At Spine West, we want our patients to understand how medical billing works. Therefore, it is important to understand what the following terms mean. These are terms you will often see when your insurance company sends you an explanation of benefits (EOB).
Charged amount – The charged amount is the standard amount we charge your insurance for a particular service. Depending on what was done or performed, this can vary. Keep in mind the amount we charge an insurance company for a particular service is the same for all insurance companies. (example: We charge Aetna, United Healthcare, Blue Cross Blue Shield the same amount for an MRI which is $1,000)
Allowed amount – The allowed amount is the contracted rate your insurance company allows for that particular service or procedure. The allowed amount is really what is important. (example: Although we charged United Healthcare and Blue Cross Blue Shield $1,000 for an MRI, United Healthcare will allow typically $610 and Blue Cross Blue Shield allows $575)
Adjustment or discount – This is the amount by which a medical claim was “adjusted” or “discounted” by your insurance company. This is charged amount – allowed amount. (example: If you have Blue Cross Blue Shield, for an MRI, charged amount $1,000 – allowed amount $575 = adjustment of $425). In essence, the adjustment or discount is by how much the charged amount was reduced by for having that particular insurance.
Deductible – This is the amount you agreed to pay for your health care services every year before your insurance starts to pay. (example: If you have a $3,000 deductible every year with your insurance company, then you pay the first $3,000 of covered services)
Copay – This is a fixed amount you pay as dictated by your insurance plan. Copays are usually required after you’ve met your deductible and are always due at the time of service.
Co-insurance – The percentage of costs you share with your insurance company after the deductible is met. (example: If you have a plan that stipulates you will have a 20% coinsurance after your deductible is met then you are responsible for paying 20% of the allowed amount for any claim)