For the uninsured, currently 8.2% of all Americans, paying cash for medical care is the only choice. However, even for those with healthcare coverage, paying cash is becoming an appealing option.
Soaring healthcare costs are motivating Americans to shop for medical discounts.
“The U.S. often pays higher prices for the same brand-name prescription drugs, hospital procedures, and physician care than similarly large and wealthy countries do,” declared a recent analysis by KFF, formerly the Kaiser Family Foundation, a nonprofit focused on health issues. The report found that healthcare costs have generally grown faster than inflation, represent a larger share of the U.S. economy than in similar nations, and that “elevated healthcare expenditure in the U.S. does not consistently translate into superior health outcomes.”
With discounts of up to 80% on medical costs, it’s becoming increasingly difficult not to consider cash-pay healthcare.
Knowing the cost of a medical procedure in advance is the best way to avoid healthcare “sticker 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 for the price of a service, you’re likely to 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 is important — until your 10% to 20% coinsurance is charged.
To compare costs, you will want to ask for the cash pay rate. That’s even more important if you are uninsured.
Here’s an example of how the pricing tiers work, in an example of the costs of an MRI by the Insurance Enterprise:
Chargemaster price: $5,000
Insurance negotiated price: $2,000
Cash-pay price: $500 to $800
The government has two programs in effect to help build public awareness of medical costs: Transparency in Coverage and the No Surprises Act.
Turquoise Health, a healthcare costs advocate, is urging the government to make the price transparency reports more consumer-friendly. The current machine-readable files should be made “less technical” and more “descriptive.”
KFF said the price data is “sparse and often confusing,” noting that it is used more by the industry than by consumers.
The No Surprises Act, which went into effect in 2022, aims to reduce surprise medical bills that often result from an 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:
Ask your provider for a good-faith estimate. Mandated by the No Surprises Act, cash-pay patients will receive a written estimate of scheduled services.
For hospital charges, ask for negotiated rates. The Transparency in Coverage rule requires that hospitals provide out-of-pocket cost estimates to insured patients, as well as prices for services rendered to cash-paying patients.
If insured, check your insurance company’s website for cost estimates. Many insurers post 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 expense.
One caveat noted by the American Hospital Association: With the many ways costs are estimated and provided to patients, confusion can still occur.
“The reported rate information may be inconsistent, and patients do not have a clear indicator as to which source should be relied upon. As a result, the overabundance of tools may create patient confusion rather than provide value,” the AHA said in a fact sheet.
For a simple and direct answer, you can also call the provider’s billing department. Remember, if you’re not going to file the claim with an insurance company, you’re looking for a cash payment rate.
In a new analysis on prescription drug prices, particularly in hospital settings, 3 Axis Advisors found that prices varied not only by hospital, but also within hospitals.
“Substantial variation persists not only across hospitals but within hospitals, where prices for the same drug can differ ten-fold or more depending on payer contracts and billing unit inconsistencies,” the study noted.
3 Axis Advisors also found that hospitals typically reported one gross price and one cash price for each drug, but multiple negotiated rates.
“The majority of a hospital’s patients — those with insurance — face a confusing array of potential prices,” the report continued. “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 at that location.”
In one quarter of the cases studied by 3 Axis Advisors, cash payers received no discount from the prescription list prices that insured patients paid. In half of the cases, the cash discount was 30% or less.
However, the firm also noted that in a few cases, cash prices were lower than the rates negotiated by insurance companies.
It all makes for a difficult task in shopping for healthcare prices, 3 Axis said.
Some national prescription drug providers promise sizable discounts for cash payments, including GoodRx, SingleCare, TrumpRx, Visory Health, and nonprofit providers such as NeedyMeds and RxAssist.
You can also search 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’re in good health.
If you have medical charges you are struggling to pay, first check the bill for errors. Compare the final bill you’ve received to ensure the services and procedures are accurate and haven’t been billed twice. You may also ask a patient advocate for assistance in the process.
Here are other resources to consider:
Don’t worry about the daily ATM withdrawal limit. “Cash pay” doesn’t mean that. It’s just 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 preventative 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, cash pay can be an option. Many providers, such as labs, 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 aspire to. Start small, contribute frequently.
Read more: HSA vs. HYSA: Which option is better for saving for medical expenses?
