When a hospital and an insurance company agree to work together, the hospital also agrees to a different pay scale for procedures. The theory is that by taking ABC Company’s insurance, the hospital will have more visitors. Since it is getting more visitors, the hospital bills the insurance company for less money than it would bill an individual; think of it as the insurance company getting “group rate.” Therefore, the hospital may bill Jane Doe $5000 for an MRI – but would only bill ABC Company $500 for an MRI. In other words, there are often vast differences between what hospitals charge insurance companies and what hospitals charge individuals like you. You are regularly charged more. The prices are even further reduced if the patient uses Medicare or Medicaid, which are run by the federal and state governments, respectively.