Those are CPT codes, Current Procedural Terminology, and the insurance carriers base payment on the particular code. The procedure code needs to match up with an ICD (International Classification of Diseases) code, or diagnosis, for payment to be approved. There is an entire profession that does coding, Certified Medical Coder (CMC) or Certified Professional Coder (CPC). The doctor does what they do, documents it, renders the diagnosis, and the coder figures out how to code it and therefore bill it.
Essentially, it’s another layer of staffing necessary to function in the insurance game. There are seminars for doctors that teach what to do and how to document it to qualify to bill a higher service level, and therefore, more payment. Sometimes, it’s as simple as asking one question and documenting it, bumps the service up to the next level.
What you have is an example of exactly what I was referencing. You had blood work of which the charge from LabCorp was $1198. LabCorp is in your carrier’s network, so your “rate” turned into approximately $185. Nice. Even better, none of that was applied towards your deductible which you have either already met this year, or lab services are not applied to the deductible as part of LabCorp’s agreement with the carrier. Plus, there is no co-pay or coinsurance, like 20% of the member rate applied, which means you’ve either met your out of pocket limit for the year, or there is no out of pocket expense for labs.
Obviously, a great deal for you, cost to you is nothing. Insurance paid around 15% of the amount billed. We pay about 10% of what Quest would bill. A potential drawback with insurance vs provider payment is if they would not allow a particular test, or certain tests to be repeated, or tests for patients getting treatment for something not allowed, like test when your levels are 400.
On the other hand, the reimbursement is such a small percentage, they just pay it. They (insurance carrier) do not want you cancelling coverage with them or you, and other employees, bitching to the company’s HR department until the employer goes elsewhere for employee benefits.