What Are Some Common Cost-Containment Procedures Used By Insurance Companies?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 16, 2021

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In order to curtail health insurance costs from spiraling out-of-control, most insurance companies have instituted a variety of cost-containment features to their Individual and Group health insurance plans. Common cost-containment procedures, under which coverage may be denied or restricted, include:

1. Same day surgery admission – instead of allowing a person to be admitted the day before surgery which results in a charge for an additional day of hospitalization charges, the patient is required to be admitted the day that the surgery is to be performed.

2. Pre-admission testing – before authorizing hospitalization or surgery in a non-emergency situation, additional testing to determine whether hospitalization or surgery is required must be performed.

3. Outpatient surgery requirement – many surgical procedures may now be performed on an outpatient (non-hospitalized) basis reducing the need for reimbursement of hospitalization costs.

4. Second opinion – before procedures, care, and related medical expenditures will be authorized, the insurance company requires a second opinion from a qualified health care practitioner.

5. Prior consent for hospitalization – the insured is required to present to the insurance company the particular course of treatment proposed by the health care practitioner before authorization for coverage will be provided.

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