Charge, Cost & Price
Charge, cost and price each have different, distinct definitions within health care. According to the Healthcare Financial Management Association (HFMA):
Charge is the dollar amount a health care provider sets for services rendered before negotiating any discounts. The charge can be different from the amount paid.
Cost varies by the party incurring the expense.
- To the patient, cost is the amount payable out-of-pocket for healthcare services. This may include deductibles, co-payments, co-insurance, amounts payable by the patients for services that are not included in the patient’s benefit design and amounts balance-billed by out-of-network providers. Health insurance premiums constitute a separate category of healthcare costs for patients, independent of health care service use.
- To the health care provider, cost is the expense (direct and indirect) incurred to deliver health care services to patients.
- To the insurer, cost is the amount payable to the health care provider (or reimbursable to the patient) for services rendered.
- To the employer, cost is the expense related to providing health benefits (premiums or claims paid).
Price is the total amount a health care provider expects to be paid by payers and patients for healthcare services.
