You have a health insurance card in your wallet or purse, so why would you ever consider pulling out cash instead of handing over your card? Well, the answer might surprise you.
As you’ve likely learned by now, health insurance is confusing. It’s almost like someone (“cough, the insurance company”) is trying to keep the average person from knowing how, when, and why they should utilize their insurance. It’s a benefit you, or your employer, likely pay hundreds, if not thousands, of dollars for each month, but in reality, it might not always provide the average consumer/patient, with the best option financially. To understand why paying cash might actually be the best option for you, let’s first take a look at the health insurance billing process from the provider’s perspective.
Before a patient is ever seen in an office, they are typically asked for their insurance type and information. Once this is obtained, the representative from your provider’s office will run your benefits to determine if they are in-network with your health insurance company, how much your co-pay will be at the time of visit, whether you require a referral before you can be seen, and whether you have met your deductible. We know that’s a lot of information to glean just from the ID number on your insurance card, but it’s true.
Once this information is obtained, you will have your appointment scheduled and will be expected to pay your co-pay at the time of the visit. After you’ve been seen and your provider has determined a treatment plan, the real magic (or misery) begins for the medical provider. Their team then needs to determine whether preauthorization is needed for any additional services, whether the provider has documented all the steps necessary to get the recommended treatment approved (steps imposed by your insurance company), and then jump through all the hoops necessary (including peer to peer phone calls, utilization reviews, etc.) to get the treatment they think you need, approved by your insurance. If all these steps aren’t followed, the recommended treatment will be denied, or even worse for the provider, they will render the treatment and not get paid. And, even if all of these steps are followed, the provider still has to code, bill, and wait to get paid for weeks or months. I know, it’s a lot, but health insurance companies don’t make it any less confusing or difficult for providers than they do patients.
Okay, now that we’ve looked at the simple (not really) health insurance process, let’s look at the process for cash-paying patients. If a patient calls most independent practices and tells them they are self-pay or cash-pay they can receive an appointment and will be told how much they will need to pay at the time of the visit. Surprisingly, most independent medical practices will charge an amount that is close to what health insurance would typically pay, or even less. But why? Well, unlike with typical health insurance, the provider doesn’t have to jump through hoops to provide the care they need, they don’t have to pay staff to preauthorize services, they don’t have to pay medical coders to code the visit, they don’t have to pay medical billers to bill the visit, they don’t have to pay accounts receivable clerks to chase down the money insurance companies owe, and best, they don’t have to wait! Think about it, if someone told you they would pay you $150 but you had to pay a $50 surcharge to collect the money and wait a month, or someone else was willing to pay you $125 today, it would be a no brainer, right? Well, the same logic applies to cash pay medical services. Most healthcare providers will take the same, or less today, because they don’t have to wait, and in the end, it’s often greater value because it’s less hassle and cost than if they billed your health insurance.
Morale of the story? Next time you’re at your doctor’s office, ask for the cash pay price before handing over your card!