ClearchargeOne service, four numbers
A hospital bill and the insurance statement that follows it can carry four different figures for the same procedure, differing by thousands of dollars. Only one of them decides what you owe. Here is what each is, why they diverge, and which to look at.
The four numbers
| Number | Who sets it | What it means for you |
|---|---|---|
| Billed charge gross charge, list price, chargemaster |
The hospital, alone | Almost nobody pays it. It is the starting point a discount is measured from. |
| Negotiated rate contracted rate |
The hospital and one insurer, privately | What the hospital will actually be paid in total, by insurer and patient combined. |
| Allowed amount eligible expense, approved amount |
Your plan | In-network, normally the same figure as the negotiated rate. |
| Your share | Your plan's benefit design | A portion of the allowed amount, set by your deductible and coinsurance. |
The two that get confused most often are the middle pair, and it is worth being precise: in-network, the negotiated rate and the allowed amount are usually the same number — one named from the hospital's side of the contract, the other from your plan's. Out of network there is no contract, so the plan decides an allowed amount on its own and the provider never agreed to accept it. That gap is where balance billing comes from.
How they fit together
Round numbers, chosen for arithmetic rather than drawn from any particular hospital — the real figures for your procedure are on this site's price pages, and the parts that depend on your plan are in your own plan documents.
| Step | Amount |
|---|---|
| The hospital's billed charge appears on the bill | $4,000 |
| Its negotiated rate with your plan — the allowed amount | $1,200 |
| You have already met your deductible this year | — |
| Your plan pays 80% of the allowed amount | $960 |
| You owe the remaining 20% coinsurance | $240 |
The $4,000 was never going to be paid by anyone. The $1,200 is what the hospital and insurer settled on. The $240 is yours. A hospital whose negotiated rate for the same service is $600 would leave you owing $120 — which is why the published rate matters to you even though you are not party to the agreement.
Before your deductible is met, you generally pay the allowed amount in full. In the example above, if you had not met your deductible, that $1,200 service costs you $1,200, not $240. This is the case where comparing hospitals saves the most money, and it is the position most people with a high-deductible plan are in for much of the year.
Why the gap is so large
Billed charges are set by each hospital with no external constraint, and have drifted far above what anyone actually pays. Negotiated rates are settled privately, plan by plan, and depend heavily on the relative bargaining power of the hospital and the insurer in that market. Neither number is closely tied to what the care costs to deliver — why hospital prices vary so much goes into the research.
The practical consequence is that the same procedure, at the same quality of care, carries very different negotiated rates a few miles apart. Across the ten most common operations in Georgia, we found the spread between the cheapest and dearest tenth of hospitals reaches twelvefold — the analysis, with the table.
What to do with this
- Look up the negotiated rate before a planned procedure. Search by procedure or by the code on a bill or referral. Your share is a percentage of it, so a cheaper hospital is directly cheaper for you.
- Check the cash price too. Hospitals publish it separately, and it is sometimes lower than your own plan's negotiated rate — though paying cash usually does not count toward your deductible.
- Read the Explanation of Benefits, not just the bill. The EOB shows the allowed amount next to the billed charge, and the two documents should agree.
- If you cannot afford the bill, the cap may be lower than you think. Qualifying for a nonprofit hospital's assistance policy limits what it may charge you to the amounts generally billed to insured patients — never the full billed charge.
One number this page has deliberately not included: the doctor's fee. A hospital price covers the facility only. The surgeon, anaesthetist and radiologist bill separately and appear in no hospital price file, so every figure here is part of a bill and never the whole of it.