What does co-insurance represent in healthcare billing?

Co-insurance represents a cost-sharing mechanism in healthcare billing where the patient and the insurance company each pay a certain percentage of the total healthcare bill after the deductible has been met. For instance, if a plan has a co-insurance of 20%, the patient would be responsible for paying 20% of the costs of a covered healthcare service, while the insurance company covers the remaining 80%. This arrangement encourages patients to be more conscious of their healthcare expenses, as they are directly involved in contributing to the costs.

In contrast, a fixed amount that patients must pay for each service is referred to as a copayment, not co-insurance. Flat fees established for specific procedures are known as bundled payments or fee-for-service arrangements, which differ from the shared percentage structure of co-insurance. Lastly, payments made by the insurance company only describe reimbursement patterns and do not reflect shared financial responsibility that co-insurance entails. Understanding the concept of co-insurance is crucial for navigating healthcare costs and insurance benefits effectively.