February 18, 2016

Some hospitals offer discounts to patients who pay in cash

Daily Briefing

This story has been updated.

Hospitals, outpatient surgery centers, and other providers are increasingly offering patients discounts if they pay in cash, Melinda Beck reports for the Wall Street Journal

For instance, Boulder Community Hospital in Colorado told one patient that receiving a knee X-ray would cost just $70 if she paid cash upfront—but $600 out-of-pocket using her insurance. And at Regional Medical Imaging in Flint, Michigan, it costs $265 to get an MRI of the knee, but $510 out-of-pocket for patients with high-deductible Aetna plans.

That's a major change from historical pricing practices, when patients who paid out of pocket were often charged the highest rates. The difference is due in part to new state and federal regulations intended to protect the uninsured from high prices, including the Affordable Care Act's limit on tax-exempt hospitals charging "financially strapped patients" far more than Medicare reimburses.

Hospitals see some benefits from self-paying patients, too: Accepting cash is less of an administrative hassle, and cuts down on time collecting payments. It can also help guard against bad debt and ensure patients are able to afford care, according to American Hospital Association executive Tom Nickels.

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And as Regional Medical Imaging COO Amy Davis notes, insurers with members who pay in cash are still collecting premiums, but they don't have to pay providers in such instances.

What insurers, other stakeholders say

America's Health Insurance Plans spokesperson Clare Krusing says insurers have reported few instances of their rates being undercut by cash prices. When it does happen, she questions why providers are accepting lower cash rates "than they could get through insurance."

Amy Oldenburg, Aetna's VP of network and product strategy, says members who may save by paying in cash "should make the best choice based on their needs." However, she notes that Aetna is less able to coordinate care for cash-paying members.

There can also be another downside for patients: Most insurers do not count cash payments toward patients' deductibles.

According to the Journal, some providers make a concerted effort not to publicize their cash rate out of concern for losing leverage in negotiations with insurers.

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"If insurers find out that plan members are able to access a cheaper cash rate, they'll call up the hospital and say, 'That's our new contracted rate,'" says Jim Lazarus, managing director of strategy and innovation with The Advisory Board Company's Revenue Cycle Solutions division.

However, others have publicized their cash prices in a push to stand out in the market and assist low-income patients. "Patients have the right under federal law to request that we not bill their insurance," says Boulder Community Hospital CFO Bill Munson, "and when they do, they have the right to participate in our self-pay program" (Beck, Wall Street Journal, 2/15).

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