Intro

At the core, negotiated rates are the agreed-upon dollar amount a provider is owed for a covered healthcare service. The term negotiated rates is interchangeable with “allowed amounts” and with “adjusted rates.”  It’s critical to distinguish between “negotiated” and “billed” amounts: a billed amount is what the provider charges, and it can differ from the negotiated rate, which is the amount the insurer and you owe the hospital.

How are negotiated rates used?

In short, the negotiated rate is the amount you and your insurer owe. For example, suppose you need an MRI and the chargemaster tags the price at $5,000. If your negotiated rate is $3,000, then you’ll be billed $3,000.

Negotiated rates apply in conjunction with your deductible. Until you meet your deductible, you pay 100% of your negotiated rate, and even after you meet the deductible, negotiated rates are always in effect, which means that in-network providers will still be cheaper with insurance than without it. After you meet your deductible, your coinsurance applies to the negotiated rate, not to the billed amount or chargemaster price.

FAQ

What if my negotiated rate is higher than the chargemaster price?

First of all, it won’t be. If it somehow is, then the insurer will likely pay the lower amount, which in such a situation is the chargemaster price.

How do negotiated rates differ in-network versus out-of-network?

In-network negotiated rates effectively match the agreed-upon dollar amount. Out-of-network providers  don’t accept insurer-negotiated rates, and insurers often determine a reasonable price based on UCR (Usual, Customary, and Reasonable) pricing standards. You may be balance billed out-of-network.

Conclusion

We hope this article answered all your negotiated rates questions! At Fairdoc, we are here to inform you, assist you, and answer all your questions. If you have any inquiries for us, feel free to reach out, and stay tuned for future articles!