Prices assigned to units of medical service, such as a visit to a physician or a day in a hospital. Charges for services may not be related to the actual costs of providing the services. Further, the methods by which charges are related to costs vary substantially from service to service and institution to institution. Different third party payers may require use of different methods of determining either charges or costs. Charges for one service provided by an institution are often used to subsidize the costs of other services. Charges to one type or group of patients may also be used to subsidize the costs of providing services to other groups.
The dollar amount asked for a service by a health care provider. It is contrasted with the cost, which is the dollar amount the provider incurs in furnishing the service. It is difficult to determine precise costs for many services, and in such cases charges are substituted for costs in many reimbursement and payment formulas (often with the stipulation that the hospital’s bookkeeping follow certain rules).