Fleeting Expletive asked a good question regarding how to read a hospital bill:
I’m now getting the bills for my eye injury and surgery.The bill from the eye surgery center is particularly confusing to me. It runs on for two pages. The first item is a procedure that bills out at $5500, then there is an “adjustment that reduces that amount by $4,295.80.
There are several more entries that do that, the large asking price and then a substantial adjustment. What is the deal there?
There are a couple of things going on here.
The top line number of $5,500 is what is known as the chargemaster rate. That is a rate the hospital generates by itself through some arcane reading of goat entrails. This number has no relationship to reality of the cost of providing the service. It is a maximal ask. It is also the baseline for debt renegoatiation with people who do not have insurance.
The second number is the difference between the chargemaster rate and the insurance company negoatiated rate. An insurer can often have multiple rates for the same procedure performed by the same provider. For instance, Mayhew Insurance has different rates for the Medicaid, Medicare Advantage, CHIP, narrow network Exchange, broad network Exchange, and major Commercial group products.
His insurer has a contract rate of $1,204.20 for the product that he is in. That is the number the hospital has agreed to take as payment in full for that service. The $1,204.20 is then split in a variety of ways. Some component of could be deductible which Fleeting Expletive would be responsible for. Some portion of the bill could be a co-pay, and more of the bill could be co-insurance where the insurer pays most of it, but Fleeting Expletive is responsible for 20% to 40% of the bill. The hospital really does not care where the check comes from as long as they are paid in full within sixty days of the bill going into the mail.