First of all, negotiated rates are only applicable with PPO (Preferred Provider Organizations) plans and only when you are using in-network providers (doctors and hospitals). The negotiated rate is essentially the basis for the entire PPO model of health care insurance. With a PPO health plan in California, the health carrier contracts with doctors, hospitals and other medical providers to accept lower reimbursements when PPO members use their services. The trade-off to the provider is that many more people will choose these providers for their services. It's essentially a large group discount. This negotiated rate is usually 30-60% lower than a person would pay if you did not have PPO coverage. The negotiated discount tends to be larger for facility care (such as hospital care) and lowest for medication costs (pharmacy claims). Even if your plan has a medical deductible, you still want to always show your card as the negotiated rates will usually apply for covered-benefit if in-network even during the deductible phase of your coverage.
California HMO health plans do not have
negotiated rates per se since most services for
HMO plans are fixed copays or co-insurance. The
HMO model is completely different than PPO
plans. The provider (usually primary care
physician and/or medical group) is paid a
certain amount each month for each member under
there care. Essentially, the provider is
assuming the responsibility to manage the health
care needs and budget of all the members under
their care. This model is more "managed" than
the PPO model.
If a benefit is not covered (say purely cosmetic surgery), then negotiated rates would not apply. In fact the amount would most likely not go towards the deductible or max out of pocket of the California health insurance plan. There are some "hospital only plans" where basic office benefits can be covered once the max out of pocket is met but the only way to meet the max out of pocket is through a hospital. In this case, the office visits most likely will not have negotiated rates even if in-network until the max is met.
Of course, negotiated rates will not be applicable with out-of-network providers. This can make a big difference in your out-of-pocket expenses. For example, if your out of network doctor charges $500, the negotiate rate for an in-network provider might be $300. That means you will pay $200 more towards a deductible. Also, if you have already met your deductible and you are into the co-insurance portion of your health plan, you may pay a higher percentage of what the carrier would pay an in-network provider. This can really make a big difference. One note...a true emergency medical situation may allow your plan to treat medical treatment as in-network in terms of meeting deductibles/max out of pockets, but the negotiated rate may not apply since the provider is charging the higher rate anyway.
The negotiated discount tends to be pretty similar from carrier to carrier...especially the major California health insurance carriers that directly contract with providers in the State. Some nationwide carriers "borrow" or use a network that is not their own directly contracted network. They may be paying more for services than the major carriers and it should be reflected in the insurance premiums, all things being equal.
Show your card or process the claim through the health insurance carrier and let them make the determination as to negotiated rates and coverage. Ideally, with an in-network provider, you should only have to pay any relevant copays when services occur. The provider may not know what their contracted rate for every given service and code so you want the claim to go through your carrier. The carrier will then send you an EOB or Explanation of Benefits. The EOB will show if there is a negotiated discount for that particular provider and/or service code. You would then pay the provider according to amount on the EOB. Most in-network providers agree to bill the carrier and not ask for payment up front as part of their PPO contract with the carrier.
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