. Some plans set the prevailing charge at a different percentile. For some claims (like those from hospitals and outpatient centers) Aetna may use other information and data sources to determine the charge. And not all the plans use Ingenix. (Medicare plans and plans that pay based on fee schedules are examples.)

The provider claims coding and reimbursement policies may also affect what Aetna pays for a claim. These policies will be shown on the Explanation of Benefits documents.

The New York State Attorney General (NYAG) investigated the conflicts of interest related to the ownership and use of Ingenix data. Under an agreement with the NYAG, UnitedHealth Group agreed to stop using the Ingenix databases when an independent database (not owned by a health insurer) is created.

In a separate agreement with NYAG in January 2009, Aetna agreed to use this new database when it is ready. Aetna also will work with the new database owner to create online tools to give members better information about the cost of the care when using providers outside the network. Most importantly, members can ask the provider what a service will cost and find the prevailing charge for that service.

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