Providers don’t want to keep 1,000 different price lists for all the different insurance companies, health plans, and employers. So what they do is keep one list, with very high “sticker prices” and just keep track of the 1,000 different types of discounts they have to apply to get down to the rates they agreed to in their contracts. These sticker prices are called “charges” or “facility fee” and that is all they are—sticker prices.
What “insurance discount” or “contractual allowance” means
The volume discounts I mentioned show up on the bills as “insurance discount” or “contractual allowance.” This is a reduction that is applied to reach the rate agreed in the provider-insurance contracts. If you do not have insurance, providers will not stick you with a full sticker price for being uninsured. They will apply an “uninsured discount” that is often signifcant. At the surgery center that I ran, one of our largest discounts was our “uninsured discount” at 70% of charges. That means our uninsured patients only paid 30% of sticker price. If they applied for fnancial assistance, some would get even more discounts.
Itemized vs. unitemized
If you stay overnight in a hospital, they are going to mail you a free book in the mail. That book is your itemized bill. It will detail every charge and discount for every single billable procedure, supply, bandage, suture, gown, meal, and room fee you can imagine. Fortunately, your insurance company will bundle all of these things together in one payment. Some providers will send you an unitemized bill that has four lines: charges, insurance discount, insurance payment, and balance due. If the balance due is questionable, ask for an itemized bill.
Deductibles, copays, and coinsurance
We discussed these in Chapter 1, but to recap, the insurance company will always apply your deductible frst before they start paying bills. Your copays are fxed amounts you pay for different types of visits and coinsurance is a percentage you pay for different types of visits. If you cannot afford to pay these, you may have options depending on your