Why is there a difference between what hospitals charge and the payments they receive?
Federal regulations require a hospital to charge all its patients the same amount (with limited exceptions) for the same service. The amount collected by the hospital is almost always less than the amount billed for three main reasons: • Government programs, such as Medicare and Medicaid, typically pay hospitals much less than the billed charge. These payments are determined by government agencies and hospitals do not have any ability to negotiate these rates. • Insurance companies negotiate discounts with hospitals on behalf of the patients they represent. • Hospitals typically have policies that allow low-income persons to receive reduced-charge or free care.
