Consumer Guide to Health Insurance

How doctors are paid

Insurance companies negotiate contracts with physicians to provide medical services to health plan members. A physician who contracts with an insurance company is called a "preferred" or "participating" provider. Participating providers are paid in various ways. The most common contract arrangements are "capitated arrangements" and "fee-for-service agreements."

Under a capitated arrangement, which is typical of managed care and health maintenance organizations (MCOs and HMOs), physicians get a guaranteed amount per enrolled patient from the insurance company. The doctors are paid whether or not the patients receive medical services — the doctors are expected to manage the care of the group of enrollees to maximize their health.

Under a fee-for-service agreement, physicians are reimbursed by insurance companies for services provided to patients. If patients don't go to the doctor, the physician receives no payment.

You have the right to find out from your insurer how your physician is reimbursed and whether she or he is rewarded or penalized for postponing or granting access to medical services.

Prompt payment of providers

An insurer must pay or deny a "clean claim" (a complete and accurate billing statement for medical services) no later than 30 days after the date on which the insurer receives the claim. If the insurer requires additional information before paying the claim, the insurer must notify the enrollee and the provider in writing and give the enrollee and the provider an explanation of the additional information needed to process the claim. The insurer must process the claim within 30 days of receiving the additional information.

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