united-states health-insurance
Lab work and laws regarding price-gouging
<p>A patient goes to doctor. Doctor orders two tests, TestA and TestB. The insurance company only covers one. The EOB shows that the two tests were billed at $500 each. TestA is not covered, TestB is covered and EOB shows that insurance company paid out $100 for TestB.</p>
<p>How much can a lab company bill out a test for. Could they bill out TestA and TestB at $1000 or $10000, even though majority of insurance companies will, if covered, only reimburse TestB and TestA at $100?</p>
<p>Are there any Federal or State(NY,CT,NJ) laws that limit how much an insurance company can demand for a specific test from a patient? e.g. Usual and customary price for a lab test?</p>
<p>Note: This questions assumes <strong>patient</strong> <em><strong>is</strong></em> <strong>responsible party</strong> for ensuring TestA and TestB are reimbursed. If this is not the case, please explain why.</p>

<h2>A company can charge whatever they like for their goods and services</h2>
<p>Except for regulated industries (e.g. utilities), or specific circumstances (e.g. during an emergency), a business is free to set their prices  as they like. Such restrictions as they are are usually on preventing prices being set too <em>low</em> as a means of eliminating competitors, so-called predatory pricing. In practice, limitations on pricing are economic, not legal: if you consistently sell lower than your costs, you go broke and if you constantly sell for higher than your direct competition, you also go broke.</p>
<p>So, for your contract with the lab, they can charge you whatever they like and they don’t have to consider what you would like to pay or whatever you might get from an insurer. You can (and should) ask the price before you agree to the test and compare prices with other providers. You can even try to negotiate lower prices. It’s your health and your money and you have to decide what represents best value for money.</p>
<p>Your contract with your insurer is completely independent of your contract with the lab. Again, you can (and should) decide how much you are willing to pay for your insurance - pay more in premiums and you generally get more coverage.  You can also check how much you will get back on any given procedure <em>before</em> you agree to it and that can inform your decision on whether to undertake it.</p>
<p>However, where you have agreed to the procedures without checking the price, you have also agreed to pay what they ask.</p>

<blockquote>
<p>The EOB shows that the two tests were billed at $500 each. TestA is
not covered, TestB is covered and EOB shows that insurance company
paid out $100 for TestB.</p>
<p>How much can a lab company bill out a test for. Could they bill out
TestA and TestB at $1000 or $10000, even though majority of insurance
companies will, if covered, only reimburse TestB and TestA at $100?</p>
</blockquote>
<p>Any amount it wants, although there would often be a contract between the lab and the insurance company requiring that the insurance company be charged a &quot;most favored nation&quot; price (i.e. the lowest price it customarily charges anyone to whom it is not providing charity care). Sometimes, in the case of a common test done by a laboratory who regularly deals with a particular insurance company, the laboratory and the insurance company would even negotiate a standard price that the laboratory will accept for a particular test.</p>
<p>Usually, in the case of a private insurance company, there is no such legal limitation (there are always some exceptions, although I'm not familiar enough with the nitty gritty in this area to know precisely what they are).</p>
<p>In the case of a government health care plan, such as Medicare or Medicaid, a relevant government regulation often sets a maximum price that providers who participate in the program can charge for particular kinds of services.</p>
<blockquote>
<p>Are there any Federal or State(NY,CT,NJ) laws that limit how much <strong>an
insurance company can demand for a specific test from a patient</strong>? e.g.
Usual and customary price for a lab test?</p>
</blockquote>
<p>Providers like laboratories charge patients, not insurance companies (except for Kaiser Permanente and a couple of much similar HMOs that vertically integrate a health insurance company and a health care provider network, in which it is wearing its &quot;provider&quot; hat when it charges patients for something other than a monthly insurance premium).</p>
<p>Insurance companies pay some portion of what patients are charged based upon an insurance contract that must be vetted by state insurance regulators and in some case, if it is offered on a health insurance exchange (an Obamacare created non-profit/quasi-governmental agency that mediates between households buying health insurance that is not through an employer and insurance companies), by the health insurance exchange as well. Insurance companies have to conform to their contracts.</p>
<p>In the case of a provider such as a laboratory with whom the insurance company doesn't have a specific agreement, the insurance company will usually have a policy of only paying what it sees as its contractual share of the usual and customary or reasonable price for the health care service rendered, and will disallow the balance of the charge.</p>
<p>But the providers can still try to collect the amount that the insurance company refuses to pay from the patient, in court, if necessary. And, often, when it does so, it will win, because the cost of fighting unreasonably high charges is great relative to a single patient's stake in not paying the charges.</p>
<p>Unlike most kinds of contracts to purchase goods or services, usually health care providers are not required to disclose to a patient and to obtain from a patient consent in advance, to a particular charge for a particular service before it is performed.</p>
<p>Under a fairly recently enacted law, some disclosure of a list of standard charges from some kinds of health care providers is now legally required (although it can be just on a long list of charges not disclosed to the patient in connection with a particular session of receiving health care from a provider) although enforcement of this requirement, and compliance with it, has been patchy at best in practice.</p>
<p>These issues are part of the reason why insurance companies usually cover a different portion of provider charges within a network of health care providers with whom the insurance company has contracts regarding prices for different kinds of procedures in place, and &quot;out of network&quot; providers who can charge anything they want even if it is much more than the &quot;going rate&quot; for the same procedure from similar providers in the same health care provider market.</p>
<p>If a patient really can't pay, more often, a patient will simply file a bankruptcy petition in bankruptcy court, rather than argue the reasonableness of the charges in an ordinary state court where collection actions are usually brought.</p>
<p>There are some health care services which health insurance exchange policies and certain other kinds of health insurance policies have to provide with no co-pay or deductible (e.g., certain preventative care and COVID care) or must provide on a equitable basis of coverage with other care (e.g. certain mental health services). Health insurance companies also generally can't require that emergency medical treatment come from an &quot;in network&quot; provider to be covered. But these mandatory coverage requirements imposed on health insurers don't directly impact what health care providers, whose services health insurance companies help patients to pay for, are allowed to charge for their services.</p>
<p>Generally speaking, laboratory tests that aren't purely preventative don't fit in any of these categories, and the laboratory can charge whatever it wants.</p>
