Helpful Definitions

Understanding health care terminology around prices poses significant challenges for patients. If you ask a group of people to define what "price" is, it is likely you will get a variety of answers.

Below are definitions to help frame your understanding around this issue:

Charge: The dollar amount assigned to specific medical services before negotiating any discounts from payers. The charge is different from the price. Very few patients pay the charge regardless of their insurance status; and, therefore, this data is not meaningful to people.

Price: The negotiated and contracted amount to be paid to providers by payers (also called the "allowed amount"). A patient's out-of-pocket liability for health care services is based on this allowed amount. Note that the price for a given service varies by insurance plan as these are separately negotiated by each plan/employer.

Out-of-Pocket: Portion of the price for medical services and treatment for which the patient is responsible. This includes copayments, coinsurance, and deductibles.

Cost: The definition depends on the cost being referenced. To the provider, cost is the expense incurred to provide health care to patients. To the employer, cost is the expense related to providing health benefits. To the insurance plan, cost is the price paid to the provider. To the patient, cost is the out-of-pocket fees.