It sounds backwards: a person with insurance paying less by not using it. But at many hospitals, for many common services, the discounted cash price is lower than the rate the hospital negotiated with the insurer. If you have a deductible you have not met, the negotiated rate is what you pay in full, so the cash price can be the better deal. Here is how to tell.
The three numbers
For any service a hospital publishes three prices that matter to you:
- Gross charge: the list price. Nobody pays it; it is the starting point for discounts.
- Discounted cash price: what the hospital accepts from someone paying directly, with no insurer involved.
- Negotiated rate: what the hospital and your insurance plan have agreed the service costs. Your deductible, copay and coinsurance are calculated from this number.
The price files show that the cash price is frequently 20 to 60 percent below the gross charge, and that negotiated rates spread widely: a large national insurer often has a rate near the cash price, while a small plan may have a rate closer to gross.
When cash is cheaper
Paying cash usually wins when all of these are true:
- You have not met your deductible, so you would pay the whole negotiated rate yourself.
- The cash price is below the negotiated rate for your plan. You can ask the hospital for both numbers, and the file lists both.
- You do not expect much more care this year. Cash payments do not count toward your deductible or out-of-pocket maximum. If a big expense is coming later in the year, paying the negotiated rate now gets you closer to the point where insurance pays everything.
This is most often the case for imaging (MRI, CT), laboratory tests, outpatient procedures such as colonoscopies, and physical therapy at hospital-owned clinics.
When insurance is cheaper
Use insurance when you have met or nearly met your deductible, when the negotiated rate is below the cash price (common for inpatient stays and at hospitals with strong insurer contracts), when a large expense is coming, or when the service is preventive. Preventive services (screening colonoscopy, screening mammogram, the annual physical) are free with insurance under federal rules; paying cash for them would be a mistake.
You are allowed to choose
You can tell a hospital you are self-pay even though you have insurance. There is no rule against it, and since the price transparency rule every hospital has a self-pay price to give you. Some hospitals will ask you to sign a form acknowledging that the claim will not be sent to your insurer. Read it; it should not waive any other rights.
What you cannot do is pay cash and then ask the insurer to count it toward your deductible. Some insurers will accept a receipt for this, especially under the price transparency rules that now require plans to publish their own rates, but it is at their discretion.
How to compare, step by step
- Get the procedure code from your doctor's order.
- Look up the hospital's cash price and, if listed, the negotiated rate for your insurer on this site.
- Call the hospital's billing office and confirm both numbers for that code, and what is not included.
- Check where you stand on your deductible in your insurer's portal.
- Choose, and ask for the price you chose in writing.
A worked example
A lumbar spine MRI (CPT 72148) at a hospital lists a gross charge of $3,200, a cash price of $650 and a negotiated rate for your plan of $1,100. Your deductible is $3,000 and you have used $400 of it. With insurance you pay $1,100 and your deductible drops to $1,500 remaining. With cash you pay $650 and the deductible stays at $2,600 remaining. If nothing else happens this year, cash saved you $450. If you have surgery in November, the $450 saved is gone and then some.