I’ve mentioned countless times before that paying directly for health care can result in big savings, especially when seeking treatment at providers and facilities that cater to self-pay patients. This applies to people who are uninsured, have high-deductible plans, or who have more comprehensive health insurance plans that don’t cover a particular treatment or provider.
There is one pretty big caveat for the insured, however. Because of the way insurance contracts are typically structured between providers and insurers, the provider is required to charge the full “negotiated” rate they and the insurer have agreed to, even though the patient is paying the entire bill themselves. This creates the odd situation where someone who is uninsured will get a better price than someone with insurance, even if both of them are paying the whole bill themselves.
I recently stumbled across this post by Dr. Dike Drummond of The Happy MD blog, which explains better than I can why patients with insurance might be better off hiding the fact that they are insured:
…We may be seeing a time when the uninsured person writing a check begins to get a much needed break. This new pricing trend is causing some interesting ripples as more and more people become aware of the sometimes dramatically lower prices for cash on the barrel head.
Here are two examples:
A recent article in the Los Angeles Times reported a CT scan of the abdomen costs about $2,400 for patients insured by Blue Shield of California, while the Los Alamitos (Calif.) Medical Center cash price is only $250. That is a 89% discount by my calculation.
Another local California hospital charges insured patients $415 for blood tests that cost only $95 in cash. This time it’s a mere 77% discount.
Now, there are some interesting rules to the cash discount game.
First, to get the discounted prices, patients would have to withhold insurance information from hospitals. If you tell them you have insurance, they will be bound to charge you the insurance company’s negotiated rate. Those are the up to 89% higher fees documented in the previous paragraph.
However, if you don’t tell them your insurance and pay cash instead, the cash payments don’t apply to your annual out-of-pocket spending limits.
For a 89% discount, I am pretty sure there are times it would be worth it to keep your little secret. If you are healthy and only need an occasional visit to the doctor you now get to make the judgment call on cash discount vs. paying five times as much and applying it to your deductible…
In perhaps the most interesting reaction to cash discounts, a patient who was unaware of the discounted cash pricing last month filed a lawsuit against Blue Shield of California for unfair business practices, breach of good faith and misrepresentation over her medical bills after she was charged $2,336 for a CT scan that would have cost her $1,054 in cash.
Blue Shield said it “cannot promise or represent that there could not be providers who will charge someone less out-of-pocket cost for a service than she would pay if the Blue Shield contract rate applies.”
There are two challenges that patients with high deductibles will have in embracing this strategy. Dr. Drummond mentions the first one, which is that not telling the provider you have insurance means it won’t count towards the deductible. For most people this won’t be a problem because they don’t usually get anywhere near their deductible amount. And paying lower prices as a self-pay patient will make you even less likely to hit your deductible.
But if you know that you’re going to hit your deductible in any given year, perhaps because of a planned procedure, it might be worth it to go ahead and just let them know you have insurance.
The other problem is that it’s possible that the rates for a procedure are less for insured patients than for someone paying cash. Usually this is going to be the case at practices that aren’t cash-friendly to begin with, so be sure to ask right up front if they offer discounts for patients who pay cash. If they’re flummoxed by the question and start explaining that they need to know what insurance you have before they can give you a price, chances are you’re not going to get a discount, and you’re better off either giving them your insurance information or finding another practice.
Assuming they do tell you they give a discount for cash, you’ll want to find out how much it is. That’s not always going to be easy (and don’t try this in the event of a medical emergency), but if you know the treatment you need or type of visit you’re seeking, it shouldn’t be too difficult.
Unless you’re dealing with a cash-only practice or using a service like MediBid, they’ll ask you for your insurance, you don’t have to lie to them and tell them you’re uninsured, just stay vague and say things like “I’ll be paying for this myself” or “my insurance isn’t going to be covering this.” This should cover you in the event you do wind up using your insurance in order to get a better price.
Then you’ll need to find out what your insurer will pay for that treatment, or what the “allowed” charge is. In the past that was nearly impossible to find out, but today some insurers will give this information to the people they insure. You can also use sites like Healthcare Blue Book and Pricing Healthcare to see what insurers are paying, on average, for procedures in your area or even specific facilities.
If the allowed amount is more than the discount for paying cash, it’s probably worth considering keeping your insurance card in your wallet or purse and. You can still use your health savings account (if you have one, of course) to pay for it, you just won’t be able to apply it to your deductible.
It may seem strange, especially given the widespread assumption that one benefit to having health insurance is that you get ‘discounted’ rates at doctors’ offices and hospitals, that hiding your insurance can get you a better price for your health care. But there are lots of oddities in the world of health care pricing, and knowing this one could save you a lot of money.