Exclusions and Cost Containment | Medical Expense Insurance

Exclusions

Common exclusions in most ACA-compliant medical expense insurance policies include:

Custodial care in nursing homes
Dental care, unless required due to a covered accident
Vision care
Sickness or accident covered by workers’ compensation
Hearing aids
War-related injury
Intentionally self-inflicted injury
Injury sustained while committing a crime
Cosmetic surgery
- Elective cosmetic surgery isn’t an insurable expense. The only exception is in rare cases where it’s required under a physician’s orders.
Care in a government facility
- Government facilities are operated as an expense of the government, and treatment is provided at the government’s expense.

Medical expense insurance exclusions

Cost containment

Most medical expense policies include a coordination of benefits provision. This provision applies when an insured is covered by more than one policy:

One policy is primary (it pays first).
The other policy is excess (it pays after the primary policy’s benefits are exhausted).

Coordination of benefits reinforces the principle of indemnity by preventing the insured from collecting more than the actual loss.

Sidenote

Know this...

If a married couple has a child who is covered as a dependent on both parents’ group plans, the parent whose birthday falls first in the calendar year will be the primary insurance.

As health care costs rise, more policies include administrative controls designed to contain costs. These are commonly called utilization management provisions.

Utilization management uses specific criteria to review whether care is appropriate. Reviews can be performed on a:

Prospective basis
Concurrent basis
Retrospective basis

Cost containment policies

Prospective review

Also called pre-certification. This may require the insured to obtain a second surgical opinion before elective surgery, or require a doctor to verify in advance that hospitalization is necessary and recommend outpatient treatment when possible.

Concurrent review

Involves consultation with the provider while treatment is being delivered, with the goal of lowering costs. Some plans require the use of ambulatory services or require insureds to use outpatient services instead of hospitalization.

Retrospective review

A review of treatment that has already been provided to determine whether the treatment was appropriate under the circumstances.

Lesson summary

Exclusions common in medical expense insurance policies include:

Custodial care in nursing homes
Dental care, unless due to a covered accident
Vision care
War-related injuries
Intentionally self-inflicted injuries

Cost containment measures include coordination of benefits and utilization management provisions, such as prospective, concurrent, and retrospective review, to help ensure care is appropriate.

Chapter vocabulary

Definitions

Ambulatory services: Health services provided to members who are not confined to a health care institution. Ambulatory services are often referred to as “outpatient” services.
Probationary period: A specified number of days after the date of the issuance of the policy, during which coverage is not afforded for sickness. Sickness protection does not become effective until after the end of such probationary period. This is a one time event, whereas an elimination period may occur upon each separate disability.