Does paying cash now cut your health care bill?

by on February 17, 2016 at 2:38 am in Economics, Law, Medicine, Uncategorized | Permalink

This one is new to me, and I cannot vouch for it.  Nonetheless I wondered if this report from Melinda Beck at the WSJ might be a positive sign:

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.

Here is the full story.

1 Reilly February 17, 2016 at 3:36 am

As someone who has always had high deductible insurance, doctors offices would routinely give me cash discounts even prior to the ACA, charging rates well below what would have been billed to the insurance company.

They saved on the Adminstrative hassle I imagine, and I also think there may be some contingency built into their standard prices to allow for failures to collect (both from insurers and patients). Cash on the barrel head makes they happy.

The varying negotiated rate schedules between different doctors and insurers may play into this as well, with the cash option giving providers more flexibility to charge something like a “real” price.

2 Damien February 17, 2016 at 11:36 am

Yes, this has been my experience too. I avoid doctors as much as possible, but when I go I typically offer cash payment (or use my HSA Visa) and skip insurance, even though I am insured. I think I originally heard the idea about 12 years ago from Rush Limbaugh, that you should negotiate with doctors with an offer to pay cash. As in, “What’s the price if I pay cash today?” It works.

3 Shane M February 17, 2016 at 6:09 pm

Doctors I’ve had experience with often don’t know what the charge is regardless of cash or insurance. When my wife broke her wrist I asked the doctor/surgeon about charges and his reply was “I don’t know.” I do remember at the ER they gave us 20% discount if we paid today though.

4 Alex K February 18, 2016 at 1:59 pm

Most contracts between insurances and providers (hospitals, pharmacies, etc.) have a “usual and customary price” clause, which dictates that providers should charge consistent amounts.

If the providers ask for less money from cash patients, then the insurances feel entitled to reimburse the providers for much less as well. That’s why providers used to charge cash patients high amounts — not because of monopoly reasons.

Welcome to the slimy world of “third party payments”/insurance.

I’m curious about why some people had success in getting lower prices for cash. Unless the way contracts are written changed, it’s unlikely that lower cash prices are a major factor in health insurance.

5 JonFraz February 18, 2016 at 1:42 pm

When I lived in St Pete (over ten years ago) I went to a doctor whose office did not process any insurance except Medicare– in St Pete you pretty much have to take that. Everyone else paid cash (check or credit card) at the time of the visit– though Of course you were free to turn a claim into your insurer yourself for reimbursement, and I did. This greatly lowered the doctor’s overhead. Instead of a small army of billing clerks, he employed just one lady, who was also his receptionist (his wife filled in for her at need). It also meant he had fewer cash flow problems. Office visits cost just $60, which even in 2005 was on the low side.

6 LonelyLibertarian February 17, 2016 at 4:27 am

This is not new – 10 years ago when I told the clerk at my doctors office I would be paying for my visit in cash the bill went from $80 to $45… Five years ago when I got my dentures the surgery to remove my death got a 60% discount for cash upfront and th anesthesiologist discounted his services 40%. More recently my wife had a hospital episode that ran up a $30,000 bill. We were able to get the total cost of this below $16,000 by telling everyone that we would be paying IMMEDIATELY. This was BEFORE the ACA and in talking with others it seemed to be common practice.

I have argued for years that the real cost of health care is much lower than what gets billed and that self insurance for many is a real and practical alternative provided some sort of catastrophic umbrella is in place. The ACA actually makes this even more practical since one can get enrolled and covered in 12 months or less.

7 Boonton February 17, 2016 at 10:24 am

Why don’t you start an insurance company that offers the following:

Doctor/Hospital/Specialist – We’ll pay you the standard negotiated price in 90 days or if you give us a 60% discount we’ll wire the money into your bank by the end of the day.

Or if starting your own insurance company seems like a problem why don’t you pitch yourself to insurance companies for the job of chief negotiator?

I think people fall into a mistake about ‘price’. In Western developed nations we are used to the Wal-Mart style of price. You walk into a store and there’s a price tag on something so you buy it for that price. This is not how price works/worked in most of the world and for most of history. The other style of doing prices is you walk into a market and look at some guy selling rugs. You tell him his rugs are crap but you’re curious how much he thinks he should get. He tells you they are the great rugs in the world and they cost $1000. You laugh and tell him you would pay $100 only because you wouldn’t want to see his kids starving. 30 minutes later you walk out with your rug for $500.

Wal-Mart leaves a lot of potential revenue on the table because there is no way their business model could afford lots of savy cash register people trying to haggle up the price people pay for soap and paper plates. Health care, however, can afford this when the costs you are talking about are large.

8 msgkings February 17, 2016 at 12:05 pm

There’s another big difference with health care though. No one truly NEEDS another rug. But we need to take care of our health. You can always walk out of the rug store if the price doesn’t work for you.

9 Dan Weber February 17, 2016 at 12:23 pm

It’s true that for emergency services you can’t comparison shop, but there are a lot of medical procedures where you can call around. The fact that American health-care providers refuse to give you prices is a separate issue.

10 Boonton February 17, 2016 at 12:56 pm

But is health care really about procedures anymore? Consider diabetes. There are individual procedures (lab tests, at home blood tests, office visits, purchasing drugs and insulin, consultation, and if things go bad possible operations and more). However over time the costs I suspect are driven by the overall management of the disease and not the individual procedures. The requirement in the long run I suspect is the *management* of the disease and ultimately you are not going to easily break that into isolated ‘procedures’ that you can haggle over the way you can haggle over individual fruit in an old world marketplace.

11 sam February 17, 2016 at 3:16 pm

“NEED” smells like argument by emotion.

The overwhelming majority of medical services are non-emergent. You can (and I do) call a variety of providers to see who has the best combination of price and service. I do this on simple things like flu shots. At the other end of the scale, pregnant mothers are famous for doing similar when looking for a place to deliver.

12 Shane M February 17, 2016 at 6:23 pm

Are the “overwhelming majority of medical services” in terms of dollars? My guess is most of the dollars are not discretionary, although I certainly could be wrong.

I’ll just use my Dad’s surgery as an example. He had a blood infection and “needed” immediate treatment to avoid death. The infection had setup in his heart, and valves had to be replaced and blood had to be cleared of the infection. While this might have been a rare event (one of the few times (only time?) he’d ever been in a hospital), in dollar terms it was very expensive, probably the most expensive medical care of his entire life. And there’s not much option of even educating yourself on the issue and options, much less negotiating on price.

I’ll submit my wife’s broken wrist was similar. Not much negotiating power, and you’re pretty much relying on the doctors at that point to tell you what needs to be done.

In any event, I don’t think using the word “need” is out of line, as alternatives of not treating result in very bad outcomes such as death or non-functional wrist/hand in the cases above.

13 JonFraz February 18, 2016 at 1:45 pm

Haggling over price creates unproductive friction in an economy: if no one knows what the price is in advance rational advance planning becomes impossible.

14 Luis Pedro Coelho February 17, 2016 at 4:35 am

“Not long ago, hospitals routinely charged uninsured patients their highest rates”

Is this true, though? In terms of what people really paid?

I have had people who were uninsured before Obamacare tell me that they call ahead and say they will pay cash and get pretty reasonable prices for medical procedures. I thought it was incredible they would go without insurance, they may have thought I was a sucker for paying so much a month when you could get a dentist appointment for $50 if you just asked

15 JonFraz February 18, 2016 at 1:49 pm

This really depends on the hospital. The for-profit hospital chains were as nasty about this as any bank: you owed what you owed, they had collection agencies on speed dial, and your options were pay up or seek bankruptcy.
Smaller non-profits, especially religious-backed institutions, were more willing to work with people who were in difficult circumstances.

16 Dan Lavatan February 18, 2016 at 6:10 pm

This isn’t true. Unless explicitly agreed on an amount in advance, as a matter of law the patient is only liable for reasonable and customary charges, which by definition are no more that the average patient pays. The collection agencies could not win at trial, and there is no reason to declare bankruptcy.

Yes, I think Luis is a sucker, I’ve saved tens of thousands in premiums not having insurance. I was fortunate to have coverage rescinded early in life, so I know they are basically just fraudsters anyway. I haven’t even really needed healthcare since then. But do know insurance has no value. My Aunt had cancer recently and although she paid a lot for insurance it didn’t cover the doctor she wanted, so she ended up paying the full amount in cash anyway. If you buy insurance you aren’t just hurting yourself, you are hurting everyone by enabling these criminals and their lobbyists.

17 prior_test February 17, 2016 at 5:19 am

‘can’t charge financially strapped patients much more than Medicare pays’

Well, seeing as how Medicare, covering essentially everyone over 65, is a lucrative source of revenue for health providers, why would it be surprising that health providers would charge an apparently regulated amount above what is already profitable.

This is just cream skimming, from one perspective, and profit driven companies tend to be expert in doing it.

18 Alan February 17, 2016 at 6:46 am

You may be able to negotiate over a bill, but it is almost impossible to get prices to compare ahead of time. My attempts have been met with laughter as often as not.

19 AndrewL February 17, 2016 at 8:16 am

This is so true. The main advertised benefit of HDLP insurance coupled with HSA is that you should be free to “shop” around for best prices. But I have found that every single time I ask a doctor’s office the price of a procedure, diagnostic test, whatever, nobody knows what the price is. The medical billing person doesn’t actually know the cost of anything, all they do is submit the medical codes to your insurance, and your insurance spits back out the costs, which they then pass on to you. Or it seems to work that way in my experience.

20 Kid Dynamite February 17, 2016 at 8:22 am

the discussions I have had with billing departments, trying to get prices ahead of time, would blow your mind. I was told – by the billing department, not some random department – that she couldn’t tell me how much it cost until the procedure was done and submitted.

this kind of thing happens over and over – not a one-time thing.

21 JB February 17, 2016 at 10:05 am

My experience too.

My dental plan has a yearly coverage limit, and my dentist can’t even tell me how much of it I’ve used up until the insurance company actually reimburses them for their share, which takes months. Their best guesses have been off by ~25%. Luckily I can easily afford that level of blowing past coverage limits and my teeth can afford delaying dental work until it’s clear what limits I’m working with.

22 Dan Weber February 17, 2016 at 12:22 pm

This is largely a culture issue.

Doesn’t Singapore require posting of prices so patients can comparison shop?

23 JonFraz February 18, 2016 at 1:52 pm

They know what charge to submit to the insurer, but often that charge is hugely inflated over what they will (have to) accept. Check out an EOB sometime– the spread between what they bill and what they get can be jaw-dropping. I’ve seen basic diagnostic tests (nothing fancy) billed at over $200, and the settled amount is $20. Even for a basic office visit my doctor bills $150, but accepts the $85 my insurance pays.

24 ZZZ February 17, 2016 at 2:17 pm

As someone who works with medical billing I can tell you the reason it is almost impossible to tell you the price ahead of time is that the price depends on what happens during the appointment. What you are essentially asking is for the billing department to predict the future, it’s like asking an auto mechanic “my car is making a weird noise how much will it cost to fix it?” The answer is “it depends on what’s required to fix it.”

There is also a lot of complexity in the requirements for properly billing a visit, enough that the CMS guidelines, not the complete reference, for a simple office visit is almost 90 pages long. If you have some time they are published here.

25 msgkings February 17, 2016 at 2:38 pm

That makes sense but isn’t it also hard to price shop for specific procedures like cost to put in a stent, or cost to do a root canal, or cost to replace a knee?

26 ZZZ February 17, 2016 at 3:17 pm

Except for the most basic procedures there are still a number of variables that effect the cost. For example anesthesia is billed by the unit, so the more it takes to put you under the more it costs and you won’t know until after the surgery. When replacing a knee a surgeon will have multiple types of joints available to choose from to find the best match for fitment and activity level. You would need to pay for a detailed consultation in order to get a price quote. Normally that would be included in the procedure payment, if you want a separate visit just for the quote you would have to pay out of pocket. Even during the operation there may be addition problems found that would require additional work to correct and you wouldn’t know about them until everything is opened up.

27 Dan Weber February 17, 2016 at 3:44 pm

“Private healthcare providers are required to publish price lists to encourage comparison shopping.”

I can understand the insiders don’t want to change anything, the same way the taxi market didn’t want to change anything.

28 ZZZ February 17, 2016 at 4:25 pm

Publishing prices does not necessarily mean you know what your bill will be before you start. Details matter.

29 Dan Lavatan February 18, 2016 at 6:17 pm

This is disingenuous however. If you wanted to help you could say here is the fixed cost and here are the unit costs for anesthesia (which itself isn’t necessary but anyway) and that for this procedure 90% off patients use between x and y with an average of z. I have hat vet work done on my dog and they can always tell me the cost within a narrow range.

On a car it is even easier – they diagnose the car for a fixed fee, then tell me exactly how much it will cost to fix. If they end up spending a few extra min they eat the cost in exchange for making it up somewhere else. We need to move to an all cash in advance up front system now.

30 JonFraz February 18, 2016 at 1:54 pm

Dental procedures should not be hard to shop for. I’ve never had a problem with my dentist office being unable to work up an estimate. They may even have to do that up front for pricier work to get the insurer to authorize it.

However if you aren’t a regular patient they may balk at taking the time to do so.

31 JWatts February 17, 2016 at 5:39 pm

“As someone who works with medical billing I can tell you the reason it is almost impossible to tell you the price ahead of time is that the price depends on what happens during the appointment.”

My wife and I were asked by the doctor to get a certain genetic blood test. We asked him how much. Not only did he not know, he couldn’t guess within an order of magnitude. I asked him if was $10, $100 or $1,000. Nobody in the office knew. After an hour of asking everyone, they just referred us to the company that they would send the results too. We called the company. They called us back a week later and told us it was a $2,000 test.

This had nothing to do with not knowing what was required. The doctor drew blood and sent the blood to a lab for a test. The price should be fixed and obvious.

32 ZZZ February 18, 2016 at 12:54 pm

Why would you expect the doctor to know the price of a test that takes place at another company? There are somewhere around 15,000 different procedure codes, each with a different price, it would be impossible to know all of them. I’m sure they could tell you the cost of the blood draw because that is what they bill for, but the bill for the testing itself is something that they would never see unless a patient shows it to them.

33 Bob Knaus February 17, 2016 at 7:18 am

This has been happening for a while, though I think the ACA may have made it more common. Some members of my family belong to a mutual self-insurance group open only to members of their religious denomination. Any member facing high medical bills will offer to pay cash, and church members will front money if needed to pay for this. The result is that expensive medical procedures generally cost about half of what they would be billed to a traditional insurer.

34 anon February 17, 2016 at 10:31 am

Members of Samaritan Ministries, a Christian organization whose members share health care costs, are also cash paying patients. And I understand that costs are generally lower.

35 Jay February 17, 2016 at 6:00 pm

Me too. Love it.

36 rayward February 17, 2016 at 7:36 am

The phenomenon reported by Ms. Beck is attributable to the proliferation of high deductible plans. Since the insured must pay in cash up to the amount of the deductible (which can be in the thousands) hospitals fear an increasing amount of uncollectible charges and are willing to accept a discounted amount paid up-front rather than face the risk of an uncollectible charge. But this can violate the hospital’s contract with the insurer, which typically prohibits the hospital from charging less than the contracted rate. If the hospital doesn’t report the payment to the insurer, then the patient-insured doesn’t get credit against the deductible. The uninsured have always faced the lack of transparency but nobody cared. Now, with the proliferation of high deductible plans, even the WSJ cares.

37 Lauren February 17, 2016 at 7:56 am

We just gave birth and the private hospital offered a 20% discount if you paid before you left (check or credit card, cash not ness). Infuriating that people who can afford it get a discount, whereas people who can’t get strapped with the whole amount.

38 Bill February 17, 2016 at 8:45 am

Raised the price 20% above market and gave you a cash discount of 20%.

39 Cliff February 17, 2016 at 1:10 pm

Crystal ball? Billing paperwork is costless?

40 will February 17, 2016 at 11:52 am

It’s unfortunate that the poor often have higher financing costs – but that’s kinda how it works isn’t it? People want to be compensated for credit risk and time value of money. Nothing particularly nefarious or malicious.

41 Feyi February 17, 2016 at 8:04 am

This is old gist to foreigners who go to America to have their babies. I personally know someone (from Africa) whose bill was cut by about a third when he offered to pay cash. And this was probably 4 years ago.

If you want to find out how true it is, it’s the ‘anchor baby’ contingent you should ask.

42 Kid Dynamite February 17, 2016 at 8:07 am

I had this “uninsured get a lower rate” phenomenon happen to me lately. It had nothing to do with paying “up front” though. I wrote the whole long story here:

cliff note excerpt for those who don’t want to click a link (there’s also a story about out-of-network billing from in-network facilities: a HUGE problem):

The rep in the Concord Hospital billing office had told me that they post information online regarding cost estimates for their procedures. I countered with the point that it was quite obvious that consumers didn’t know the costs – that the same procedure cost a THIRD as much at the facility next door. No one would voluntarily get the procedure done at the hospital if they were aware of the costs. Anyway, I looked on their website to see the costs for the renal ultrasound, and I found this:


The first column ($842) is what the hospital bills. I honestly have absolutely NO IDEA what this number represents – as I’ll get to in a minute. The N/A is a field for facility charge, the 3rd column ($842) is the total charge (ps: the radiologist’s fees are additional), and the last column ($505) is the uninsured “self-pay” rate. Ok – so I mentally stopped myself out at the $505 that any idiot walking in off the street without insurance would pay. New Hampshire has a (weird but good?) rule (RSA 151:12-b) that dictates “uninsured patients receive a discount consistent with amounts received from insurance for the same services.”

In other words, if you don’t have insurance, they can’t just bill you a random number – they have to bill you something in line with what insurance reimburses for the same procedure. This is a great thing for consumers! It almost (*almost*) makes me think about not needing insurance, as I thought the main benefit of insurance was to make sure you don’t get completely hosed by top-line billing rates. Now then, what is the $842 number that the hospital “bills” ?!?!? It’s just a random number that no one actually pays. No one. In fact, when I got my EOB from Anthem for the procedure, it informed me that the maximum allowable rate under my benefit was $672, which was what I owed – and then things started to make sense in a perverse way – but we’ll get to that in a second.

So Concord Hospital sends me a bill for $672. This is the the rate my insurance company -the largest insurance company in NH, and the sole provider of individual plans until recently – has managed to negotiate using their mighty heft and market position (sarcasm alert). Needless to say, I called CH billing.

“Hi – for some reason my insurance company has managed to not-negotiate a rate for me that is worse than the rate you guys give any random person walking in off the street. I’ll just pay the $505.”

I was talking to the same billing rep I’d talked with briefly a month before about this issue.

“Sorry, you have insurance, and your insurance rate is $672.”

me: “Um – yeah – so I’m gonna go ahead and NOT use my insurance. Don’t bill it through my insurance.”

her: “We can’t do that.”

me: “Of course you can do that – I never even gave you my insurance information anyway: you just used what you had on file.”

her: “We DON’T do that – you have insurance, we know that from prior care, we bill the insurance.”

me: “That’s not how insurance works. The holder of insurance doesn’t have to use his insurance policy.”

her after another 5 minutes of “arguing” with me: “Look, I’ll give you the $505 rate, but this isn’t how we do things going forward.”

me: “I want you to understand that I will fight the healthcare system every single time I feel like I’m being screwed over,” and then I went into the whole additional clusterf*ck of the out-of-network billing for the radiologist, which I also took up with Concord Hospital’s customer service department.

43 Bill February 17, 2016 at 9:00 am

Your assumption is that what the hospital shows you it charges to the carrier is what it actually charges to the carrier. What they are really showing you is fictional. There has been litigation in the past where the price shown to you as the price the carrier pays is actually fiction…there is another discount for other things somewhere else in the hospital managed care agreement with the hospital that is another discount. What you are seeing is the number from which your deductible is computed. You live in fairy land if you think insurance companies are paying more than what you as an individual can negotiate, particularly since managed care contracts have most favored nations clauses.

44 Kid Dynamite February 17, 2016 at 2:03 pm

Bill – I’m not sure what you’re trying to say here. To clarify, I have a HDHP, so I pay the first $8k after the EOBs get processed by my insurance company. In this case, my insurance company’s “negotiated rate” (which they now call “maximum allowable rate”) was $672. That was the amount that I had to pay, but the insurance company would have had to pay if I’d met my deductible. It’s higher than the $505 “uninsured” rate because the $505 is based off Medicare, etc, with insurance company rates like mine averaged in. If you’re suggesting that my insurance company would have paid less than $672 if they were actually paying (After i’d met my deductible), well, I think you’re way off base.

One thing I’m still unclear on is what the significance of the $842 “top line” billed number – which no one pays – is… It’s been suggested to me by a few different sources that the hospital “bills” 872, agrees to be reimbursed at a lower rate ($672 in my case) and writes the difference off as an accounting loss??? I’d be surprised if this were true…

45 JonFraz February 18, 2016 at 2:03 pm

They may be literally be unable to do as you ask: it’s quite likely their billing software automatically bills the insurance electronically and there’s no way to prevent that,

46 Dan Lavatan February 18, 2016 at 6:21 pm

It depends on what contract you signed with them. Some contracts have subrogation clauses in which case they can bill your insurance. You need to be disciplined up front and refuse to provide the information consistently, or even better cancel your insurance. However, they can refuse to treat you unless it is an emergency. On the other hand, I don’t know any other reason someone would get treatment in the US.

47 Justin Kelly February 17, 2016 at 8:25 am

This has always been the case and I have several family member who can vouch for this fact over the past decades, including one who paid cash for surgery. Also there are religious health sharing plans like Samaritan Ministries wherein you pay cash for health services and members reimburse each other, amortizing the cost. Samaritan instructs each member how to negotiate for cheaper rates based on the fact they pay in cash.

The “price gouging cash payers” phenomenon is seen by people who don’t haggle, which Americans seem to suck at doing or at least have an aversion to. The first offer is always high you have to knock them down.

48 asdf February 17, 2016 at 8:27 am

Not surprised. Insurance company contracts are often done to target aggregate reimbursement targets. Prices on individual items can vary wildly compared to actual cost.

49 Bill February 17, 2016 at 8:42 am

Did you know I got a really good deal in the store the other day.

Really, Really good.

The sticker or manufacturers suggested price said $1. and I got it for 89 cents.

I didn’t even have to bargain.

They must like me. Or maybe it was Obamacare.

(Note: this is an economics website, right. Reference prices are not transaction prices. And, just because you show one price, another for an insurance company, etc., no one is showing actual transaction prices. This gets even more complicated, folks, when services and products are bundled or unbundled, or your attention is lost to details when you get into the hospital and find out the aspirin and its administration costs $20).

50 Cliff February 17, 2016 at 1:14 pm

Aspirin is way more than $20 in a hospital

51 Jack February 17, 2016 at 8:42 am

In my experience it is hard to bargain with physicians because you are often dealing with office personnel, who don’t have the proper authority or incentives. Because of the wonders of Obama Care I recently needed a referral to go to a specialist I have been using for 16 years for a chronic condition. I found a physician who would take me on short notice and asked the woman checking patients in how much it would cost if I paid cash. She looked at some price list and said $500-$700. Now that is obviously an absurd price to pay a physician to give you a referral and I pointed that out to her but she didn’t care and was impatient to move on to the next customer, who would pay with insurance. So the physician and I were both worse off after that interaction — but he didn’t know it.

52 Boonton February 17, 2016 at 10:27 am

You couldn’t try a physician at an urgent care center for a flat $100?

53 Albigensian February 17, 2016 at 10:38 am

My experience has been that many medical practices outsource their billing and thus are unable or unwilling to negotiate cash discounts; in fact, they often plead inability to even quote prices (let alone actually negotiate them).

On the other hand, Wal-Mart and other retail pharmacies have promotional pricing (typically $4./30 or $10./90 days’ supply) on many prescription drugs, and I’ve found that the cash price of these drugs is often significantly less than the co-pay I’d owe if it’s billed through my insurance.

54 JK Brown February 17, 2016 at 10:51 am

Some of this is tricky. If the medical office offers a discount for cash, I believe that can violate truth-in-lending laws. Although that may be if they state cash vs payment on time as opposed to cash vs discount for immediate payment.

The experience with my brother, who had no insurance, was a discount but pre-payment for lab work and an offer of settlement for near half if paid within a week on the hospital bill. I was able to front this money.

When considering this problem, we must consider that some “consumer protection” laws prevent the most logical solutions and some private practices can be unintentionally violating such laws and thus at risk to the first low-life lawyer they treat.

55 ZZZ February 17, 2016 at 2:50 pm

Medicare, along with most private insurers, have a requirement in their contract that a physician cannot charge them a higher rate then that physician would charge to anyone else. This is to prevent physicians from overcharging but it has the effect of uninsured patients being billed the full charged amount. Discounts can be given after the fact but telling someone upfront that the cash price would be lower technically violates that provision. I don’t know if there are any legal cases about it or if anyone has ever had to pay back the difference to Medicare but it is a possibility. In the end it’s not necessary to have it in the contract because Medicare sets their own rates but someone at some point thought it was a good idea.

56 Boonton February 17, 2016 at 11:26 am

Suppose instead of paying the cable company I instead decided to commission actors and directors to perform plays live in my living room? I think I would find:

1. A wide variation in costs.
2. A lot of difficulty getting price quotes but quite often I might be able to get things cheaper than the ‘big boys’ (Game of Thrones is like $5M per episode, I could get a really good production done in my LR for a lot less!)
3. Ultimately this would not be a practical way to produce entertainment on a mass scale for most people. That model would be a ‘subscription’ type service where people pay a monthly fee to consume a bundle of entertainment options (whether that’s the cable company or just internet based services is in flux).

Health care IMO appears to be moving towards a managed service type model where we are paying people to manage our overall health rather than doing ala cart services (one root canal this year, a stent next year, new knee the year after). If that is true then it isn’t going to work to try to force the industry to create a menu of prices and let people haggle over them.

57 Cliff February 17, 2016 at 1:16 pm

In what way does it appear to be moving towards that model? I have not seen anything indicating such a move at all.

58 JWatts February 17, 2016 at 5:46 pm

Exactly. I’ve heard a lot of talk about a managed model. But I don’t see a lot of proof that it’s occurring. Unless they really mean HMO’s.

59 Dan Weber February 17, 2016 at 8:07 pm

HMOs were very successful at holding down costs while not impacting outcomes. And they were roundly hated for it.

60 revver February 17, 2016 at 9:25 pm

I still remember this one from years back on MR:

61 Adam Minter February 17, 2016 at 9:43 pm

During my last trip to the US, I stopped by a chain pharmacy to get a flu shot. My insurance covered it, but I was curious to know what it would cost if I wanted to pay cash. The pharmacist told me $26.99. A few weeks later, I logged into my insurance company’s website to check the status of a claim, and saw that the pharmacy had charged my insurer $30.99 for the shot. There was no out-of-pocket expense for me, but it does raise some interesting questions about how well the insurance companies are negotiating rates on behalf of their customers.

62 edwardseco February 18, 2016 at 1:48 am

I don’t know when this mythical age of cash being more expensive than insurance was. With negotiation cash was always much cheaper. 16 USD/hr for physical therapy instead of 40. For child birth 1400 instead of 4400 and that must have been generous as genetic & ultrasound testing was volunteered as well. Cash up frront without collection hassles and without an emergency room event under Medical did wonders. Before Medicare and widespread insurance physicians’ assistant’s judged the ability to pay by the patient’s appearance. My mother always dressed us down scale for a doctor visit:).

63 Mark Dionne February 20, 2016 at 11:18 pm

One reason that medical service providers set a high “list price”, and then give a significant discount to “cash” customers, is so they can charge full price to insurers that do not have a contract with them. For example, if you are in an auto accident, the auto insurance company will pay “full price”.

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