This is a free website and it's only purpose is to educate you on Health Insurance!
CONTRACTED RATE
Contracted Rate We have all heard the horror stories of someone going to the hospital and being charged $25 for an aspirin and we all say that’s not true. Unfortunately, it is true . . . this is not an urban legend it happens every day to people who don’t have Health Insurance. Contracted Rate is a critical component of our industry. I feel it is the single most important aspect of why all of us must have coverage. The "usual and customary" charge by the physician, hospitals, pharmacy, lab facilities are a fraction of what the charge would be if you have coverage versus not having coverage. The "contract" between these providers, and the insurance company is what will save you many thousands of dollars, if God forbid. . . you're hospitalized, or in need of any services. The balance of the potentially huge claim is "written off".
Insurance companies negotiate contracted rates or maximum amounts they will pay for services performed by the hospital, clinic, or doctor. When you get your bill you will see the original charge for the service and then you will see the adjusted charge or allowable charge, which is significantly lower. The lower amount or “contracted rate” is the amount the insurance company agreed to pay and is the amount the hospital, clinic or doctor agreed to accept as payment in full for the service. The remaining balance is written off by the hospital, clinic, or doctor and they agree not to charge or collect that amount from you.
This all happens if and only if you have Health Insurance. If you don’t have Health Insurance you are paying the original amount you see on your bill, which is the outrageous charges the hospital, clinic, or doctor was trying to get away with until the insurance company corralled them in and negotiated the “contracted rate". Without having a contracted rate when going to the hospital, clinic, or doctor you are completely at their mercy and they can charge any amount they want to you. There is no law that tells them what they can or can’t charge. Obviously they have to post their charges upfront and can’t make them up after the fact.
So, even if you have a poor Health Insurance Plan you will get the benefit of the “contracted rate” negotiated by the insurance company, which will save you thousands in the long run. You may only be able to afford a high deductible plan, but the contracted rate will save you thousands in the long run. Also, if you are uninsurable and only qualify for a Limited Benefit Plan (we will discuss these plans later) you are better off having this plan if only for the contracted rate. Because if you go to the hospital with the Limited Benefit Plan you will receive the contracted rate and you won’t end up paying $25 for an aspirin. Make sure that you ONLY pay the USUAL AND CUSTOMARY or the CONTRACTED RATE on all of your procedures or claims, please make sure you have an expert handling your claims as well. Your agent and/or insurance company should help you review your claims to make sure you are being charged the “contracted rate” Always stay "In Network" and we will talk about this in another section and how this effects your cost and your policy benefits. Going out of Net Work can be an extremely costly mistake that you don’t want to make, so make sure your hospital, clinic, and doctors are part of the network on any policy you are looking at buying.
