Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Mar 19, 2020

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Doctor charges different prices for prepayment and payment from insurance company.

In most parts of the United States, it is legal for a doctor to charge different rates to patients who prepay vs. payment from an insurance company. The doctor has a contract with the insurer that sets out the amount the doctor will be reimbursed for medical services and procedures.

When the patient prepays for the services, this schedule of insurance rates doesn’t apply, since he or she is paying, as opposed to the insurance company assuming the cost.

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Medical Insurance Policy Provisions

Each medical insurance plan has its own directives about what it will pay, and how much, for procedures.

In some cases, a particular procedure must be approved in advance before the insurance company will cover it. Other policies do allow an insured person to prepay for medical services or procedures and ask the insurance company to reimburse the policyholder for at least a portion of the services after the fact.

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Difference in Fees Charged

When a doctor agrees to be part of a medical insurance company’s network of providers, he or she will be offered a set rate for services. Since signing up for one of these insurance plans means access to a guaranteed pool of potential patients, the rates paid out by the company for services rendered will likely be lower than what the doctor would get paid by billing patients directly for the same medical services.

The insurance companies work in the same manner as a large retailer does. When a company like Wal-Mart is looking for products to carry in its stores, they are negotiating with wholesalers for a large volume of product. The company can negotiate a discount based on bulk rates that a smaller company will not be able to get, simply because of the numbers involved.

A smaller company that wants to place an order from the same wholesaler will be paying higher rates for the same product. This rule applies to healthcare as well. The patient may be billed for the services based on his or her status as an individual as opposed to a member of the health insurance plan.

Check Health Insurance Policy

A person who is considering prepaying for medical services and then seeking reimbursement from the health insurance plan should look at the provisions of the plan first. The policy language will set out the procedure a plan member should follow for making claims against the policy. It will list the policy deductible, as well as any copayments the plan member is required to make.

The policy language will also list the specific services that are covered under the policy. It may also list specific types of medical services that are excluded from coverage under the policy.

If, after reviewing the policy provisions, something is not clear, the plan member should contact the plan administrator or the insurance company directly to get some clarification about the matter. The plan member should keep asking questions until they get the information they need to make decisions about the best way to proceed.

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Billing the Insurance Company Directly

If the services can be billed to the insurance company directly, the fee the doctor can collect will likely be lower than what he or she can collect by billing the patient directly. The doctor has the right to charge higher rates for services rendered outside of the agreement that he or she has made with an insurance provider if the doctor chooses to do so.

Even if the patient is a member of an insurance plan, the issue involves where the bill is being sent. Ideally, the patient should find out about how this will be handled before the bill is paid. It’s possible that the rate charged is an error made by the doctor’s staff, and the patient can contact the doctor’s office to discuss the matter. It’s also possible that the patient is not considering any required copayments when looking at the amount the insurance company is paying.

The doctor who charges different prices for prepayment vs. payment from an insurance company is not doing anything illegal in most regions of the United States. A plan member who gets authorization for the procedure from the insurance company beforehand may be able to argue that he or she should have to pay only the same health insurance rates that the insurance company will be charged, since the bill will ultimately be paid by the insurer.

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