What your doctor bills is not always what your insurance company will pay. The allowable rate/expense that the insurance company will pay is based on two things: contract and/or usual and customary rates.
If you are seeing an in network provider then your insurance company has a contract with them for how much they will be paid. The price in the contract agreement is often the allowable rate for these instances.
One key-note to remember is that just because your provider is in network for one service does not mean they are in network for all services. For example a mental health counselor may be contracted for individual counseling but not contracted for psychological testing.
Usual and Customary Rates (UCR)
If your provider does not have a contracted price then your insurance company may use a UCR rate. These rates are often calculated as a percentage of the federally allowed Medicare rate.
However, other insurance companies may have a set percentage for out of network providers. For example they may pay 50% of billed charges. However, they may also express it as 50% of UCR Rates, so be sure and consult your plan document to know which one your insurance plan uses.
In these instances the UCR rate or the percentage allowed of billed charges will be the allowed rate that your insurance company will consider paying. If there is no contract in place then you will be responsible for paying your provider in full, after the insurance has made their payments.
For both of the above instances it is important to note that your insurance company generally won’t pay 100% of the allowable rate unless you have met an out-of-pocket maximum. There are generally deductibles, co-payments, and/or co-insurances that you will be responsible for paying.