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Economics Insurance Help?
A surgeon charges $2,400 for hernia surgery. He contracts with an insurer that allows a fee of $800. Patient pays 20% of the allowed fee. How much does the insurer pay? How much does the patient pay?
I figured the patient pays $160. However would that mean insurer pays $640 or do they have to pay $2240? What exactly does allow a fee mean? Thanks.
3 Answers
- Casey YLv 77 years agoFavorite Answer
When an insurer and doctor establish a contract, it sets the rate for particular procedures. This surgeon customarily charges $2,400 for the surgery, but will have accept $800 to work with this insurance company.
$640 by insurer and $160 co-insurance by the patient.
- AnonymousLv 77 years ago
800 - 20% of 800, is what the insurer pays. Patient pays 20% of 800.
The difference between the $2400 and the $800, gets erased. No one pays that - that's the overcharge that the surgeon bills to uninsured people.
- JJLv 57 years ago
Casey has it right, but don't forget about your deductible if it has not been met.
If you have a deductible, you pay that first, then insurance pays 80% of the remaining balance.
Example: $100 deductible
$800 negotiated amount
-100 (you pay the deductible first)
=700 (remaining balance)
700 x 80% = $560 - paid by insurance
700 x 20% = $140 - paid by you
In total, you pay $240 and insurance pays $560.
