|Premium– The monthly or bimonthly fee you pay to have health insurance.
CPT codes– A medical code used for billing (a 5 digit number like 97110).
Allowed Amount– The maximum amount your particular health insurance plan will pay for a service.
Deductible– The amount you owe before your insurance begins to pay.
Co-insurance– A percentage of the allowed amount that you pay.
Out of Pocket– The maximum you will ever pay during your benefit period.
Copay– A fixed dollar amount you may pay for a service at the time you receive it. Many times, a copay does not apply towards your deductible. However, it will often apply towards your Out of Pocket Limits.
Allowed Amounts: What are they and why is one bill different from another?
Each insurance company has a document called a fee schedule that lists the maximum amount that company will reimburse for a particular service. The bill that the doctor sends has one or more CPT codes on it. An insurance representative finds each of those codes on the fee schedule so they will know how much to pay for that service.
- If a provider sends a code to Insurance Company A and it is $200 on the bill, but the fee schedule says that the insurance pays $70 for that service, then $70 is what is paid for that service.
- If a provider sends a code to Insurance Company B and it is $200 on the bill, but the fee schedule says that the insurance pays $130 for that service, then $130 is what is paid for that service.
Now we know that the allowed amounts are set by the insurance companies and that they list all of their chosen amounts in a document called a fee schedule. Each company has their own list and, while they may be similar, they are not the same.
On to the next topic: Who will be paying for the service now that the price is determined? That will depend on the particular plan that you signed up for. Stay tuned for Deductibles, Co-insurances, and Out of Pocket Limits.