Editor's Pick: Originally Published Wednesday, Dec. 23
Negotiating health care costs for tests such as ultrasounds could make it significantly cheaper for consumers to resort to paying out of pocket instead of using their insurance coverage.
In many cases, the cost of routine tests are three to four times less expensive when patients opt to pay using the “cash” option, which is a reduced amount for people without insurance coverage. With deductibles rising across the board and high deductible health insurance plans becoming commonplace as more employers shift health insurance costs to their workers, consumers are increasingly gravitating toward these plans.
The prices for procedures and tests can be a “bit of a black box, because you're never quite sure what you're going to get, especially when you file through insurance,” said Jack Hooper, CEO of Take Command Health, an online health insurance exchange based in Dallas.
Major tests and surgeries will warrant you to file the claims through your insurance company since often there are multiple doctors and technicians to pay. Simple tests and procedures to check out a minor ailment will be worth your time to ask about the cash price, or sometimes you can also “negotiate with your doctor or the staff,” he said.
As consumers attempt to spend less money and choose cheaper monthly premiums, their only option is to chose plans with high deductibles. Health insurance premiums are expected to rise modestly in 2016, even among employee-sponsored plans, increasing the burden for consumers who are already saddled with extremely expensive deductibles.
During the past five years, employees have been hit with a double whammy since both the share of workers with deductibles and the size of those deductibles rose sharply, according to the Kaiser Family Foundation/Health Research & Educational Trust survey of 2,000 small and large employers. The combination of these two factors resulted in a 67% increase in deductibles since 2010, much faster than the rise in single premiums of 24% and about seven times the rise in workers’ wages of 10% and general inflation of 9%.
High deductible plans have many advantages, especially for Millennials and Gen X-ers who rarely go to the doctor because they are healthy and do not rely on taking prescription drugs on a regular basis.
Some workers turned to high deductible plans to defray some of the costs with 46% of employees who selected a major health insurance plan with a high deductible of $1,000 or more last year, up from 34% who said the same in 2014, according to a recent Aflac survey. The catch is that the out of pocket costs might prove to be a surprise for consumers who don’t budget for meeting the higher deductible for tests and other procedures.
Are You Near Your Deductible Amount?
It may seem contradictory, but there are some cases when it may “actually make sense to pay for medical care out of pocket rather than use your health insurance coverage,” said Nate Purpura, vice president of consumer affairs at eHealth.com, an online health insurance exchange based in Mountain View, Calif.
Now is a good time to evaluate whether you are getting close to meeting your deductible. If you are like many consumers, you are a long way from meeting a deductible of $4,000 or $6,000, so using your insurance to pay for a $300 ultrasound instead of paying $111 yourself offers no financial gains.
For the majority of people, their annual deductible resets every year on January 1. Paying the cash or no insurance rate “might make sense” if you are just getting around to seeing the doctor, Purpura said. Do not hesitate to ask for both prices - the cost if the claim is processed through your insurance and also what your medical provider would charge for the service if you were to pay cash, Purpura said.
“Ask if any discounts are available for an upfront payment,” he said. “You may even want to shop around a bit as a ‘cash customer' to compare prices. Paying cash can sometimes cost less out of your pocket than having the claim processed through the insurance company.”
How to Negotiate Costs
Depending on which plan you purchased, coverage to see an out of network doctor may not exist such as with an HMO. Other plans might reduce the amount of coverage, increasing the odds that the visit or procedure will not be covered by your insurance company at all. In that case, there is no benefit of having your insurance company process the claim, Purpura said.
“You should ask the medical provider for a discount as a cash customer since many will give you one,” he said.
The costs of your prescription drugs can easily add up, and while some plans have fairly affordable copayments for them, others are more restrictive and require you to fulfill a large deductible before the insurer will begin covering drugs. Consumers who purchased plans with a large deductible will most likely obtain a decent deal paying for the drugs themselves. Depending on whether the drug you take is a common one with a generic option, the difference could be less than $10 for a 30-day supply.
“Money you pay out of pocket like this won’t count toward your annual deductible, but certain discount pharmacies or discount drug programs will occasionally give you a better cash price than what you’d have to pay when the claim is processed through your insurance,” Purpura said.
Why Doctors Offer Cash Payment Option
Doctors are more than willing to negotiate with patients, because insurance claims can take weeks or months to settle instead of receiving an immediate payment from a consumer at the end of their visit.
“When you think about it, doctors don't always want to hassle with insurance either, because they have to report your visit, code the procedures and then wait a few weeks for the insurance company to review the claims,” Hooper said. “Then they have to wait for your copay or coinsurance which pays the doctor the ‘negotiated rate.’ If you're able to offer cash on the spot, it can save you and the doctor and their office staff a lot of trouble and money.”
Since 75% to 80% of Americans are not meeting their deductibles, consumers are striving for better deals, said Vish Banthia, chief medical officer of ZendyHealth, the Los Angeles-based health care cost comparison company. Some doctors will negotiate on procedures such as getting allergy testing or a MRI, so consumers can save 10% to 80% of the fee.
“Up until now, health care has been one of the only industries in which nobody knows the price tag for the medical procedures until you get a super high medical bill after the fact,” he said. “Our website shows you the national average.”
Choosing to sidestep using your insurance is a personal decision and contributing to your deductible throughout the year might come in handy when a major accident occurs or surgery is needed.
“We generally don’t recommend that people not use their coverage to avoid paying toward their deductible, but we recognize there are occasions when it may make financial sense,” Purpura said. “The fact is that you never know when someone serious may happen. If it does, you’ll be glad for every dollar that you’ve already contributed toward your deductible already.”