13.2.2 Basic Surgical Expense
Basic Surgical Expense plans cover the cost of a surgeon's services whether the surgery is performed on an inpatient basis or on an outpatient basis. These plans follow three different methods.
- Surgical Schedule
- Reasonable and Customary
- Relative Value Scale
Under basic surgical expense policies, the surgeon's services are covered and it doesn't matter if the surgery was performed in or out of the hospital. Included in this coverage are the anesthesiologist and any postoperative care.
Surgical Schedule Method
Under the Surgical Schedule method, every surgical procedure is assigned a dollar amount by the insurer. A similar concept is used in the HMO methodology wherein a CAP is placed upon expenses; except that there is no deductible. The patient can be billed for the difference between the cost allotted and the cost charged.
Reasonable and Customary Approach
The Reasonable and Customary approach is the most commonly used method. Under this approach, surgical expenses are compared to what is reasonable and customary for the geographical part of the country where the surgery was performed rather than stating a specific dollar amount.
For instance, an appendectomy may cost approximately $2,000 in a small town in Kansas and the same procedure may generally cost $5,000 in New York City. The reasonable and customary charge for this procedure in the Kansas area would be $2,000 and if the cost presented by the hospital was $5,000, the policy would still pay only the $2,000.
Relative Value Scale
The Relative Value Scale assigns points to surgical procedures instead of dollar figures. For instance, setting a broken finger would naturally carry fewer points than a surgical procedure on the hand would. The dollar figure depends upon the conversion factor which assigns a specific dollar figure to the points.
For example, if the conversion factor is $10 per point and setting the broken finger is worth 10 points, then the plan would pay $100. If the surgery on the hand carries 100 points, then the plan would pay $1,000.
Basic surgical insurance plans provide coverage for the following expenses.
- Anesthesiologist services
- Surgeon services
- Postoperative care
- Surgical Schedule (every operation is assigned a dollar amount)
- Reasonable Customary Approach (geographical information is used to determine price)
- Relative Value Scale - Similar to surgical schedule; however, instead of assigned dollar amounts, it operates on a point scale - Price is determined by the conversion factor
Basic Physicians' (Nonsurgical) Expense
The Basic Physicians' Expense policy covers doctors' visits while the insured is hospitalized for a nonsurgical reason based on the indemnity approach. Typically, x-rays, drugs, and dental treatment are excluded.
