Why it makes sense to offer discounts for cash

Practices willing to charge less to avoid billing hassles
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Since FierceHealthcare last reported on the issue in May, news stories have continued to proliferate about healthcare organizations around the country offering discounts to patients who pay cash. While many patients don't know such discounts are available, those with high-deductible or no insurance are most likely to look for ways to negotiate with their doctors.

In Ohio, for example, Melanie Thompson, who relied on a short-term catastrophic healthcare policy with a high deductible between jobs, told the Columbus Dispatch that one doctor's office offered a 40-percent discount for paying cash instead of using her high-deductible health plan.

Other hospitals and health systems throughout the state reported similar discounts for prompt payment or the uninsured.

"When you don't have to spend staff time filing the claim and dealing with a third party (the insurance company), it lowers the overall cost of the interaction" with the patient, Todd Baker, director of professional relations at the Ohio State Medical Association, told the newspaper. "To the extent you don't have to do that, you have the flexibility to look at charging less."

The drawback to patients, however, is that such direct payments do not count toward their annual out-of-pocket maximum, the Dispatch noted.

To solve this problem, some patients take the risk of dropping their health insurance altogether. One such patient, Ed Lee, a self-employed public relations expert, recently told the San Francisco Chronicle he cancelled his coverage in June after realizing that by bypassing his insurance whenever possible, he never came close to reaching his $5,200 deductible.

"I know it's a huge risk, but I felt I was just flushing the money down the toilet," Lee, who has no dependents who needed coverage, told the newspaper.

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"When a patient is paying cash, the practice doesn't have to deal with the hassle of submitting an insurance claim."
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Brandon Betancourt, a pediatric office administrator and blogger at Pediatric Inc., told FiercePracticeManagement that while he always advises patients/parents to carry at least catastrophic health insurance for unexpected events, he is also willing to offer a discount for patients who pay cash for routine primary care.

"I think this is a good practice, for a practice and for patients. When a patient is paying cash, the practice doesn't have to deal with the hassle of submitting an insurance claim, waiting, at the earliest two to three weeks, or at the latest six months to get paid," he said. "And for the patient, it could be cheaper, as well. Since the practice is saving money and time, it doesn't hurt to give a 20 or 30 percent discount."

To learn more:
- read the article from the Columbus Dispatch
- see the story from the San Francisco Chronicle

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