Paying cash? Get a discount on your health care

Low prices are intended only for uninsured patients, officials say

Topics: Reimbursement, Finance, Revenue Cycle, Undercompensated Care, Uncompensated Care, Billing and Collections

May 30, 2012

Many hospitals offer large discounts to patients who agree to pay for outpatient treatments promptly, in cash, and without using their health insurance, according to a Los Angeles Times investigation.

To assess the prevalence of the little-known discounts, the Times contacted eight hospitals across Southern California about pricing for a common CT scan. It found that almost all of the hospitals offered a different, lower price to patients who paid in cash without insurance.

For example, one hospital website indicated that the price of an abdominal CT was $4,423, while the Blue Shield of California negotiated rate was about $2,400. When the Times called the hospital, it found that the cash price for the procedure was just $250.

Why hospitals created cash discounts

The California Hospital Association says the cash discounts are intended only for uninsured patients; most hospitals have other discounts for insured patients who pay upfront.

According to the Times, the cash discounts evolved over time as hospitals faced growing criticism over collection tactics and rates charged to uninsured patients; allowing these patients to pay a smaller bill upfront helped hospitals secure some revenue and avoid costly collection efforts.

Some insured patients say the discounts penalize them for carrying large insurance premiums and deductibles. However, hospital executives counter that the steep discounts are not offered to insured patients in part to cover the cost of providing care to uninsured and Medicaid patients

How insured patients take advantage of the discounts

The Times notes that insured patients who seek to take advantage of the discounted price—which are often lower than out-of-pocket payments for insured patients—could try to conceal their insurance status from the hospital.

The option may be especially appealing to insured patients as employers ask them to shoulder a growing share of their medical costs, insurers reduce their coverage levels, and high-deductible plans become more common.

However, experts warn that the cash payments do not apply toward annual insurance limits for out-of-pocket spending. As such, patients should consider expected future medical bills and the amount of their deductible before attempting to secure a cash discount (Terhune, Los Angeles Times, 5/27).

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