To Save Administrative Costs, Health-Care Providers Give Discounts for Paying Out-of-Pocket
(p. R6) As consumers get savvier about shopping for health care, some are finding a curious trend: More hospitals, imaging centers, outpatient surgery centers and pharmacy chains will give them deep discounts if they pay cash instead of using insurance.
When Nancy Surdoval, a retired lawyer, needed a knee X-ray last year, Boulder Community Hospital in Colorado said it would cost her $600, out of pocket, using her high-deductible insurance, or just $70 if she paid cash upfront.
When she needed an MRI to investigate further, she was offered a similar choice--she could pay $1,100, out of pocket, using her insurance, or $600 if she self-paid in cash.
Rather than feel good about the savings, Ms. Surdoval got angry at her carrier, Blue Cross Blue Shield of Arizona. "I'm paying $530 a month in premiums and I get charged more than someone who just walks in off the street?" says Ms. Surdoval, who divides her time between Boulder and Tucson. "I thought insurance companies negotiated good deals for us. Now things are totally upside down."
Not long ago, hospitals routinely charged uninsured patients their highest rates, far more than insured patients paid for the same services. Now, in the Alice-in-Wonderland world of health-care prices, the opposite is often true: Patients who pay up front in cash often get better deals than their insurance plans have negotiated for them.
That is partly due to new state and federal rules aimed at protecting uninsured patients from price gouging. (Under the Affordable Care Act, for example, tax-exempt hospitals can't charge financially strapped patients much more than Medicare pays.) Many hospitals also offer discounts if patients pay in cash on the day of service, because it saves administrative work and collection hassles. Cash prices are officially aimed at the uninsured, but people with coverage aren't legally required to use it.
Hospitals, meanwhile, have sought ever-higher rates from commercial insurers to make up for losses on other patients. Insurers pass those negotiated rates on to plan members, and given the growth in high-deductible plans, more Americans are paying those rates in full, out of pocket, than ever before.
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(Note: the online version of the story has the date Feb. 15, 2016, and has the title "How to Cut Your Health-Care Bill: Pay Cash.")