The Explanator
A demonstration, by the house’s engineers.
For some years now, work has been under way on a machine that not only prices a claim but explains the price, without at any point revealing it. That machine is the Explanator, and it is ready.
Nothing about the Explanator is new, except one principle: the price is computed at every stage and displayed at none. The claim enters at the place of service, where it is coded and fitted with its modifiers. Its relative value units are multiplied by a conversion factor and corrected by a geographic cost-of-practice index, which yields an allowed amount.
The allowed amount is then held against the qualifying payment amount and the usual, customary and reasonable charge, and the lower reading is retained. Coordination of benefits removes any second payer. Prior authorization removes the first. The network, meanwhile, holds the store in place.
What remains is the member’s share: a deductible, then coinsurance, then a copayment, each credited toward an out-of-pocket maximum that resets in January.
The output is an explanation of benefits, issued about six weeks after the fact, with claim adjustment reason codes in the margin, and a remittance advice for the store, which explains it the same way.
The Explanator is available today to every member, whether or not they asked, and it cannot be switched off.
The real answer
Are these real health insurance terms?
Yes. Every term in the demonstration above is a real term of art in American health insurance. The consumer terms, among them allowed amount, usual, customary and reasonable, coordination of benefits, prior authorization, deductible, coinsurance, copayment and out-of-pocket maximum, are defined in the federal government’s own glossary at HealthCare.gov, and the qualifying payment amount is defined in the No Surprises Act (42 U.S.C. § 300gg-111(a)(3)(E)). Relative value units, the conversion factor and the geographic cost-of-practice index come from the Medicare physician fee schedule law (42 U.S.C. § 1395w-4). Place of service and modifiers are part of Medicare’s own coding rules (CMS), and claim adjustment reason codes and remittance advice come from the standard code lists claims are paid with (X12).