California Brokers – SBG/LG Amendment to EOCs – Maximum Allowable Amount Update
Effective September 15, 2016
Approximately 7,000 members will receive the following letter/amendment.
Maximum Allowable Amount is the amount on which Health Net bases its reimbursement for Covered Services and Supplies received from an Out-of-Network Provider, which may be less than the amount billed for those services and supplies. Health Net calculates Maximum Allowable Amount as the lesser of the amount billed by the Out-of-Network Provider or the amount determined as set forth herein. Maximum Allowable Amount is not the amount that Health Net pays for a Covered Service; the actual payment will be reduced by applicable Coinsurance, Copayments, Deductibles and other applicable amounts set forth in this Evidence of Coverage.
- Maximum Allowable Amount for Physician services is determined by applying a designated percentile from the database of Physician charges from the FAIR Health RV Benchmarks or a similar type of database of Physician charges.
- For all other types of services received from an Out-of-Network Provider which is not a Physician (including, but not limited to Hospital, Skilled Nursing Facility, Home Health Agency, Residential Treatment Center, dialysis center, for outpatient surgery or for medical care received during foreign travel or work assignment, as described under Miscellaneous Provision section of this Evidence of Coverage), Maximum Allowable Amount is determined by applying a percentage of what Medicare would allow (known as the Medicare allowable amount). The Maximum Allowable Amount for such services is 190% of the Medicare allowable amount. In the event there is no Medicare allowable amount for a service, Maximum Allowable Amount is calculated using a method developed by Data iSight, a data service that applies a profit margin factor to the estimated costs of the services rendered by the Out-of-Network Provider, or a similar type of valuation service.
- In the event Maximum Allowable Amount cannot be determined using methodologies described above, Maximum Allowable Amount shall be deemed to be 75% of the covered charges billed by the provider. The Maximum Allowable Amount determined under the databases described above may be more or less than 75% of the amount normally charged by the provider for the same services or supplies.
- The Maximum Allowable Amount may also be subject to other limitations on Covered Expenses. See the “Schedule of Benefits and Copayments – SELECT 2 and SELECT 3,” “Covered Services and Supplies,” “Certification Requirement,” and “Exclusions and Limitations” sections for specific benefit limitations, maximums, pre-certification requirements and payment policies that limit the amount Health Net pays for certain Covered Services and Supplies. Health Net uses available guidelines of Medicare and its contractors, other governmental regulatory bodies and nationally recognized medical societies and organizations to assist in its determination as to which services and procedures are eligible for reimbursement.
In addition to the above, from time to time, Health Net also contracts with vendors that have contracted fee arrangements with providers (“Third Party Networks”). In the event Health Net contracts with a Third Party Network that has a contract with the Out-of-Network Provider, Health Net may, at its option, use the rate agreed to by the Third Party Network as the Maximum Allowable Amount, in which case the member will not be responsible for the difference between the Maximum Allowable Amount and the billed charges. The member will be responsible for any applicable Deductible, Copayment and/or Coinsurance at the Out-of-Network level.
In addition, Health Net may, at its option, refer a claim for Out-of-Network Services to a fee negotiation service to negotiate the Maximum Allowable Amount for the service or supply provided directly with the Out-of-Network Provider. In that situation, if the Out-of-Network Provider agrees to a negotiated Maximum Allowable Amount, the member will not be responsible for the difference between the Maximum Allowable Amount and the billed charges. The member will be responsible for any applicable Deductible, Copayment and/or Coinsurance at the Out-of-Network level.
In the event that the billed charges for the Out-of-Network Provider are more than the Maximum Allowable Amount, except where the Out-of-Network Provider’s fee is determined by reference to a Third Party Network agreement or the Out-of-Network Provider agrees to a negotiated Maximum Allowable Amount.
Please note that whenever the member obtains Covered Services and Supplies from an Out-of-Network Provider, The member is responsible for applicable Deductibles, Copayments and Coinsurance.
For more information on the determination of Maximum Allowable Amount, or for information, services and tools to help the member further understand their potential financial responsibilities for Covered Out-of-Network Services and Supplies please have the member log on to www.healthnet.com or contact Health Net Customer Service at the number on their Member identification card.
Click here to view a sample of the Amendment.
Click here to view a sample of the Cover Letter.
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