Wendy Winn, PT, OCS, President
Health Insurance companies are private, for-profit companies in the United States.
An individual or company enters a contract where an insurer pays a portion of medical expenses in exchange for a monthly fee (premium). Costs are shared through deductibles, copayments, and coinsurance.
- Terms:
- Premium: The amount you pay monthly to maintain the plan
- Deductible: The amount you pay for covered services before insurance starts to pay any portion.
- Coinsurance: Your share of the costs of a covered service (e.g., 20%) after you have paid the deductible, used primarily for out of network providers
- Copay: Your share of the cost for in-network providers
- Out-of-Pocket Maximum: The most you will pay for covered services in a year; after this, the insurer pays 100%
- Billed amount: The amount a provider charges the insurance company
- Allowed / Allowable Amount: The amount an insurance company considers reasonable for a specific healthcare service, as well as the maximum the insurance company will pay. After billing an insurance company for a service, they review the charges and determine the lower “Allowable Amount” they’ll apply toward the patient’s deductible. This amount is only known to the out of network provider after the service is billed. Once the deductible is met, the insurance company will pay the plans coinsurance percentage of the allowable amount.
- In-Network: Providers can contract with insurance companies for certain rates, which are typically much lower than cash rates or billed rates
- Out-of-Network: Providers that do not contract rates with insurance companies
- Superbill: A receipt given to a patient to submit to their insurance company that includes the provider information, diagnosis code, treatment codes, and payments.
- Pre / Prior Authorization: Some plans require a medical provider to submit an evaluation asking for permission to provide a service. Services are then allotted by the insurance company in certain amounts.
- Types of Plans:
- HMO (Health Maintenance Organization): Lower premiums and costs to employers, but generally restricts coverage to in-network providers
- EPO (Exclusive Provider Organization): Services are covered only within the network (Similar to HMO)
- High Deductible HSA (Health Savings Account): Lower monthly premiums, lower costs to employers, with high deductible. Often, employers will contribute to an HSA (pre-tax spending for medical costs) account for the employee; incentivizing the utilization of these policies.
- PPO (Preferred Provider Organization): Higher flexibility to use out-of-network providers for a higher cost
- Where to Get Coverage:
- Employer-Sponsored: Offered through your job
- Government Programs: Medicaid, Medicare, or CHIP
- Marketplace: HealthCare.gov or state-based marketplaces
What is the difference between in-network and out of network providers?
In-Network providers are contracted with insurance companies; and agree to accept the payment that the insurance company makes to them, no matter how small. From a care perspective, this reimbursement is often not enough to cover the time cost of the practitioner. As such, practitioners will often see multiple patients at once, or hire assistants to perform care at a cheaper rate. Quality of care often suffers under this model as a result.
Out-of-Network providers are not contracted with insurance companies. They can bill at whatever rate they choose, but only receive the portion of the allowed amount covered under the insurer’s portion of the co-insurance. In theory, reimbursement to the provider is higher, and quality of care is less compromised.
Insurance Trends:
Post-Covid Volatility
The COVID-19 pandemic had a huge effect on the volatility of insurance companies. In 2020, insurance usage declined as people delayed care. Following 2020 and 2021, utilization of insurance policies skyrocketed as a result of the rebound effect. Companies pass this cost along to the consumers, naturally, through higher deductibles, higher premiums, lower allowed amounts, and more frequent denials of care.
Revenues for Insurance Companies
In 2025, UnitedHealth Group topped the major insurers in revenue, at $447.6 billion, reporting a profit of $12.05 billion. This is an all time high number. It is important to realize that these companies consider insurance payments an “expense,” or a loss to the company’s revenue. When speaking about health insurance, we differentiate between “health insurance” and “healthcare” for this reason.
Regulation by State
“Medical Loss Ratio” is calculated as a percentage that insurance companies charge for premiums versus pay on claims and improvements; and for most states is set at 85%. Large insurers have various ways to skew this percentage, including owning hospitals and physician practices, a practice known as “vertical integration.”
AI Denials and “Rubber Stamping” to Decrease Appeal Frequency
Health insurers are increasingly using AI for automated “batch” denials of medical claims, frequently bypassing human review and causing significant care delays. These AI systems, often used for prior authorization or medical necessity, use algorithms instead of professionals, and have led to denials up to 16 times higher than standard rates. As of 2026, legislation like California’s SB 1120 seeks to prohibit AI from making final, autonomous medical necessity determinations without human review. One common practice today is insurers using AI to make initial denials, relying on the assumption that many patients will not appeal due to the confusing nature of the letters, called “rubber stamping.” 82% of physicians reported that these processes cause patients to abandon necessary treatments.
Third Party Utilization Management Systems
Third-party utilization management (UM) companies, such as Carelon, EviCore, and Optum, provide outsourced services to insurance payers to manage medical necessity, prior authorizations, and costs to companies. Optum uses AI-enabled UM for authorizations, medical notes reviews, and denials. These are the companies that issue the denials “rubber stamping,” for authorization and care, making the appeals process even more confusing for patients. While insurance companies may state that they do not use AI, the third party management companies they use, do.
How We Work with Clients and Their Insurance Policies at Custom:
First, we are not contracted with any insurance companies as we would not be able to afford our speciality care clinicians. We know runners need good, personalized (“Custom!”) care, and would never operate like a conveyor belt. So we are an out-of-network provider.
Second, we collect payment upfront. This began three years ago (see above Post-COVID Volatility), when insurance companies became increasingly unpredictable and unstable with payments and methods. We never want to back-charge a client because of an insurance company’s random decrease in payment, denial or error.
After upfront payment, if you would like us to attempt to bill your policy, we will do so. If the reimbursement we receive covers the cost of the visit, we decrease your upfront payment. If the reimbursement does not cover the cost, we ask you to submit on your own, and when your deductible is met, the reimbursement from insurance is yours to keep. Again, this is to prevent back billing, or surprise bills from us.
We do all of our billing in-house which allows for quick turnaround, and internal problem solving. Should we receive a denial on a claim, we try our best to appeal it with you on your behalf. Should we see something suspicious come in on your account, we will investigate thoroughly and communicate it directly to you. Our management team is always here to help you on your healing journey and will answer any questions about payments that you have.
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