COPAYs, co-insurance, deductibles, list price, discounted price, contracted rate, negotiated price, cash price. Do you know in advance what amount you will be charged for health care services?
If you have health insurance, your health plan has negotiated discounted rates with each of your providers in the health plans network. These discounted rates are called “contracted rates.” When you visit a provider in the network, and show them your insurance card, they will charge you (or your health plan) the contracted rate for services. The “list price” for services is reserved for people without insurance, and without a doubt, is an inflated price. The Medicare rate for services is the rate the Government has negotiated for services under the Medicare plan. Medicare is the lowest rate for services and often does not cover the provider’s true cost of delivering the services. If you do not have health insurance, be careful because providers will charge you the “list price” for their services. This list price is an inflated price, and if you pay cash, you should expect to receive a discounted rate, but remember ---you have to ask for it. Everything is negotiable – including your health care bills. It varies from provider to provider, but I have seen cash-pay discounts that range from 20% to 60% off the list price!
Bargaining down those medical bills
I conducted an experiment to find out if it was more cost effective for me to pay cash for visiting a provider, or to pay the contracted rate my insurance plan has negotiated for services. To give you some background, I have a high-deductible health plan and this looks like a very healthy year for my family so I doubt we will come close to meeting our deductible this year. In other words, we will most likely pay for all our health care expenses out-of-pocket. Our high-deductible health plan is really a good deal for us because we save about $8,000 a year on less expensive premiums for this type of plan. So if I spend less on health care out-of-pocket expenses throughout the year by being a cost-conscious consumer, I have more money in my pocket to spend on other things like vacations and get-away weekends. That’s a topic for another day.
Last week I visited a specialist for a follow-up office visit. No tests. No equipment. No supplies were used. Just a follow-up consultation. When I checked in for my appointment, I inquired about paying cash for my doctor visit rather than have the office staff bill my insurance plan for the service. The office staff was very confused by my request. They consulted with three office staff, including the billing manager, and concluded that I needed to wait until after the doctor visit to know what the price is. This makes sense. They cannot give me an estimate for services until after I see the doctor so they know what level of office visit to charge me for. After I saw the specialist, I went back to the front desk and asked them what today’s charges would be if I paid cash. They looked up the CPT code for today’s visit and said, “the cash pay rate for today’s visit is $86.” I know from earlier visits to this provider, that my insurance plan negotiates a contracted rate of $70. The list price for this visit is $109. So here’s what I learned:
After all that, I decided to have this office visit processed through the regular insurance claims process, because it provided me with a larger discount.
Conclusion
My health insurance plan has negotiated some terrific discounts with their network providers. The best part is that I directly benefit from these discounted rates for services. When I signed up for my health plan, this topic never came up with the insurance agent that sold me this plan. These network discounts appear to be one of the strongest selling points for this high deductible health plan since I end up paying 100% of the negotiated price for these services (until I meet my deductible.) If there was more transparency in our health care system, consumers would be able to look-up provider prices for services for specific health plans, and determine upfront what their out-of-pocket expenses would be. In today’s health care system, this is impossible to know ahead of time.