Out-of-Pocket Costs Less When Hospitals Don’t Bill Insurance

A study shows that patients with high deductible plans can save money on out-of-pocket costs by not going through their insurance and paying a reduced cash price.

Hospitals must now publish their standard charges and disclose discounted cash prices to patients under a new rule from CMS meant to empower patients to shop for the best price. The case study looked to uncover how hospital discounted cash prices can impact patient decisions and savings.

The researchers selected three hospitals compliant with CMS regulation rule: Massachusetts General Hospital (MGH), the University of Michigan Health System (UMHS), and Vidant Medical Center (VMC). The team compared the outpatient rates for a colonoscopy and magnetic resonance imaging of a lower limb joint between hospitals. They calculated average the negotiated commercial, negotiated public rates, and cash prices of the common procedures.

The study found that in comparison, the healthcare facilities’ cash prices were lower than the average commercial negotiated rate but higher than the average public negotiated rate.

The discounted cash prices for an outpatient colonoscopy were $1,707 at MGH, $1,273 at UMHS, and $1,929 at VMC. A patient in a high deductible plan receiving a colonoscopy could reduce their medical bill by as much as $569.00 at MGH, $1,714.90 at UMHS, and $760.76 at VMC by paying the cash prices.

The data’s results show that a self-pay patient seeking an MRI could save a maximum of $1,095 by changing hospitals and paying the cash price at UMHS instead of the average commercial price at VMC.

In addition, discounted cash prices are 75 percent of the chargemaster price at MGH, 71 percent of the chargemaster price at VMC, and 40 percent of the chargemaster price at UMHS.

“Using some multiplier of the Medicare rate or a function of the commercial negotiated rates may be a more beneficial way of calculated discounted cash prices,” study writers suggest. “Policymakers may want to encourage hospitals to shift away from the ‘percent of chargemaster price’ contracting structure.”

In a time where patients are struggling to pay their medical bills, the Hospital Price Transparency Final Rule allows patients to shop around for medical services resulting in reduced medical expenses.

“While there are many questions yet to answer, we believe that discounted cash price could potentially be of great utility to patients,” said the researchers. “As such, researchers and policymakers should not discount this new discounted cash price data and instead work to validate it.”