Pet Insurance as an HMO?
I wanted to bring up an important topic, and one that most of you fellow pet owners probably aren’t aware of – or you are, but don’t realize it. What?! Let me explain…
HMO. Managed care. Human healthcare system (US). Sound familiar?
As most of you are aware of, human health insurance companies in the US like to dictate to doctors/hospitals/clinics what they are allowed to charge and subsequently, what the insurance company will pay out.
For example, if you go see a shrink through your healthcare provider, and that shrink usually charges $250 an hour (hmm maybe I’m in the wrong line of business…nevermind.) but the health insurance company says “to get our clients, join our network, but we will only pay you $75 an hour”. The same goes for regular doctor check-ups, emergency room visits, hospital stays, etc.
Ok now that you know what I’m talking about; let’s touch on our veterinary healthcare system. Oh wait, there’s isn’t one…yet.
As pet insurance becomes more popular in the US, many veterinarians are becoming worried that pet insurance will start dictating their prices. That is, the more that people buy into pet insurance to cover their pets, then their pet insurance company says “we will only reimburse you up to $200 for that knee surgery because that is a ‘reasonable cost’”. Well, when you get your veterinary bill for $1,000, what would you do in that situation? I know what I would do “hey veterinarian, why are you overcharging me?” It turns into a debate over who should you trust, veterinarian or pet insurance company? Well, as a representative of a pet insurance company, let me give you what I think is the correct answer: YOUR VETERINARIAN.
There is a reason why they went to school for many years and decided to go into veterinary medicine. They truly like pets. They want to make them healthy. They want to take care of their clients (your pets) and their owners (you).
I’ve seen many comments over the past few months on this blog about benefit fee schedules and people getting upset that their pet insurance didn’t pay out enough, or didn’t pay as much as they were expecting.
By now you’re probably thinking “ok, Melissa, get to the point already”.
Here it is: make sure you understand what your pet insurance company is paying out on. Most pet insurance companies do have some sort of reimbursement schedule or fee guide, whether or not they clearly market it. If you’re okay with getting about 50% of your claim reimbursed, then maybe that’s ok with you. But for most of us, we’re expecting to get the advertised “90% of your costs” or “80% of your veterinary bill” back.
Be wary of things like “usual and customary fees” or “reasonable costs”. Ask the question “Do you pay out based on what my veterinarian actually charges?”
Now, for those readers who haven’t yet gotten pet insurance or ran into the problem above, could the rest of you please share your horror stories? Did you think you would get $700 back but actually ended up only getting $300?
I have saved thousands with pet insurance. It is not cheap, but either is veterinary care. It works like a PPO. Ours through Pet’s Best pays 80/20…but for recurrent illnesses, 100% is covered, for life!
Here is the thing. I am not the one sitting in the vet’s office having to make the heartbreaking decision, because I cannot afford lifesaving care. Pet’s Best will elven send reimbursement directly to the vet. If you have a relationship with your vet, and you are strapped, I cannot imagine him not working with you and the insurance.
As as aside. I have known vets that overcharged. I have known human doctors that have done the same. Just because someone is in the medical field, does not automatically mean they have integrity.
Most insurance, human or pet pays “reasonable cost”…it is right in the policy.
Thanks for your comment and sharing your experience. Many policies do have the “reasonable cost” wording, and that is exactly what veterinarians are afraid of. It is possible that some vets overcharge for their residential area, but why should an insurance company get to determine what that “reasonable” amount should be?
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Melissa,
Great topic! As you know, virtually every pet insurance policy from every company has “reasonable and customary” printed in their policies. Each company has a fee schedule of some kind (most use the AAHA Fee Reference Guide that is published every 2 years) that they can use to determine if what a veterinarian charges is more than the usual for any given geographical region of the country.
There are several companies that actually strictly apply these fees when they calculate reimbursements to pet owners. Most of the newer companies like Trupanion, however, usually pay according to whatever the pet owner’s veterinarian charges. I have been told by executives of these newer companies that the fee schedule (reasonable and customary) would only come into play if a certain fee seemed extremely inappropriate (out of line). Even then, they are likely to contact the veterinarian to determine if there were circumstances that would justify the higher fee. Therefore, you are indeed right to advise the pet owner to ask how a company calculates benefits because it will definitely make a difference in how much they get reimbursed.
But, it is important for pet owners to understand why fee schedules can be misleading. In fact, fees not only vary from one region of the country to another, but from one hospital to another in the same city.
For example, we have two specialty/emergency hospitals in Memphis. If a pet is treated at one of these facilities, the fees will be higher because specialists have more training, use higher technology e.g. CT scans, MRIs, solve more difficult problems and usually the pet receives treatment around the clock.
Also, the costs of repairing a fractured femur will vary greatly depending on whether the bone is in 2 pieces or 10 pieces and whether it was repaired by the pet owner’s regular veterinarian or referred to a specialist. So, fee schedules may not account for these variables.
I think that the newer companies are aware of the criticisms that some of the older companies have gotten over the years from pet owner when their reimbursements didn’t match their expectations because the company paid benefits based on a benefit or fee schedule. Therefore, they have decided to pay benefits based on what the veterinarian charges.
From my research, it appears that the newer companies that pay according to what the veterinarian charges have premiums that are very competitive with and sometimes even less than those who pay strictly according to a benefit or fee schedule.
Dr. Kenney,
Thank you so much for your post, as I’m sure everyone else appreciates, as much as I do, the veterinarian perspective. Your point about the leg fracture is one that I wasn’t even aware of, but makes total sense. I had the basic knowledge that “chemo treatment”, for example, could vary tremendously from patient to patient costing the pet owner any range of money. Making the benefit fee schedules incredibly irrelevant.
Again, thank you so much for jumping in here!
We had a “scheduled” plan before and it was terrible — VPI Pet Insurance. I prefer the way Go Pet Plan works in which they just cover 80% of the charges. This is fair. I haven’t submitted a claim yet to review their claims payment service.