What is a negotiated rate?

Everything you need to know about negotiated rates and how they work.

What you need to know

Most health insurance plans work with networks of providers. What that means is that the health insurance company has a contract with a network of hospitals and other providers. In that contract are negotiated rates for different services. For example, your health insurance provider may have a negotiated rate of $500 for a CT scan. The negotiated rate is usually lower than what the provider would charge an uninsured person.

Provider networks allow health insurance companies to have lower rates because they gain access to that insurer's customer base. As most insurers do not cover out-of-network care, these customers are much more likely to pick providers in their network.

Negotiated rates vary between different insurance companies. For example, larger companies tend to have more leverage in their negotiations as they have larger customer bases. A large health insurance company may have a negotiated rate of $500 for a CT scan while a smaller company may negotiate a rate of $700.

If you switch to a different health insurance company, you may notice that you pay different prices for the same health care services than you were getting before you switched. Part of this may be because of a different copay or coinsurance structure, but it's likely that a large part of it has to do with negotiated rates.

It can be very difficult to check negotiated rates for different plans, as they differ on a provider-by-provider basis. If you have a provider or doctor that you see frequently and are considering switching to a different plan or health insurance company, ask your doctor if they have a list of negotiated rates. They are likely your best resource in this situation.