Examples of Calculating the Patient and Insurance Portion of Charges

Calculating the patient and insurance portion of charges can be a complex task, but it's essential to understand how it works. For instance, if a patient has a $1,000 hospital bill and their insurance covers 80% of the charges, the patient would be responsible for paying the remaining 20%.

The patient's share of the bill would be $200, as 20% of $1,000 is $200. This calculation is based on the example in the article, where a patient has a hospital bill of $1,000 and their insurance covers 80% of the charges.

To make it more concrete, let's consider another example: if a patient has a $500 doctor's bill and their insurance covers 90% of the charges, the patient would be responsible for paying the remaining 10%. The patient's share of the bill would be $50, as 10% of $500 is $50.

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Calculating the patient and insurance portion of charges can be a complex process, but understanding the basics can make it more manageable. The key is to identify the allowed amount, paid amount, and obligated to accept field (OTAF) amounts on the Explanation of Benefits (EOB).

The allowed amount is the amount the primary insurance company allowed for the submitted charges, which should equal the OTAF amount. The paid amount is the amount the primary insurance company paid for the submitted charges. To calculate the patient's portion, you need to know their copayment, coinsurance, and deductible amounts.

Here's a step-by-step guide to calculating the patient's portion:

For example, if the patient's insurance plan covers 80% of the cost, the patient is responsible for the remaining 20%. If the total cost is $100, the patient's portion would be $20.

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Medicare Secondary Payer (MSP) process pays secondary benefits when a physician, supplier, or beneficiary submits a claim to the beneficiary's primary insurance and the primary insurance doesn't pay the entire charge.

The method of calculating the Medicare secondary amount is the same whether the claim is assigned or unassigned. All claims are processed on a line-by-line detail.

Medicare is not a supplemental insurance, even when secondary, and Medicare's allowable is the deciding factor when determining the patient's liability.

To calculate the secondary payer amount, you'll need the Explanation of Benefits (EOB) from the primary insurer. The EOB will list information such as the provider's billed amount, the amount the insurance company allowed, and the amount the insurance company paid.

Here's how to calculate the secondary payer allowed amount (SA), the secondary payer paid amount (SP), and the obligated to accept field (OTAF) amounts:

To illustrate this, let's say the primary insurance company allowed $100 for a service, but paid only $80. The OTAF amount would be $100, as the beneficiary is not liable for the $20 difference.

By understanding MSP payment calculation, you can ensure accurate billing and reduce errors.

Including a deductible in treatment calculation can be a bit tricky, but it's essential to get it right. A deductible is a fixed amount your patient pays out-of-pocket for dental expenses before coverage from their plan's benefits will be applied.

Most dental plans include a yearly deductible per person and a family deductible. This means that your patient will need to pay a certain amount before their insurance kicks in. Typically, a deductible is only applied to basic or major procedures, not to preventative care like cleanings, evaluations, x-rays, or fluoride treatments.

For example, let's say your patient needs a $100 filling, and their plan will cover 80% of the cost after they pay $50 out of pocket to meet their deductible. The sequence is critical: insurance will first apply the patient's $50 deductible to the $100 filling fee, and then cover 80% of the remaining $50.

Here's the step-by-step calculation:

1. $100 (filling fee) - $50 (deductible) = $50

2. Patient responsibility (includes their $50 deductible): $100 - $40 = $60

It's essential to accurately enter the patient's insurance information into your practice management software (PMS) to arrive at an accurate number. This way, you can effectively explain to your patient the amount they're responsible for during their treatment presentation.

To illustrate this, consider the following example:

In this example, the patient pays $50 out of pocket to meet their deductible, and then they're responsible for 20% of the filling cost, which is $20.

In a real-world scenario, a patient named Sarah received a bill from a hospital for $10,000, and her insurance covered 80% of the charges, leaving her with a balance of $2,000.

According to the example in the article, the patient's portion of the charges was calculated by subtracting the insurance coverage from the total charges, so Sarah's balance of $2,000 is indeed 20% of the total charges.

The article also illustrates how to calculate the patient's portion of charges when the insurance coverage is a percentage of the eligible charges, such as in the case of a patient named John who had a 50% copayment.

In this scenario, the patient's portion of the charges was calculated by multiplying the eligible charges by the copayment percentage, resulting in a balance of $1,000.

A hospital may use a similar calculation to determine the patient's portion of charges when the insurance coverage is a fixed amount per service, as in the case of a patient named Emily who had a $500 deductible.

In this scenario, the patient's portion of the charges was calculated by subtracting the deductible from the total charges, resulting in a balance of $9,500.

For another approach, see: How to See If You Have Charges against You?

Calculating out-of-pocket costs is crucial for both patients and medical practices.

To determine a patient's out-of-pocket expenses, you need to consider their eligibility information, including their insurance plan's details.

A current health plan fee schedule is also necessary to understand how much the insurance company will pay for various services.

Copayments, coinsurance, and deductibles are the main factors that influence a patient's out-of-pocket expenses.

For example, if a patient has a copayment of $20 for a visit, they will owe that amount at the time of service.

Coinsurance is based on the insurance provider's coverage, such as covering 90% of office visits, leaving the patient responsible for 10%.

A patient's deductible also plays a significant role in determining their out-of-pocket expenses.

If a patient hasn't met their deductible, they may owe the entire visit amount.

Manual calculations can be prone to human error, but health plan estimation tools can provide accurate estimates of out-of-pocket expenses.

If this caught your attention, see: Is Dental Insurance Considered Health Insurance

These tools can be found on the insurance provider's website and can help practices provide more accurate payment details to patients.

However, it's essential to note that these tools are not always guaranteed and can change over time.

To calculate out-of-pocket medical expenses, providers must understand the details of a patient's health insurance plan.

This requires researching the patient's insurance information and connecting the dots to calculate the numbers.

A simple example of calculating out-of-pocket costs is when a patient comes in for a filling that costs $100, and their insurance covers 80%.

In this case, the patient is responsible for the remaining 20% of the cost, which is $20.

Related reading: Calculating Nopat

Knowing the patient's health plan fee schedule is crucial for calculating the amount they'll be responsible for.

You can look up the contracted fee prior to an appointment, based on the kind of appointment your patient has booked.

This will help you communicate confidently to the patient how much they'll have to pay upon their visit.

Expand your knowledge: A Patient Received a Service That the Insurance Company