A scheduled benefit plan is exactly what the name suggests – a health plan with limits to what will be paid for each covered expense. Similar to a comprehensive major medical plan, members typically have a deductible with the plan paying up to each respective limit for covered expenses. In order to determine what will be paid for a covered benefit, many plans base their scheduled payments on Medicare, since it is the most widely accepted index. It is fairly common for the plan and area hospitals to agree on Medicare plus 20%. In other instances, hospitals agree to accept a payment equal to their cost plus a pre-determined margin – perhaps 10% to 15%.
The biggest difference between a scheduled benefit plan, sometimes referred to as a “cost plus” plan and more common PPO plans is that no provider network is involved. While cost plus plans eliminate hospital networks, some may still contract with physician networks.
Years ago, PPO networks offered a real advantage because many providers participated in only one network. Today, it is not uncommon for providers to belong to every provider network in a market, diminishing the real value of a network discount.
Transparency is another factor driving the trend to scheduled benefits. The absence of reliable price information, especially among smaller groups, makes it very hard to identify the real savings in a PPO environment – especially when hospital costs continue to rise.
Beware of Balance Billing
While a scheduled benefit plan can produce significant cost savings, some providers will accept the scheduled payment and then turn around and “balance bill” the patient in an effort to collect the difference between the agreed amount and what they wanted to charge initially. All “cost plus” plans caution members about balance billing and some engage attorneys to negotiate with hospitals on the member’s behalf. This is a great service since few plan participants feel comfortable negotiating with providers.
As studies have long shown, the price for an identical health care procedure performed in the same city can vary greatly, with no difference in quality. As long as these conditions persist, interest in “scheduled benefit” or “cost plus” plans will continue to grow as employers look for ways to better manage the costs and future risks of health care.
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In cooperation with NAEBA