For those without insurance, currently 8.2% of all Americans, paying cash for health care is the only option. However, even for those with health coverage, paying cash is becoming an attractive option.
Rising health care costs are motivating Americans to seek medical discounts.
“The United States often pays higher prices for the same brand-name prescription drugs, hospital procedures, and health care than similarly large and wealthy countries,” stated a recent analysis by KFF, formerly the Kaiser Family Foundation, a nonprofit organization focused on health issues. The report found that health care costs have generally grown faster than inflation, represent a larger share of the U.S. economy than in similar countries, and that “high health care spending in the U.S. does not consistently translate into superior health outcomes.”
With discounts of up to 80% on medical costs, it is becoming increasingly difficult not to consider cash-paid healthcare.
Knowing the cost of a medical procedure beforehand is the best way to avoid healthcare “shock” and compare any cash price option. Of course, that’s not always possible, especially if emergency care is required.
However, for planned medical procedures, when asking the price of a service, you will likely be quoted “chargemaster” rates.
Chargemaster rates are based on what healthcare providers have negotiated with insurance companies. If you have coverage, you may not think what the insurance company has to pay matters until you are charged the 10% to 20% coinsurance.
To compare costs, you’ll want to ask about the cash rate. This is even more important if you don’t have insurance.
Here is an example of how the pricing tiers work, in an example of the costs of an MRI from the insurance company:
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Chargemaster Price: $5,000
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Negotiated insurance price: $2,000
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Cash payment price: $500 to $800
The government has two programs in place to help raise public awareness about medical costs: Transparency in Coverage and the No Surprises Law.
Turquoise Health, a healthcare cost advocate, is urging the government to make price transparency reporting more consumer-friendly. Today’s machine-readable files should be “less technical” and more “descriptive.”
KFF said pricing data is “sparse and often confusing,” noting that it is used more by industry than consumers.
The No Surprises Act, which went into effect in 2022, aims to reduce surprise medical bills that often result from emergency treatment or a sudden illness. It could also come from services received from an out-of-network provider.
To know your medical costs and compare the cash price before you are billed:
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Ask your supplier for a good faith quote. Mandated by the No Surprises Act, cash-paying patients will receive a written estimate of scheduled services.
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For hospital expenses, consult negotiated rates.. The Coverage Transparency rule requires hospitals to provide estimates of out-of-pocket costs to insured patients, as well as prices for services provided to cash-paying patients.
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If you are insured, check your insurance company’s website for cost estimates.. Many insurers publish in-network provider costs for various services and procedures. You can search by the treatment you need to find an estimate of your out-of-pocket costs.
One caveat noted by the American Hospital Association: Given the many ways costs are calculated and reported to patients, confusion can still arise.
“Information on reported rates may be inconsistent and patients do not have a clear indicator about which source they should trust. As a result, the overabundance of tools may create patient confusion rather than providing value,” the AHA said in a fact sheet.
For a simple and direct response, you can also call the provider’s billing department. Remember, if you are not filing the claim with an insurance company, you are looking for a cash settlement rate.
In a new analysis of prescription drug prices, particularly in hospital settings, 3 Axis Advisors found that prices varied not only by hospital, but also by inside hospitals.
“Substantial variation persists not only between hospitals but also within them, where prices for the same drug can differ tenfold or more depending on payer contracts and inconsistencies in billing units,” the study noted.
3 Axis Advisors also found that hospitals typically reported a gross price and a cash price for each drug, but negotiated multiple rates.
“Most hospital patients (those with insurance) face a confusing array of potential prices,” the report continues. “When the same drug or healthcare service can have a dozen different prices from the same provider on the same day, it becomes difficult to argue that there is a defined price for that product or service in that location.”
In a quarter of the cases studied by 3 Axis Advisors, cash payers received no discount on the prescription list prices paid by insured patients. In half of the cases, the cash discount was 30% or less.
However, the firm also noted that in some cases, spot prices were lower than rates negotiated by insurance companies.
All of this makes it difficult to compare healthcare prices, 3 Axis said.
Some national prescription drug providers promise substantial discounts for cash payments, including GoodRx, SingleCare, TrumpRx, Visory Health, and nonprofit providers such as NeedyMeds and RxAssist.
You can also look up local hospital drug prices at hospitaldrugprices.org.
Read more: What is TrumpRx and can it help you save money?
Another affordable healthcare option is direct primary care. Unlike concierge care, which is a premium service that can be expensive, direct primary care often costs between $50 and $150 a month, paid directly to your provider.
For routine health maintenance, it can help reduce your healthcare costs or your insurance premiums, especially if you are in good health.
If you have medical charges that you are struggling to pay, first review the bill for errors. Compare the final bill you received to make sure the services and procedures are accurate and not double-billed. You can also ask a patient advocate to help you through the process.
Here are other resources to consider:
Don’t worry about the daily ATM withdrawal limit. “Cash payment” does not mean that. It is simply a matter of paying the provider directly, rather than through an insurer.
Of course, having health insurance is important. Insurance can be vital for annual wellness visits, screenings, and preventive care. But if you can’t afford it, have a high-deductible health plan, or are simply looking for ways to save on medical costs, paying out of pocket may be an option. Many providers, such as laboratories, outpatient procedures, and imaging labs, offer discounts for cash payments.
Having an emergency savings account for unexpected major healthcare costs is a safety net to look forward to. Start small, contribute often.
Read more: HSA vs. HYSA: Which option is best to save for medical expenses?