Hide your health insurance status and pay cash instead

It always has broken my heart to see a person bankrupted by the costs of their healthcare. I remember my outrage when I first learned the only people who pay full price for their medical procedures are the ones paying cash. Insurance companies use their market muscle and patient volumes to  negotiate discounts for their patients that have always been unavailable to the uninsured, individual healthcare consumer.

If you have been in practice for even a short while you have patients who have lost their homes and even been bankrupted to pay medical expenses, usually for emergencies or end of life care.

The days of paying more when you are paying cash may be coming to an end. Doctors and hospitals are starting to do what every other business has done since the beginning of time – giving a discount when you pay cash. States are beginning to require pricing transparency and hospitals and physicians are starting to publish their “cash prices” for all to see.

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.

Hospital executives say they don’t like to charge insured patients more, calling it a result of the country’s broken healthcare system. “We end up being forced to charge a premium to health plans to make the books balance,” said John Bishop, the hospital’s finance chief of Long Beach (CA)Memorial Medical Center. “It’s a backdoor tax on employers and consumers.”

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.”

In my mind it is only fair that the cash price gets a discount. I must admit the size of the discounts being offered certainly raises my eyebrows. However, it is just the latest in a long string of things that don’t make sense when it comes to healthcare pricing in America.

At least now, the people unfortunate enough to have only cash to pay for their medical expenses can finally get a break.

Dike Drummond is a family physician and provides burnout prevention and treatment services for healthcare professionals at his site, The Happy MD.

Submit a guest post and be heard on social media’s leading physician voice.

View 19 Comments >