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In the United States, can a medical practitioner legally charge health insurances a different amount from what it would charge a non-insured patient?

I am mostly interested in the states of California, Florida, and Massachusetts.

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They're not actually billing people different amounts because they have insurance or not. Doctors can pretty much bill a patient whatever they want for their service, similar to how a grocery store can charge whatever they want for their fresh deli cheese. Generally, they charge every single person the same amount. It just gets discounted depending on the insurance you have and how much they're willing to pay.

One of the huge benefits of having medical insurance (outside of them paying for your medical expenses) is that they build contracts with service providers, known as their network. Those contracts specify prices (both preset and algorithmic) for certain services that you receive through those providers - the insurance provider will only pay that much and the doctor cannot charge the patient more than what is paid.

If a claim was processed through a different insurance provider, the price will likely be different since each provider will have a separately negotiated contract with different price points for different services. It's not a system of "this is the insured price and this is the uninsured price" but rather a system of "this is the contract you established saying you'd accept this much from us for this service."

For an uninsured person, though, you have no insurance provider and more importantly no provider contract backing you up. So you'd have to face the full force of the non-discounted price of those services. You'll face the same problem even with insurance if you go out-of-network, where the provider does not have contracts and therefore will only cover up to a certain amount that they would normally pay out for a similar service, requiring you to cover the rest of the amount of whatever the doctor decided to bill for that particular service. Without that insurance contract preventing the doctor from billing you the remainder of what they'd normally charge, you'll likely be slapped with a bill for that remainder.

Directing back at your original question: there is no reason that a medical provider would ever legitimately bill someone a different amount because they are insured or not, thus there are no laws preventing it. It's that they already agreed to accept this certain amount from patients covered under this specific insurance. Again, they bill every patient the same amount - the insurance company is just saying "we're giving you this much and the rest of this, yeah that needs to go away."

If you've ever looked at an EOB (Explanation of Benefits) from your insurance company, you'll see that the actual billed amount from the doctor is almost always much, much higher than what is actually paid out by you or the insurance, often known as the insurance discount. Maybe you'd rather think of it as a coupon?

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  • I live in a country with a "sane" healthcare system. I have read lots of stories of vastly cheaper prices (in USA) when directly negotiating with a doctor and not using insurance.
    – davidgo
    Dec 21 '16 at 18:54
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    @davidgo, the US healthcare prices are "sane." Once you take into account the unique aspects of the US healthcare system, legal system, and the government bureaucracies that provide healthcare funding for many Americans, the health care system costs in the US are exactly what the net sum of market forces would predict. Jan 16 '19 at 15:27
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    I've been in the individual market for 15 years. When using a health-care provider I always ask the cash price for the service and quite often get a price that is lower than the negotiated price contracted by my insurance carrier. The cash price of the last MRI I had was lower than what my insurance company pays. I choose to pay cash in these instances because it's cheaper than my out-of-pocket costs with insurance. I live in the U.S. in an area with many part-time Canadian citizens; it's not unusual to see "cash price" documents at medical offices or see signs advertising a discount for cash.
    – Dave D
    Jan 16 '19 at 15:53
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    @davidgo, what market force do you take issue with specifically? It's hard to talk about generalities. There are unique inputs and outputs of the US healthcare system. Some are very desirable and some are not so. Jan 16 '19 at 19:07
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    @StatsStudent Im not an american, so I can only guess, but I expect - That pharmaceutical companies can buy laws, That malpractice suits can run rampant, that a basic social need is essentially privatised so that it needlessly financially cripples most users. Those "unique inputs" that make US healthcare something only the rich can afford - On average, Americans pay by far the most for care, with outcomes demonstrably worse then countries which pay half as much (eg Canada, half average cost, 3 year longer average life expectancy, more medical professionals as a precentage of people)
    – davidgo
    Jan 16 '19 at 19:30
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Short Answer

Can a medical practitioner legally charge health insurances a different amount from what it would charge a non-insured patient?

In the vast majority of cases, yes, although a handful of states have laws imposing some limitations on this practice. I haven't reviewed the state laws of the states mentioned in the question.

Long Answer

There is some pattern to the madness that is American medical provider building, but overall it is arbitrary, idiosyncratic and disconnected from any independent reality.

Most cases of weird pricing structures in the U.S. economy are basically variations on ways to engage in "price discrimination" so that people who are willing and able to pay more for something pay more for something, while people who can't can still obtain something while paying less for it in exchange for some sort of compromise or inconvenience. In the case of U.S. medical billing, however, the causes are more complex and involved than that.

Instead, this is largely because the person making the decision on whether or not to purchase the service and the person paying for most of the expense of the service is usually not the same. These prices aren't set in anything closely resembling the models of economic price markets one learns about in introductory college economics classes.

It is easiest to illustrate the health care billing situation in the U.S. by example.

Imagine that Dr. Fred is a medical doctor specializing in internal medicine who performs an exam of a patient who presents as not feeling well and having a fever. Dr. Fred practice in a medium sized U.S. city where he has privileges at a satellite free standing combined emergency room and urgent care center, at an office affiliated with a local hospital, and at his own separate office. Dr. Fred is, as most physicians are, self-employed with a contractual rather than employee-employer relationship with the places where he provides health care other than his own private office.

Dr. Fred would typically have 29 different rates for performing these services, seven at each of the four settings depending upon who is paying and where the services are performed, and a twenty-ninth rate of zero or of only out of pocket costs at cost without markup for extreme charity cases.

In terms of location the price would be highest at the emergency room, next highest at the urgent care wing of the combined emergency room and urgent care center, next highest at the hospital affiliated doctor's office, and lowest at his own private doctor's office. An actual hospital, a special medical clinic with limited hours for a particular subset of patients, and ambulatory surgery center, if Dr. Fred provided the service there, might also have different rates.

The ER rate is often five to twenty times the private doctor's office rate. The urgent care rate is often two to five times the private doctor's office rate. The hospital affiliated doctor's office is often one and a half to five times the private doctor's office rate. An ambulatory surgery center rate is often 33% to 80% of the rate for performing the same services in a hospital. A specialized medical clinic is typically significantly less, typically 20% to 90% of the private doctor's office rate. An ER or hospital will also usually have more independent service providers who charge separately for ancillary or related services than a private doctor's office would.

In terms of who is paying the prices would be, the main categories, from highest to lowest, would typically be:

  • Uninsured patient, not paying in cash (this typically includes a large collectability risk premium and is only rarely collected in full unless the uninsured patient receives a personal injury settlement or judgment in a lawsuit). This rate is often disclosed to a regulatory agency and caps the maximum amount that the provider can charge anyone for the services described.
  • Insured patient, with an insurance company for which Dr. Fred is an out of network provider (this typically includes a significantly higher than average profit margin but not the collection risk premium paid by insured patients not paying in cash). The reasons that out of network providers are used varies. Sometimes providers with premium services don't join the larger networks because they want to charge a premium price for their services. Sometimes the patient has an insurance company that is geographically limited and has no local network providers where the patient needs to obtain care. Sometimes the patient accidentally chooses a non-network provider without realizing it. Sometimes a patient has bare bones catastrophic health care coverage, or is designed for maximum flexibility at the cost of the insurance company paying a smaller share of total billings, and does not have its own provider's network.
  • Insured patient, for an insurance company for which Dr. Fred is a network provider (this typically is the most common rate includes a little more than the profit margin needed to meet the provider's expenses and subsidizes the lower rates). This rate is negotiated and typically is subject to a "most favored nation" clause that prevents one insurance company from being charged more than another for in network services provided to each other's insureds.
  • Medicare patient (this is typically a few percent less than the insured patient network provider rate and includes a somewhat smaller profit margin). This is benchmarked to the insurance company price which must often be disclosed to Medicare administrators. Medicare is the program providing the primary health insurance coverage for most retired senior citizens in the U.S.
  • Uninsured patient paying in cash (this is typically slightly more than the break even price for the provider providing the services given the provider's cost structure).
  • Sliding scale rate paid by low income uninsured patient not paying in cash (this is typically slightly less than the break even price). Reproductive health care providers (e.g. abortion providers), and mental health care providers, often provide the largest share of their services on a sliding scale to uninsured patients. Sometimes this rate is also used for friends and family of the provider.
  • Medicaid patient (this is typically much less than the break even price). Medicaid primarily provides care to low income patients on a means tested basis with minimal or not patient co-pays or deductibles.
  • Uninsured, totally indigent patient provided with charity care (typically for someone who doesn't qualify for Medicaid for some reason like lack of U.S. citizenship, but urgently needs care) for a nominal cost or for free (the same at all four locations) (obviously this doesn't pay any bills and is an act of pure charity reserved for exceptional heart strings tugging cases).

Sometimes there would be other special rates for worker's compensation insurance patients, patients who are part of a provider based or third-party price discount plan that doesn't provide the third-party payment that an insurance company does, or flat rates for providing medical services in bulk to an institution such as a university or school medical clinic, a jail or prison, a factory, or a professional sports team. Rates almost as high as emergency room rates are often charged for patients paying in cash for illicit, "off the books" care like drug cartel members injured in gang warfare, or people seeking prescription drugs that they are not medically permitted to receive lawfully for their particular ailment, or for priority treatment contrary to the policies of the institution where the physician would usually provide these services.

The hierarchy of cost by location, however, is not always exactly the same for each kind of payment arrangement.

For example, a hospital based HMO may negotiate lower prices for services provided as a hospital or a hospital affiliated doctor's office, than at a private physician's office, even if the physician is in the HMOs network, because the HMO makes some of the money it pays back in its role as a hospital provider.

Some physicians with predominantly office based practices refuse to treat patients who are insured and not paying cash in advance, and also refuse to treat patients who are on Medicaid.

Some boutique high end practitioners will no join any network of health care providers and will only treat patients with out of network coverage or patients who pay a premium cash only price rather than a usual discounted cash only price. Often these practitioners make house calls or provide specialty elective services like cosmetic plastic surgery.

The ER price for an uninsured patient exam might be $6,000. The urgent care price for an insured patient from a network provider might be $500. The cash price for an uninsured patient at a hospital affiliated office might be $250. The Medicaid price for a visit at Dr. Fred's private office might be $75.

Also, in a hospital or ER setting and sometimes also in a hospital affiliated doctor's office or urgent care clinic, each of the providers who interacts with the patient bills separately, so there is often more than one charge for what would be a single physician visit charge in a private doctor's office.

For example, a hospital might charge, in addition to the physician exam fee, an admission nurse triage fee, a facilities fee, a hospital gown charge, and a disposable thermometer charge, all from different vendors on separate invoices. In the case of insured patients, some, but not all of these charges would be disallowed.

The price charged at First Hospital for different services might be completely different from the price charged at Second Hospital across the street. Rates for the same service in the same city by comparable providers typically vary by a factor of ten within the same city, and it is virtually impossible to get an accurate price quote in advance from all relevant providers, except in the case of elective surgeries scheduled weeks in advance, or for very simple basic routine services (e.g. a pediatric well child visit, or a sport's physical).

Typically, the price charged has little or nothing to do with the cost of providing the service, or with the rates charge for similar services in the same geographic area. Billing rates and practices are quite arbitrary and nearly random, although they have some vague internal logic at times and are usually tied to one of several standard billing code systems.

Typically, neither Dr. Fred nor the patient would know what the price of the service rendered was in advance, and there would often be discretion on the part of the billing office to bill for the same service in different ways.

For example, one billing office might bill the exam as a "sick patient office visit" and another might bill the same exam as a "COVID-19 risk prescreening visit" at different rates with different billing codes. Some might bill the use of a thermometer by a nurse as a separate laboratory test with a different billing code, and another might roll it into the same service.

There are a handful of systems in the U.S. in which the insurer and the provider are vertically integrated, most notably a health maintenance organization known as Kaiser Permanente, the U.S. Veteran's Administration, some medical services for active duty military personnel, and a few smaller health maintenance organizations (HMOs) that usually operate only in one city with one provider network. In these systems, pricing is somewhat more predictable and services are usually provided only to HMO enrollees.

Of course, within the category of insured persons there are myriad variations on what a patient's responsibility is under the insurance policy.

Generally speaking, providers take the position that the patient is responsible for all charges billed, and then adjust their rates to reflect negotiated prices reached between an insurance company and the provider. The onus is on the patient to resolve billing disputes between the insurance company or companies involved and the often many providers involved in providing a single medical service. But, once that negotiated price is determined, the division of the negotiated price between the patient and the insurance company varies a great deal.

Billing disputes are common. It is unusual for any medical service more complicated than a single physicians office visit, vaccination or isolated laboratory test to not result in some sort of billing dispute or mistake outside of a vertically integrated health care provider.

In practice, courts typically end up siding with health care providers in medical billing disputes, even under circumstances when other vendors would be denied all recovery or full recovery of the amount sought, even though the legal doctrines upon which this is done are often flimsy or not formally articulated.

A small minority of states (Colorado is one of the few in this category) impose some statutory limitations on price discrimination between insured and uninsured patients, but this is the rare exception rather than the norm, and not infrequently isn't enforced even when these laws are on the books.

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  • You have covered the bases quite well. I can think of one other source of payment. We tend to think of only health insurance companies as insurors. Sometimes auto insurance companies pay the bills for health care, both immediate emergency care and long term followup, often surgery and rehabilitation. I've been told that they are usually billed top dollar and pay that amount. Aug 6 at 15:18
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I have worked in Healthcare for over 20 years.

I see how people are confused and think they are being billed more because they have insurance. I even understand why they think they can provide some type of “evidence” or support to their reasoning by saying, “They asked me what insurance I have! That MUST mean they want to charge me a different price because I have insurance!"

Now, when you hear a different rate quote for cash payers, this is a cash discount offered to you, the un-/under-insured as a BENEFIT to help you cut the cost of what, more often than not, turns into multiple office visits that can become taxing to anyone's budget- which usually leads to failure to complete treatment/therapy because the patient can't afford the continued care down the road. A cash discount does not benefit the practice/practitioner typically. It benefits the patient!

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    Welcome to Law.SE. Are you able to write an answer that engages with the law?
    – Pat W.
    Dec 15 '20 at 11:05
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The answer previously given is completely wrong. Health care providers absolutely have 2 different sets of pricing, for insured and non-insured. And, the difference in pricing is substantial. This is why you are asked before services are rendered if you are using insurance, or paying out of pocket. This is standard practice in any industry that utilizes insurance claims, not just medical (auto repair, home repair, etc...). I know this from being in the industry, as well as through personal experience in paying for identical services with and without insurance. Generally, non-insured pricing is currently about 60 percent less than insured pricing. For example, if you go to a provider to receive an MRI scan and use an insurance policy for payment, the cost may be around 2,000. If you go to that same provider and ask for same service, and notify beforehand you are paying out of pocket, your cost will be about 800. This is not a non-insured discount, rather an inflated price for insured service. For one thing, providers know they can retrieve more money from an insurer than an individual. Also, they charge more because they have to utilize more personnel on their staff to process insurance claims and and collecting from insurance companies can be difficult and they never pay the full amounts. This is the primary reason people think that health care cost so much, because most people only see inflated amounts that are billed to insurers.

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  • It is certainly possible that a select few do this, but most don't. As indicated in a comment on my answer, some offer a discount if you pay in cash, but it is extremely rare to find providers that straight-up charge a different price for non-insured individuals. That would violate the contracts they have with the insurance companies. Most simply offer payment plans to help those without insurance cover the full cost. Don't try to apply your experience with only a couple providers to the entire market - it's just not true.
    – animuson
    Jan 16 '19 at 18:28
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    "This is why you are asked before services are rendered if you are using insurance, or paying out of pocket" - No, it's really not. They ask you that because they need to check things, like whether it's valid. Particularly, whether your plan has a co-pay that they should charge you up-front before rendering services. And more importantly, whether or not they're likely to get paid for the service. It's similar to running a credit check when applying for a loan. If there are red flags, they may refuse to provide service that day.
    – animuson
    Jan 16 '19 at 18:33
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    "...they have to utilize more personnel on their staff to process insurance claims and and collecting from insurance companies can be difficult..." - I can't imagine how submitting claims to the insurance would be more expensive. They literally have to do all the same work to generate a bill, and it's just an extra step of submitting it to the insurance company's system before sending it to the client. Most of this process has been automated away, to the point that they can run your insurance at check-in and figure out exactly how much you'll be responsible for in under a minute.
    – animuson
    Jan 16 '19 at 18:44
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    Can you cite sources beyond your own experience to indicate that this is a widespread practice? Can anyone cite law on the matter one way or another? I know that on auto repairs in NJ, having a different price for insured repairs is criminal, classed as a form of insurance fraud. But that may not apply to medical claims. Jan 21 '19 at 23:29
  • While many providers offer a discount to uninsured people who pay cash from their "official price" that is paid only by uninsured people who don't pay cash up front on a case by case negotiated basis, health insurance policies typically have a clause mandating "most favored nation" status for their insureds and discounted below the official "uninsured rate".
    – ohwilleke
    Nov 11 '20 at 2:26

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