Definitions
Health Insurance Terms
Cost Containment

Cost Containment

Definition:

When the insurance company devises a way to reduce the benefit payment or costs associated with the health plan.

Application:

Health plans no longer pays the entire charge billed by the medical provider. Health care costs were spiraling out of control, with new treatments and medications in the marketplace. Processes were developed to reduce the total amount paid on a claim. These involved: usual and customary reductions, preferred provider discounts, benefit penalties, and requesting pre-authorization of services. All of these methods reduced the total costs associated with providing medical care.

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