Why do insurance companies agree to pay 2-3 times the self-pay price??

[wolfcreek]

I am trying to get my head around it. Example: self-pay for an implant is somewhere around $18,000-$25,000. But if insurance is involved the price is around $40,000-$60,000. Why would the insurance companies agree to pay so much more if the surgeon can still make a healthy profit for the much lower self-pay price? Is there some sort of collusion going on? Or some tax advantage? Kickbacks? Why hasn't Congress investigated this? I suspect it happens for all types of medical procedures, not just IPP implants. Is it cheaper in countries with socialized medicine, like Canada?

[williamb]

I do not think they agree to pay more, the insurance company like Medicare has a range that they consider usual and customary charges and then they negotiate and reduce their cost from there. So the providers know to get their pay they have to be imaginative in the billing, its the only way that they can come close to getting what a self-pay customer pays. Plus there is a lot of administrative cost in dealing with Medicare and Insurance companies. Then you add into the mix a few providers or insurance companies that have dishonest practices and that really screws things up.

[wolfcreek]

Maybe I should get the "Freakonomics" guys on the case. They seem to be able to always get to the bottom of these sorts of questions....

[LMCatman]

insurance companies typically have agreements/contracts that get the price way way down. My first implant surgeon (chosen poorly by me) was paid $1600 by Humana. My second, my "savior" Dr Perito was not on Humana's network and I paid him directly. I think he gave me a "special deal" because he hadn't seen an implant as fucked up as mine and wanted to fix it. Which he did. I'll not specify his price but it was more than the Humana payment to the previous Dr. Humana paid all else, after the deductible....