Consumers to Get $1 Billion in Health Insurance Rebates

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By PARIJA KAVILANZHealth rebates insurance

NEW YORK (CNNMoney) -- Health insurers will dole out a total of $1 billion in rebates to 12.8 million Americans this summer -- an average of $151 per family --as a result of the 2010 health care reform law, the government said Thursday.

The rebates announced by the Department of Health and Human Services come from a provision of the law that punishes insurers who spend too much of policyholders' premiums for boosting company profits instead of paying for their medical care.

The rule mandated that, beginning in 2011, insurance companies would have to spend 80% to 85% of the premiums they collect on medical care instead of toward their own profits and overhead costs.

Insurers that didn't increase that allotment to the new federal standard would have to give customers a rebate for the difference beginning in 2012.

HHS said insurance companies that failed to meet the required "medical loss ratio" must provide a rebate for the difference to their customers no later than Aug. 1.

"The rule helps ensure consumers get fair value for their health care dollar," HHS Secretary Kathleen Sebelius, said in a statement.

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Consumers to Get $1 Billion in Health Insurance Rebates

This one could be an innocent mistake. There are many departments within a hospital, and it can be difficult for each one to know what the other is putting on the tab. For example, the hospital may charge for your anesthesia, and the anesthesiologist might charge you again. A quick review of your bill should reveal mistakes like this.

If you can, pay attention at the hospital (or designate somebody else) to make sure you only get billed for services actually provided. Sometimes the slip-ups are easy to overlook, like being charged for an extra dose of antibiotics that was never actually administered.

This is another easy one for the average person to miss. You may be diagnosed and treated for the flu, but charged for treatment of bronchitis. A quick Google search can help you verify the codes on your bills.

When Goldstein first started looking over his daughter's bills, this was one of the first things that stood out to him. "When I looked at my bill for my daughter, the operating room charge was $7,400. I thought that was excessive for a 20-minute procedure. The hospital tried to justify the cost by stating that it took an hour and a half to reset my daughter's leg, which means they charged me for the time it took to prepare and set up, which they are not allowed to do." The physician fee schedule search tool at the Centers for Medicare & Medicaid Services website provides payment rates to use for comparison purposes.

This is a tough one. Most doctors are independent contractors, not hospital employees. So while you may go to an in-network hospital, it's not uncommon for an out-of-network doctor to treat you. Unless you ask, you have no way of knowing up front. In emergency situations, asking your doctor what insurance he accepts is likely the last thing on your mind. But if you or someone you are with has the presence of mind to ask, your savings account may thank you for it later.

Excessive hospital billing practices will continue unless consumers get smart about examining and questioning the cost of care.

According to Goldstein, "Less than 15% of patients ask if their bill can be lowered. Of those who do ask to have their bill lowered, approximately 40% receive a discount."

Goldstein's advice: Don't pay any medical bill until you have had a chance to try and negotiate for a lower fee. And if you find fraudulent charges on your bill, it's your right to speak up. The more people who do, the more difficult it will become for unfair billing practices to continue.

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HHS said consumers owed a rebate could get it as a check in the mail, a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card, or as a reduction in their future premiums.

For affected policyholders who are insured through their employers, their companies could provide them with the check or reimbursement, or employers could apply the rebate in another manner that benefits their employees, the agency said.


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