Insured patients can save money by pretending to be uninsured

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:

Hide your health insurance status and pay cash instead

…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.  

This entry was posted in Cash-Only Doctors, High-deductible health insurance, Negotiating Medical Bills, Price Transparency and tagged , , , . Bookmark the permalink.

47 Responses to Insured patients can save money by pretending to be uninsured

  1. DR. Mike Vasovski says:

    The same “don’t tell them you have insurance” applies to many generic Rx’s that can be filled at big box stores that are offering $3-$4 per month for select meds. Patients frequently comment, “you mean I don’t have to tell them I have insurance?”

    The pharmacy benefits companies are complaining that this interferes with their “quality assurance programs”. More likely it’s interfering with their profit assurance guarantees.

  2. No one ever has to use their insurance. I have heard from many that a drug discount card price was cheaper than their copay. It’s like your auto insurance. You can opt to pay for a covered repair yourself rather than report it to your insurance company.

    • Carol Betz says:

      Your comment says that no one ever has to uae their insurance. Is there a law or anything in writing that shows this?

      • says:

        No, fortunately our legal system isn’t based on the idea that in order for something to be legal, the government must pass a law saying it’s legal. Instead, there would have to be a law that specifically said that it was illegal to not use insurance for medical bills if you had it. No such law exists, so it’s legal.

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  4. Eric says:

    I have experienced this myself. I went to an in-network imaging center for a CT-Scan and found that our PPO rate was $2700 which would be paid entirely by me since my remaining deductible was $3,000. Fortunately, the lady at the imaging center quietly told me that if I paid cash and they didn’t report it to the insurance company, they would do it for $400. I just can’t fathom how a stingy insurance company would agree to pay such an inflated rate for this procedure. Isn’t the value of a PPO network the heavy-weight influence they have negotiating great rates for their customers? Obviously not. The silver lining was that this situation was one piece in the puzzle which led our non-profit organization to can our group insurance plan and put everyone in the organization on the Health Co-op plan instead. Our monthly costs are half and we like what we’re getting for it.

  5. Rick says:

    I just gave up my Medicare Advantage and went with straight Medicare. I learned that Medicare Advantage was more expensive for me in terms of co-pays. I lose my dental and vision. While I haven’t found out if my eye doctor will discount for self-pay, my dentist recently honored what my insurance would pay, which was $100 for exam, cleaning and x-ray. Next exam will cost $82. That is $182 for two visits. The dental plans I found cost $1/day, or $365 for the year. Even when I was working, my company deducted somewhere around $30/month for dental. My dentist doesn’t like me. No cavities, no root canal, etc. He kids me and calls me boring and laments that I am doing nothing to help him put his daughter through college.

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  8. Jerome Bigge says:

    It should be noted that in France the patient pays the doctor at the time of service and then collects back a percentage of what they paid to the doctor. I see no reason why this sort of insurance wouldn’t work here in the US as well as it does in France. Having the doctor bill your insurance, while convenient for you, adds a fair amount to the cost as the doctor has to have his medical biller bill the insurance company, then wait for payment. Which depending on the insurance company, could be as much as a month or two. If the doctor could get paid right away, no need to hire a medical biller, the doctor no doubt would be willing to discount his usual fee. BTW there are numerous businesses that will give a discount if payment is at the time of service instead of having them bill you.

    • gwoccmed says:

      It used to work that way in the US, only many didn’t pay the doctors kind enough to bill (or alternately family doctors not smart or mean enough to demand payment up front from struggling families). Too many such patients just pocketed what the insurance company paid them forgetting/neglecting to pay the doctor. Hence , the evolution of the current doctor paid directly by insurer relationships (called “assignment of benefits” in the papers you signed at your medical visit). With HSAs making the insurance involvement now a sham for any actual direct to doctor insurance (non)payment [it’s now mostly just a insurer repricing scheme and the patient usually pays] a return to a direct pay time of service system like you mention is a likely next (retro)evolutionary phase.

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  10. There is a certain irony in the fact that hospitals and other medical providers typically charge patients without health insurance as much as three times what they charge Medicare or an insured patient. This situation is getting increased media scrutiny, which is one reason why clinical laboratories and pathology groups may want to review their own policies for charging patients without health insurance. Self-pay patients include the uninsured, under insured, out-of-network patients subject to balance billing, self-insured patients, foreign patients and some others. Even under the Affordable Care Act, there will still be many (an estimated 30 million after 10 years) uninsured Americans.

    • Thad says:

      My experience as a self-pay patient has been exactly the opposite. The cost is far and away cheaper than the insured price.

    • g woodall says:

      Some insurers (and government programs) insist they get the lowest charged rate but also demand significant discounts – then “regular” rates are inflated to allow the discounts – guess who might be paying the “regular” rates . . .

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  12. M Easterbrook says:

    Is “hiding your insurance” actually insurance fraud? If you carry a high-deductible policy, then state that you are “self-pay” is that illegal or fraudulent?

    • says:

      To the best of my knowledge it isn’t – ‘self-pay’ isn’t a legal term, and I commonly use the term ‘self-pay’ to describe people who have high-deductible insurance.

      • Linet says:

        What if your pharmacy already knows that you have insurance? Are they obligated to file a claim with your insurance, or can they just give you the discounted price offered by the manufacturer?

        • says:

          I’m pretty certain you can ask them not to submit it to insurance and that you’d rather pay the cash price.

          • g woodall says:

            Insurance is a contract between you the insurer to indemnify define losses/expenses in exchange for a fee – pharmacies and doctors have you sign assignment of your insurance benefit because patient used to collect the insurance and not pay – now they are in the middle – so long as you pay your bills the middle men “should not” mind and you “should not” be obligated to use your insurance “benefit” (which of course has been bastardized by discounting systems that don’t reflect reality)

  13. g woodall says:

    of course medicaid and medicare may be exceptions due to “participation” rules which prohibit billing outside the program (? includes criminal penalties)

  14. mike says:

    Kroger told me that they “have” to charge everybody the same price for the same drug.

  15. Linet says:

    I showed my coupon to my pharmacy and told them I didn’t want to use my insurance. They honored it. Hopefully they will do the same on the refill.

  16. Diane says:

    Why couldn’t you just file your insurance yourself so it could go towards your deductible???

    • says:

      Quite often, insurers won’t allow anything towards the deductible unless it’s run through their network and repricing schemes. Hopefully this will change, and there may be some exceptions, but usually insurers look at it and rule it an out-of-network expense and therefore not eligible to be considered towards the deductible.

  17. Medicaid self-pay HIPAA policy says:

    According to the Medicaid self-pay HIPAA policy, what are the requirements and process on a Medicaid patient who wants to be considered self-pay or “out of pocket?” How can the patient be assured that their medical records are not reported to Medicaid in the near future if they do not what them to? I understand that all state policies are different, can you provide me with information on how to access this information.

    • says:

      I’m not all that familiar with specific Medicaid requirements, but to the best of my knowledge you’re not required to bill Medicaid for services if the patient requests that you not. I’d imagine a call to individual state Medicaid offices would resolve this.

  18. Judy says:

    The doctors I work for would like for me to find documentation to support the fact that a patient can opt out of using their insurance if we know they have it. Are we breaking the contract we have with the insurance company?

    • says:

      You’ll probably need a good contract attorney to review it, but since people frequently lose or switch insurance plans, you’re likely going to be fine if you just take people at their word when they say “I’m paying for this myself” and not run it through insurance.

      • Billy Bombastic says:

        Ah, I think Judy’s question lets on to one of the key problems with health care costs in the country and major reason for the skyrocketing costs NOT involving the insurance companies. What her doctors are really asking is, “If I know I can bill the insurance company for MORE, can’t I do that and to hell with the patient?” In other words, GREED. Apparently the hypocratic oath does not extend to a patient’s financial health.

        This is why a patient needs to be very cagey about revealing they have insurance. Doctors are not going to tell you which route is cheaper. They will almost always err on the side of collecting the most money. After all, they didn’t go to medical school for 8 years to retire poor.

  19. Joann says:

    We are a chiropractic facility and truly want to discount for young children. We have been told that we must be in a “discount plan” in order to offer cash discounts. Our question that no one seems to be able to answer is, can we extend this offer to children who are covered under their parent’s insurance plan? We would be processing the children as self-pay patients instead of insured patients, and at a charge that would be much below any coinsurance or copay currently being offered. This is not to circumvent the insurance but to provide affordable care for a clientele that is often overlooked.

    • says:

      There’s no requirement in law that says you have to be in a ‘discount plan’ to offer cash discounts, perhaps in some insurer agreements however. I think if the children are covered under the same policy AND YOU KNOW they are covered then you may be required under your contract to charge them the negotiated rate, but that’s probably something you’ll need to look at your insurer contracts to determine. The trick is to just not find out whether the kids are on the same policy…

  20. Gloria says:

    Question, our physician is not contracted with patient insurance. Patient would like to pay cash. What if he ends up having surgery and patient wants to bill his insurance? IS this legal?

    • says:

      Just to be clear, the same doctor would be the one performing the surgery?

      First, it’s definitely legal, unless Medicare is involved. Since the doctor is ‘out of network’ it shouldn’t be any problem either, to the best of my knowledge none of the insurers require patients or out-of-network doctors to submit all bills (or any bills, for that matter). Probably the easiest thing to do (check with the insurer first, though) would be to have the doctor hand the patient all bills, and the patient can pay in cash those they want to and submit for reimbursement to the insurer for what they want them to cover. That way the doctor never has to deal with the insurer, and the patient is just submitting those bills for reimbursement they want to.

      • Gloria says:

        Yes, it would be the same physician. What if its a Medicare product?

        Thank you.

        • says:

          If it’s a Medicare situation, I’m pretty sure it’s illegal. Dumb, I know, but they get real upset when anyone with a Medicare card tries to pay cash for anything.

  21. Gloria says:


    A patient has BCBS AZ and a Medicaid plan as a secondary, we are not contracted with any AZ Medicaid plan but we are contracted with patient’s primary. Can the physician deny services since the physician isn’t contracted with patient’s secondary? I believe have to see patient since we are contracted with BCBS AZ and summit an authorization for patient’s secondary. Either get a denial or approval from the secondary. Now, if the secondary denies is patient responsible for any ded/coinsur/oop from their primary insurance?

    • says:

      Sorry, not much I can offer on this, probably need to consult an attorney familiar with provider contracts in Arizona. I’ll just say it’s messes like this that hopefully will make more doctors realize just going cash-only is the best option!

  22. Marcia says:

    I was told I was covered for preventative care (pap and mammo) by my insurance carrier. Then after the visits I found out I wasn’t because my plan was grandfathered. I was amazed that the office visit for the pap alone was $391. My insurance applied the whole amount to deductible. No contracted amount even though the doctor was in network. I called the doctor’s office, and was told had I said I was self pay, there would have been a 40% discount. The office says they can’t do anything now to rebill it as self pay. Is there any one that I can contact in regards to this? Isn’t this illegal to have two different charges?

    • says:

      This is pretty common, and legal. Once you tell your doctor you’re covered by a certain insurer, they’re obligated to charge you that price even if it would be cheaper to pay self-pay rates. It’s part of their agreement with the insurer.

  23. C.J. says:

    Now, however, enters electronic medical record, which shares across the board your personal information. I see that causing issues for people who would rather self-pay and another tricky way around people who claim to be, no?

    • says:

      Potentially, but I don’t think electronic medical records currently have insurance information, but it’s not really an area I’m that familiar with.

  24. J.M says:

    I stumbled across this forum because after a recent experience, I went searching for answers. I went in for a CT and they knew I had insurance. However, the very nice lady at the imaging place presented me with a “self-pay” option. Pay me $413.00 cash today, or I can bill your insurance for you and it will apply to your deductible. I just sat there like an idiot looking at her for a minute. Being blessed with excellent health for the past 55 years, this was something brand new and honestly shocking to me. I said, much would you bill my insurance? She tells me $4,651.00!!! Of which I would end up owing $3,000.00 after deductibles and all. HUH?
    Of course I handed her a credit card and steamed about it all weekend!! How can that be legal? Seriously? If they can still make money with a $400 CT, WHY would they bill the insurance $4,000?? I still can’t believe it. Hence all the exclamation points. This is just not right – scummy!!! The price should be the price, period!! No wonder our insurance rates are so high. Isn’t there anything we can do about this? If we get a movement going, sign me up!!

  25. Brenda says:

    How can it possibly be legal to have a law (ACA) that now requires all Americans to carry health insurance when we can get lower prices by not using it? I’ve experienced similar situations to those in the other comments and wondered “Why do I pay for expensive insurance when it would be cheaper to pay out of pocket?” Because we are REQUIRED TO PAY FOR IT. Some might say – Go to a high deductible plan. We have and it is only about $100/month less than the other plan so we aren’t saving that much money on it. We can’t go to a catastrophic only plan because Obamacare no longer allows that for anyone over 30. Seriously – how is it legal to force me to buy a product that makes all of my out of pocket costs go up?

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