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WHAT DOES IT MEAN 80/20?

When you call for an insurance verification, do you know what they mean by 80% of the allowable charges?  Some times this can be confusing to you as well as the patient.  In this week’s   blog I hope I can help explain what the insurance company means by 80% of the allowable charges.

The insurance will only pay the provider the maximum amount allowable according to your contract with the insurance company. This amount is considered full payment from the insurance.  Insurance companies have a fee schedule they refer to for payment of fees you charge.  This fee schedule is negotiated at the time the provider’s contract. It is comprised of the charges of all the providers of a certain area. 

Now that we have figured out how they set up the allowable charges. Let’s take a look on how to figure the 80%.  When insurance pays 80/20 this means they will pay 80% of the allowable charges and the patients responsibility is the 20% of the allowable charges.  The balance between the allowable charge and the providers charge is usually written off by the provider according provider /insurance contract.  When the provider charges $100.00 for a service rendered, the insurance by only allow $90.00 the provider must then write off the $10.00. The insurance company will then pay 80% of the $90.00.  Some contracts state you may not bill for the balance of the fee after the insurance has paid.  Some contracts you may bill the patient the other 20%.