In revenue cycle management, what is the primary purpose of a deductible?

The primary purpose of a deductible in revenue cycle management is to determine the patient's financial responsibility before insurance coverage begins. A deductible is the amount that a policyholder must pay out-of-pocket for healthcare services before their insurance plan starts to pay. This means that it sets a threshold that the patient must meet for the insurer to cover any claims.

For example, if a deductible is set at $1,000, the patient must incur $1,000 in medical expenses on their own before the insurance company contributes to further costs. This mechanism helps to share the cost of healthcare between the insurer and the insured, encouraging patients to be mindful of their healthcare expenditures.

In contrast, options that focus on reducing out-of-pocket costs, establishing eligibility for benefits, or outlining allowable charges do not accurately define the core function of deductibles within the overall insurance framework. While those aspects are relevant in different contexts of healthcare financing, they do not specifically relate to the purpose of a deductible, which centers on the initial out-of-pocket cost before insurance kicks in.