Paid vs. Incurred Medical Expenses

Incurred medical expenses are the amounts billed by a healthcare provider to a patient for services related to the treatment and prevention of a disease or injury. Paid medical expenses refer to amounts paid for these services, whether by a patient’s insurance or out of pocket.

In health insurance coverage, the final amount billed for services is usually a reduced amount depending on the contractual agreement between carrier and provider and the types of services provided. A patient’s policy may cover various medical expenses (like office visits, procedures, and prescriptions) depending on the coverage limits and deductible. A patient would be responsible for any amounts beyond those covered by their policy. That portion is usually subject to a deductible or copay.

When a healthcare provider faces a claim or lawsuit following a patient injury or adverse event, the provider’s medical professional liability insurance (MPL) policy can pay associated defense costs for a covered professional incident. Their policy can also help cover damages if the provider is found liable for the patient’s injury or condition. In a court settlement, compensatory damages such as medical expenses are calculated based on what would reasonably or customarily cover treatments and care. Incurred and paid medical expenses are also considered differently from state to state in determination of compensation. Most states allow the patient to enter into evidence the total amount billed/incurred for medical expenses related to their injury or event. Another state may allow into evidence the actual amounts paid. Some states only allow amount billed and prohibit the defense from entering paid amounts into evidence. It is then left to a jury to decide what amount to award the plaintiff.

Read more on paid and incurred medical expenses at ProAssurance.com/Knowledge-Center.