Big price difference between 2 medical service providers for same procedure - acceptable?

Both are in-network

I should have added that.

Good point on Dr. reading images. Let me look into that difference.

Your insurance is going to pay what is negotiated. It doesn’t matter what the clinic bills.

You will pay your same deductible in both situations

Every insurance company pays a different amount so to make sure there aren’t any screw ups (like under billing a certain plan that pays more) the clinics will just charge a much higher rate to every insurance company. The insurance company then corrects the bill down to their allowable amount.

People read medical bills without any explanation of the system, this isn’t their fault but it leads to false assumptions

The clinic isn’t making 3x as much as the hospital.

Insurance companies have different fee schedules for different providers/locations. Essentially their contracted rate will be different based upon the place that the service occurs. Even if they would both be clinics, you'd see a discrepancy there. Also, are you certain it is the exact same procedure being done at both facilities?

ETA: also note that the clinic will essentially have one fee schedule for procedure x regardless of the fact that the allowable for that procedure for insurance company y is 50% of that amount, because the allowable for insurance company z might be 100%. They charge all insurance companies the same, regardless if they will only receive 50% from company x and possibly 25% from another.

Let me give you a better example:

Let’s say you need an MRI. This is what the following plans will pay the orthopedic clinic:

Blue cross - $400
United - $200
Medicare $300
Medicaid - $150

A clinic is trying to run its billing department with as few people as possible because overhead expenses are crazy.

So instead of a biller having to check the fee for each plan before they bill it, they bill a number way above any possible plan’s fee. Then the insurance company adjusts it down on their end.

So the clinic will bill all MRIs at $600. It’s just an arbitrary number. To you it looks like they are 3x what Medicaid would pay. But at the end of the day Medicaid only pays them $200 for the MRI.

The hospital may have better billing resources and are comfortable billing closer to the actual fees.

These fees also change on a yearly basis. So instead of constantly having to keep up with the changing prices you just bill way more than anyone would possibly pay.

You don’t want your biller submitting a $200 bill to blue cross when they would pay $400.

We have the best healthcare, we just don't have the most accessible healthcare.

It also explains those stories you hear people saying…

“I called up my doctors office and asked them how much a MRI was and they said $600, I said I would pay cash and they said ok we will take $200”

Ever heard those?

It’s because the practice is telling you their standard billing… remember priced way above what the insurance will actual pay.

When you say you want to pay cash they can only charge you what Medicare will actually pay, so they look up exactly what Medicare would pay, and that’s what you owe in cash.

They didn’t just negotiate with you. You just don’t understand the language they are speaking.

quote:

---

As a patient, I would love this if that's what it actually cost the clinic with reasonable oh&p mark-up. Insurance companies cause way too much strife for providers to provide actual care.

---

It’s not about what it would cost the clinic because the clinic doesn’t get to decide the price. It’s dictated to them by the insurance companies which base their price off of government insurance.

It’s the fact that every plan has a different negotiated price and it’s constantly changing. You are right that it is creating too much strife and it’s why there are so many administrators now.

Trust me, doctors hate it, what you are seeing is them trying to be as efficient as possible in the environment they are operating.

TLDR point is that we don’t need to tear the system down. The billing issues just need to be reworked.

quote:

---

What is different?
Ortho A (Clinic) MRI costs 3X more than Ortho B (Hospital) MRI costs

---

By "costs" do you mean the make believe number on the bill, or the actual amount you have to pay once insurance does their thing?

quote:

---

Ortho A (Clinic) MRI costs 3X more than Ortho B (Hospital) MRI costs

---

In general, charges billed at a hospital location will be higher than the same services billed from a clinic setting.