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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.

  1. Surgical Schedule
  2. Reasonable and Customary
  3. 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.

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.


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Section 13.2 Review

insurance limits coverage to specific medical care. insurance can work either as a supplement to a basic plan or as a comprehensive stand-alone plan providing more extensive coverage.


Word bank: Basic Medical, Major Medical

Basic Medical insurance limits coverage to specific medical care. Major Medical insurance can work either as a supplement to a basic plan or as a comprehensive stand-alone plan providing more extensive coverage.

Lesson 13.2Check your answer

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insurance provides coverage for daily room and board and miscellaneous expenses. insurance provides coverage for the cost of surgeons services and the anesthesiologist. insurance provides coverage for office visits and non-surgical care by a physician while hospitalized. insurance provides coverage for private duty nursing care. insurance provides coverage for skilled nursing facility expenses.


Word bank: Convalescent Care Expense, Hospital Expense, Nurses' Expense, Physicians' Expense, Surgical Expense

Hospital Expense insurance provides coverage for daily room and board and miscellaneous expenses. Surgical Expense insurance provides coverage for the cost of surgeons services and the anesthesiologist. Physicians' Expense insurance provides coverage for office visits and non-surgical care by a physician while hospitalized. Nurses' Expense insurance provides coverage for private duty nursing care. Convalescent Care Expense insurance provides coverage for skilled nursing facility expenses.

Lesson 13.2Check your answer

3

In a Hospital Expense Indemnity Plan, if the policy states a daily benefit of $200 and the hospital charges $100 per day, the policy will pay a _____ per day benefit.

a) $100
b) $200
CORRECTTRY AGAIN (Lesson 13.2.1)
Check your answer

4

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. Complete the following sentence utilizing the three different methods of payment.

Under the , every surgical procedure is assigned a dollar amount by the insurer. Under the , surgical expenses are compared to what is reasonable and customary for the geographical part of the country where the surgery was performed. The assigns points to surgical procedures instead of dollar figures.


Word bank: Reasonable and Customary approach, Relative Value Scale, Surgical Schedule method

Under the Surgical Schedule method, every surgical procedure is assigned a dollar amount by the insurer. Under the Reasonable and Customary approach, surgical expenses are compared to what is reasonable and customary for the geographical part of the country where the surgery was performed. The Relative Value Scale assigns points to surgical procedures instead of dollar figures.

Lesson 13.2.2Check your answer