It's easy to assume that once you have insurance, prices are your insurer's problem. For a growing number of people they aren't. If you have a deductible, and most plans have one, the price your insurer negotiated with a provider often becomes the amount you pay yourself.
Here's how that works, and why comparing prices can matter as much as choosing a plan.
The price behind your bill
When you see an in-network provider, your plan doesn't pay the provider's list price. It pays the negotiated rate it agreed with that provider in advance. That rate is the starting point for everything you owe. Your deductible, coinsurance and out-of-pocket maximum are all applied to it.
Because every provider negotiates separately, the same service can carry very different rates within one plan's network. (We cover the reasons in why the same procedure can cost five times more across town.)
How each part of your plan uses that price
Deductible. Until you've paid your deductible for the year, you usually pay the full negotiated rate yourself. A $1,800 scan is $1,800 out of your pocket.
Coinsurance. After the deductible, you pay a percentage of the negotiated rate, often 20%, and the plan pays the rest. A higher rate still means a bigger share for you.
Copay. Some services, like a regular office visit, have a flat copay. The price matters less to you here, though it still affects your plan's costs and, over time, premiums.
Out-of-pocket maximum. Once you hit it, the plan pays in full for the rest of the year. Until then, every dollar of difference in price can be yours.
A worked example
Say your doctor orders an MRI and two in-network imaging providers have these negotiated rates with your plan. The numbers are illustrative but typical of the spreads in published rate files.
| Imaging center A | Hospital outpatient department B | |
|---|---|---|
| Negotiated rate | $450 | $1,800 |
| You pay, deductible not yet met | $450 | $1,800 |
| You pay, after deductible (20% coinsurance) | $90 | $360 |
Same scan, same plan, same network. If you haven't met your deductible, choosing A saves you $1,350. Even after your deductible, you pay four times less.
Why higher prices cost you even when you don't see them
Your out-of-pocket costs aren't the only place prices show up. Plans set premiums from what they expect to pay for their members' care. Many employers pay their employees' claims directly. When a plan pays high prices, everyone covered by it pays more over time, through premiums, smaller raises, or both. Lower-priced, high-quality care helps you and everyone on your plan.
What to check before you book
- Is the provider in network? Out-of-network care can cost far more. The No Surprises Act protects you in emergencies and in some other situations, but not every time (what the law covers).
- Is it the same service? Compare the same billing code at the same kind of place of service. A hospital visit can include a separate facility fee.
- What will you actually owe? Your plan's cost estimator applies your own deductible and coinsurance to the provider's rate.
- Is the cash price lower? With a high deductible, a provider's cash price sometimes beats the negotiated rate. Ask whether paying cash still counts toward your deductible.
A negotiated rate in a published file isn't always exactly what you'll be billed. Separate fees, bundled services and contract terms can change the total. But it's the best guide to which providers are likely to cost you less.