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

UPDATED: Jul 17, 2023Fact Checked

Free Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Jeffrey Johnson

Insurance Lawyer

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...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

UPDATED: Jul 17, 2023

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

UPDATED: Jul 17, 2023Fact Checked

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.

Case Studies: Common Cost-Containment Procedures in Insurance

Case Study 1: Same Day Surgery Admission

Sarah requires surgery for a medical condition covered by her health insurance. However, her insurance company implements a cost-containment procedure that requires same-day surgery admission. This procedure helps reduce unnecessary hospitalization charges by admitting patients on the day of their surgery instead of the day before. By adhering to this policy, Sarah avoids additional hospitalization costs and contributes to overall cost containment.

Case Study 2: Pre-Admission Testing

Mark needs to undergo a non-emergency surgery that requires hospitalization. However, his insurance company follows a cost-containment procedure of requiring pre-admission testing. Before authorizing the surgery or hospitalization, the insurance company requires additional testing to determine the necessity of the procedure. By undergoing these tests, Mark ensures that his surgery and hospitalization are warranted, contributing to cost containment efforts.

Case Study 3: Second Opinion Requirement

Lisa receives a recommended course of treatment for her medical condition. However, her insurance company implements a cost-containment procedure that mandates a second opinion before authorizing coverage for the proposed procedures, care, and related medical expenditures. Lisa seeks a qualified health care practitioner’s second opinion, ensuring that the recommended treatment aligns with medical standards and contributing to effective cost containment.

Free Insurance Quote Comparison

Enter your ZIP code below to compare cheap insurance rates.

secured lock Secured with SHA-256 Encryption

Jeffrey Johnson

Insurance Lawyer

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...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

Free Insurance Quote Comparison

Enter your ZIP code below to compare cheap insurance rates.

secured lock Secured with SHA-256 Encryption