Comment by ArtemZ
2 months ago
But isn't it insurers actually set how much a service is going to cost you and then make "a discount" on that figure?
2 months ago
But isn't it insurers actually set how much a service is going to cost you and then make "a discount" on that figure?
Yes and no.
What happens in practice is that a provider charges $200 for "distributing Advil" and $50 for two pills. Then the insurance company, whose legally allowed profit is proportional to payouts, "negotiates" the price down to $150 total and claims to the person "we saved you $100". Then their accountant says "we paid out $150, so we get a profit margin of $40" (instead of the $0.50 they would get with a real at-cost charge).
But the price is made up nonsense and 100x actual cost for 15 seconds handing a 1¢ pill over. Which is why asking for an itemized receipt and saying you can't afford that suddenly drops the bill to $1.50.
When providers don't "play ball" with the price fixing the way insurance company wants, they go off network.
Medicaid and Medicare set service rates by fiat, which is why many providers don't accept patients on those plans. Commercial health plans have to negotiate service rates with their network providers. There's no discount as such: if you receive service from a network provider then they have to charge the negotiated rate.