How Hospitals Get Paid for Medical Care: A Behind-the-Scenes Look at Insurance and Reimbursement
How Hospitals Get Paid for Medical Care: A Behind-the-Scenes Look at Insurance and Reimbursement
Understanding how hospitals get paid for medical care can be complex, but fascinating. In this article, we delve into the intricate process, from the initial insurance coverage to the final payment. We also take a closer look at how different payment sources—insurance companies, Medicare, Medicaid, and employers—play a role in making sure that patients receive the medical care they need. This behind-the-scenes look is based on firsthand experience working at the US office of a major travel insurance company, Mondial Assistance.
The Role of Insurance Companies
Insurance companies are a primary source of payment for medical care. They are responsible for verifying that the claims submitted by hospitals and other healthcare providers are legitimate and, if covered, they process the claim and submit payment. In my previous role at Mondial Assistance, a large travel insurance group based in France, we would often handle medical claims for our insured clients who had an accident or illness while traveling in the USA.
Other Payment Sources: Medicare, Medicaid, and Employers
Other major payment sources include:
Medicare: A federal health insurance program for people aged 65 and older, as well as certain younger people with disabilities. Medicaid: A joint federal and state program that helps with medical costs for people with limited income and resources. Employers: Many employers offer health insurance to their employees as part of a total compensation package.The Billing Process
The billing process for hospitals is complex and involves several steps:
Initial Treatment: The patient receives medical care, and the hospital generates a bill for the services provided. Insurance Verification: The hospital sends the bill to the insurance company for verification and approval. During this stage, the insurance company checks if the services are covered under the patient's policy. Claim Submission: If the claim is approved, the hospital submits the claim to the insurance company for payment. Payment and Reimbursement: Once the claim is processed, the insurance company pays the hospital for the services rendered. The hospital may also bill the patient for any remaining balance that is not covered by the insurance.The Role of Travel Insurance Companies
As part of my work at Mondial Assistance, I was involved in paying medical bills for insured clients during their travels. This included obtaining medical reports to verify expenses, auditing hospital bills, and even arranging air ambulances or shipping a deceased person back home. The reimbursement and fee were provided by our home office after they sold the travel insurance policy to the insured.
Challenges and Considerations
One challenge in the payment process is the varying value of insurance policies. Basic policies often covered around 7-8K USD, which is not sufficient for comprehensive medical care in the USA. This can create a pressure for healthcare providers to seek additional compensation beyond the insurance limits. It is important for patients to understand the extent of their coverage and the steps they need to take to ensure that they receive all possible benefits under their insurance policies.
Conclusion
Understanding the intricacies of how hospitals get paid for medical care provides important insights into healthcare financing in the United States. This process involves numerous stakeholders, including patients, insurance companies, Medicare, Medicaid, and employers. By demystifying these processes, patients can take a more active role in managing their healthcare and financial responsibilities.