PriceCheck: What We Mean When We Talk About Prices

Apr 21, 2016

Health care costs are complex and often secret.
Credit phasinphoto / freedigitalphotos.net

Ask what something costs in medical care and you could easily come back with a half dozen different answers. Health care costs are complex and often secret.

That’s part of why WLRN, WUSF and Health News Florida are launching PriceCheck, a reporting project aimed at bringing clarity to the cost of health care in Florida.

Listen here for a conversation about just what we mean when we talk about health care costs:

You can help us untangle health care prices by checking out the PriceCheck tool, which will let you upload your prices and see what other people paid. For tips on how to fill out the form, check out this video:  

And if health care pricing wasn’t convoluted enough, it’s hard to talk about it without running into some conversation-stopping jargon. Words that mean one thing to the rest of the English-speaking world can mean something completely different in health care — like a “charge” that isn’t the same as the price.

To help clarify, here’s a glossary of common terms in the world of health care finance:

All-Payer Claims Database – A state-run database that tracks what insurers and other payers actually shell out for health care services from different hospitals and providers.

Charge – The price a health care provider says it is owed for a service, not necessarily what it expects to receive. Insurance companies negotiate with providers for cheaper rates than the listed charge. People who are uninsured may be billed for the whole charge—but even then it’s frequently negotiable. Appears as the amount billed column on an explanation of benefits.

Chargemaster – A hospital’s list of charges for common procedures. These lists are different from the list of rates negotiated by each insurer. Hospitals are required to make charges available to the public. Many hospitals satisfy this requirement with the chargemaster.

Contracted rate – The price an insurer and provider have agreed upon for a particular service—usually lower than the charge. This is also known as the reimbursement or the negotiated rate. On an explanation of benefits, it appears as the amount paid by the insurer.

Copay – The standard price paid by an insured patient for a covered service or medication. This is in addition to what the insurance company will pay on behalf of the patient.

Cost adjustment – The difference between the charge and the contracted rate. It’s sometimes presented to health insurance customers as savings.

Deductible – The amount a patient must pay for covered health care before the insurance company picks up the rest of the tab.

Explanation of Benefits (EOB) – A statement from an insurance provider detailing how it covered a patient’s health care. EOBs typically include details like a description of the service and its billing code, the amount the provider charged, the amount the insurer paid (the contracted rate) and what the patient owes. It looks so much like a bill that some insurance companies write “this is not a bill” on the statement.

Medicaid – Health insurance for people with disabilities and low-income individuals and families. It’s managed at the state level with federal oversight and it’s funded with federal and state money.

Medicare – Federally run health insurance for people over 65.

Premium – The monthly price you pay for health insurance. It is separate from the deductible and copay.

Self-Insured – When an employer takes on the risk of insuring its employees and pays their health care claims. Self-insured employers, like Miami-Dade County, frequently hire an insurance company to manage the claims process and negotiate rates with providers on the employer’s behalf.

Sammy Mack is a reporter for WLRN in Miami. WLRN is part of Health News Florida, which receives support from the Corporation for Public Broadcasting.