Healthcare Economics: (1): A radiology firm charges $2,000 per exam.

Question

An insurer's allowed fee is 80 percent of charges. Its beneficiaries pay 25 percent of the allowed fee. How much does the insurer pay? how much does the beneficiary pay? 

 

(2): If the radiology firm raised it's charge to $3,000, how much would the insurer pay? and how much would the beneficiary pay? 

Answer 1

Assume total charges = x

Then insurer's allowed fee = 0.8x

Since beneficiaries pay 25 percent of allowed fee

Beneficiaries pay (0.25) (0.8x) = 0.2x

 

Therefore, insurer pays 80 percent of charges, beneficiary pays 20 percent of charges.

 

Based on these percentages, for a charge of $3000:

 

Insurer pays $2400

Beneficiary pays $600.