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Billing Examples
Choosing a provider can impact the amount you pay for covered services.
When selecting a provider you have the choice between a Network Provider (this is a provider that has a contract with your health care plan and will provide services for set amount that the plan and provider have agreed on, this is referred to as reasonable and customary charges) and an Out of Network provider (this is a provider that does not have a contract with your health care plan and can set there own prices of services that are being rendered).
The amount that your plan is going to pay is based on 80% of the R&C charges “reasonable and customary”. You or your coinsurance will be responsible for covering the remaining 20%.
Below you will find two examples:
Example one is In Network claim payment and advantages over Out of Network
Example two is an out of network claim payment and disadvantages of choosing an Out of Network provider.
| Example 1. In Network Provider Claim Payment (80% Plan; Deductible is met): |
Provider's billed charge |
$10,000.00 |
R&C charges (maximum amount that can be considered for benefit payment) |
$8,000.00 |
The Health Care Plans payment to provider (80% of $8,000) |
$6,400.00 |
Member coinsurance (20% of $8,000.00) applied to out-of-pocket limit |
-$1,600.00 |
Amount over the R&C charges, the consumer is responsible for all cost incurred over the R&C charges these amounts do not apply to your out of pocket limits) |
-$0.00
|
With coinsurance: the total amount due would be: |
$1600.00 |
Total amount due without coinsurance: |
$0 |
| Example 2. Out of Network Provider Claim Payment (80% Plan; Deductible is met): |
Provider's billed charge |
$10,000.00 |
R&C charges (maximum amount that can be considered for benefit payment) |
$8,000.00 |
The Health Care Plans payment to provider (80% of $8,000) |
$6,400.00 |
Member coinsurance (20% of $8,000.00) applied to out-of-pocket limit |
-$1,600.00 |
Amount over the R&C charges, the consumer is responsible for all cost incurred over the R&C charges these amounts do not apply to your out of pocket limits) |
$2,000.00
|
With coinsurance: the total amount due would be: |
$3,600.00 |
Total amount due without coinsurance: |
$2,000.00 |
| Example 3 |
In-Network Hospital
(Plan Pays 90%) |
Out-of-Network Hospital
(Plan Pays 70%) |
| Actual Hospital Charge |
$ 10,500 |
$ 10,500 |
| Amount Recognized by medical plan: |
$ 6,500
(the discounted rate for health plan) |
$ 8,800 (the Reasonable & Customary charges based on standard charge for that geographic area)
Plan does not recognize the $1,700 difference between the actual charge and the R&C |
| Medical plan pays: |
90% of the discounted rate:
$6,500 x 90% = $5,950 |
70% of the discounted rate:
$8,800 x 70% = $6,160 |
| Member pays: |
10% of the discounted rate:
$6,500 x 10% = $650 |
30% of R&C charges ($8,800) plus 100% of the amount over R&C ($1,700): $2,640 + $1,700 = $4,340 |
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