Most consumers would agree that timely and convenient access to medical services when they are needed most is essential. With this in mind, many health care providers (such as KHC) partner with various insurance companies via a “participating agreement” (contract) that will allow those who have health insurance coverage through those companies to seek “covered” medical services through KHC via its hospital, clinics and doctors.
In exchange for the privilege of being an “in-network” provider, KHC, like most other hospitals clinics and doctors, offers a discount on its services to the various insurance companies via the signed participating agreement (contract). This discount not only benefits the insurance company, but affords a benefit to the individual policyholders as well given that their coinsurance amount (or the member’s share of the costs of a covered health care service, as outlined in the individual health insurance policy, usually expressed as a percentage) is based on the discounted amount as opposed to the total charges. Here is a simple example:
|Total amount charged by provider||$100.00|
|Insurance company discount||20%|
|Covered benefit amount||$80.00|
|Coinsurance per policy||20%|
|Coinsurance due from patient||$16.00|
*Without the insurance company discount, the coinsurance amount due from the patient would be based on 20% of the total amount charged by provider or $20.00, so the insurance company discount saves their customer $4.00, in this example.
So, how do you go about determining what the insurance company discount amount is for the services you received? Well, there are about as many terms used to describe the insurance company discount as there are insurance companies out there. Some of the more common terms are summarized as follows, many of which you will see on the Explanation of Benefits (EOB) you receive from your insurance company after medical services are received and benefits are paid on your behalf.
|Contractual Allowance||Contractual Adjustment||Provider Liability|
|PPO Discount||GRP/RC – Amount||Write-off Amount|
If the discount is not clearly identified on the EOB, it can usually be determined by subtracting the “allowed” or “approved” amount from the “billed” amount.