Plastic Surgery and Your Insurance Company

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Plastic Surgery and Your Insurance Company
Plastic Surgery Interactive

A patient comes to the office looking to have a breast reduction. This is one of the few plastic surgical procedures that insurance companies frequently cover (with restrictions). The difficulty (at least in the State of California) is that often the patient's share of cost when the procedure is done via the insurance company is often very close to (or sometimes more than) the price if she had paid cash for it. To ellucidate upon the confusing terrain of medical insurance is a "hit-or-miss" proposition, but here we go......

Defining Insurance Coverage
Medical insurance has gone through several phases in its lifetime. Most recently, the indemnity type plans (fee for service) have been becoming scarce and the HMO (Health-Medical Organization) types have been taking hold. In some areas of Southern California, HMO coverage represents nearly 90% of all those covered by health insurance. As most people know, the tendency of an insurance plan to cover a particular medical problem relates to the type of plan (just read the exclusions on some of them). The fact that many insurance companies offer up to twenty different plans of course makes the problem more difficult. The (first) problem is: WILL MY INSURANCE COVER THIS?

Unfortunately, it is not this simple. A "Yes" or "No" answer on the part of your insurance company will not solve the problem entirely.

The second (and often more difficult to define) issue is: WHAT EXACTLY DOES MY INSURANCE PAY? and the related question: WHAT DOES MY DOCTOR ACCEPT AS PAYMENT IN FULL?
The Big Picture - The Surgeons' Fee and It's Rate
Insurance companies rate services based upon a coding system. As most plastic surgery occurs on the skin or superficial structures, the rates are on the low side. The best way to think about this may be that your insurance company cares about "medically-necessary" surgery. Anything that makes you look better afterward is often not covered or poorly covered.

When you doctor performs a service (office visit or surgery) he bills a code to your insurance company. He assigns a rate to it. Your insurance company will only pay up to their rate for that service. There's the first problem. Medical insurance companies on average pay 33-50% of my charges. They take the "uncovered" amount as a discount. This is in cases in which they deem the service as "covered."

Many surgeons drop "contracted" or Provider status with insurance companies, so that they are not legally bound to these outrageous discounts. After all, name a business that can stay afloat on an average of 33-50% of its charges?

In my practice, this frequently makes the patient responsible for part of the excess amount not paid by insurance. I almost always (excluding Emergency Care) give a discount to patients with insurance companies for which I am not a Provider. Your surgeon's "Provider status" with your insurance company is something about which to inquire before you have that surgery. If your surgeon is not a Provider, you might want to inquire as to your share of cost beforehand.

Another point here is that the surgeon's fee in cash and insurance cases is usually not the same. This reflects the cost of having a billing company bill and keep track or insurance payments. Insurance companies most often do not pay the entirety of a surgeon's fee. We end up disputing it over the course of months. This costs money as employees do this. After a while, we hand it over to the patient. The time between billing and collecting (three to six months) also adds to the cost.

Take into account that in your case an Operating Facility, Anesthesiologist, Pathologist and/or Assistant Surgeon might also be involved.

The bottom line here is that things will get more confusing if you decide to try to get the insurance company to cover your breast reduction (or any other) operation. You will not be able to get a global fee in most insurance cases as each individual of the five above mentioned may bill you separately. If your insurance company denies to pay any of them, then you will be billed. Your insurance company may not pay them adequately in which case you may be billed for the balance.

When Surgeons Offer The Surgery On A Cash Basis, What Changes?

Usually, the surgeon's office offers a global fee in this case meaning that all the above fees are covered.

How can they do this? Simple.

The surgeon gets together with the pathologist, anesthesiologist and assistant surgeon. All four of them would really rather avoid the costs and delays of billing an insurance company (not to mention the potential that they will not get paid when billing the insurance company). They come up with discounted Cash rates which are bundled into the global fee.

The procedure is performed (as long as the health of the patient is OK) in a surgical facility, which also has cash rates.

Hopefully this has been helpful.

- John Di Saia, M.D.

P.S. This breakdown assumes that your insurance company has agreed to pay for the surgery in question. Sometimes they will deny it before it gets to this point. Other times they will deny it in retrospect even after they may have approved it in the first place. Go figure.