I want to post today about the limited reach of pet health insurance to pet owners as it exists today. This isn't talked or written about very much. Pet insurance is essentially a reimbursement plan. An insurance policy is a contract between the pet owner and the insurance company. This means that you must pay your veterinarian in full for the bill, then file a claim with the insurance company and wait for reimbursement. This has led many to ask, “If I can afford to do that, then why do I need insurance?” In these cases, the insurance reimbursement will help pay off the credit card debt or replenish the bank account.
Thus, the pet health insurance model of today implies that only pet owners who can afford to pay for a large bill out of their own bank account or with a credit card and then wait for reimbursement need apply. In my opinion, this leaves a large percentage of pet owners who cannot afford to pay a large, unexpected veterinary bill out of the loop.
Some of the insurance companies have provisions to pay your veterinarian directly after you pay the deductible, co-pay and for any non-covered procedures. The drawbacks to this are that your veterinarian may not agree to such a provision because he or she is used to being paid at the time the procedures are done. Veterinarians also fear that if they start filing claims on behalf of pet owners and waiting for reimbursement from insurance companies that extra staff may be needed. This will increase their overhead and they will have to raise fees to cover this expense. They see human doctors who have a whole office devoted just to handling insurance claims and they want no part of that. They are also concerned that if they have to wait on reimbursement from the insurance company (MDs have to wait weeks to months sometimes) that cash flow will suffer significantly. In fact, some practice management experts have stated that such a scenario is undoable for most veterinary practices. The other problem is determining in a timely fashion if the disease or problem they are treating is even covered and if so, how much the pet owner will end up having to pay and how much reimbursement they can expect from the insurance company.
Therefore, veterinarians generally prefer the status quo - present day model. Veterinarians are also wary of any model that may resemble “managed care” (networks e.g. HMOs, PPOs, Medicare or Medicaid) that has plagued other healthcare professions. There is a whole chapter in my book on the importance of veterinarians and pet owners avoiding managed care.
Several insurance companies are working to improve their ability to verify coverage and shorten turnaround times between filing a claim and receiving reimbursement – sometimes as short as 24 hours. The filing of claims and receipt of reimbursements are done electronically, therefore, it involves virtually no paperwork and minimal staff time. I know of one company who is working with at least one veterinarian to test such a system. I was told that the veterinarian files all claims – large and small – for pet owners and the reimbursements are deposited directly into the hospital’s bank account.
If insurance companies can reliably put such a model in place, it should overcome most of the objections that veterinarians have with it and put pet insurance within the reach of pet owners who can afford a monthly premium, but can’t come up with thousands of dollars on the front end should their pet develop a serious medical or surgical problem.
Just because your veterinarian agrees to file the claim on your behalf doesn’t mean that you will walk out without paying anything (like you may be used to doing at your own doctor’s office). You will still be responsible for paying your part (deductible, co-pay, and any non-covered expenses), and the insurance company will pay its part directly to your veterinarian. In my mind, this is how it ought to work to allow more pets to be covered. Some of the insurance companies are now offering larger deductible policies and these may be more acceptable by the veterinary community in such a model because you will be paying (and they will be receiving) a larger portion of the bill on the front end (like a deposit).
Until such a model is commonplace, you can ask your veterinarian if he or she will allow you to pay the deductible and co-pay and file a claim on your behalf. If it isn’t an emergency, some companies will pre-certify a procedure and let you and your veterinarian know the approximate expected reimbursement. Your veterinarian would need to send an estimated cost of the diagnostic and treatment plan to the insurance company (the final bill may vary from the estimate). However, you should only expect to be able to do this with large, unexpected bills, and you will have to get the cooperation of both your veterinarian and the insurance company.