EP425: Three Ways for “Regular” Clinical Practices to Take Cash When It’s Cheaper for a Patient Than Using Their Insurance, With Marshall Allen

For a full transcript of this episode, click here.

This show today is for physicians or other clinicians or providers who are still taking insurance—those who are going about their day being pretty normal ... but at the same time, they’re noticing one and/or two things potentially going on.

Here’s thing one: They may be seeing patients struggling to afford care, especially patients with commercial insurance and huge deductibles. And/Or thing two: They may have patients actually coming in and asking to pay cash. It’s definitely becoming known in some circles that about half the time the cash price for something is actually cheaper than the “negotiated” rate with an insurance carrier. And this has really become an actionable insight for patients who haven’t yet met their deductible, and some high percentage of patients—maybe upwards of 90% of patients—won’t meet their deductible in any given plan year.

So, all of this is probably some pretty obvious foreshadowing, but let’s run through two maybe quick reasons why a practice might want to contemplate ways to make it easier for patients to pay cash when it is, in fact, cheaper for that patient to pay cash than it is for them to go through their insurance. Now, a clarifying point here: We are not talking here about that patient always paying cash heretofore … like, never using their insurance ever again, even if they get hit by a bus. No. We’re talking about the patient coming in for some office visit or service, and today, they want to pay with a wad of money they take out of their wallet and hand you. That is the end of the transaction that we’re talking about here.

So, here’s the first of let’s just say two reasons that a practice might want to entertain taking cash from insured (technically, at least) patients. First reason: We have a situation in this country where 48% of insured commercial patients say that they are delaying or forgoing care due to cost or fear of cost. Sometimes I say this 48% number to a clinician, and they will reply, “Well, that’s not in my practice or in my hospital; our patients show up.” To which I reply, “Yeah, because the patients abandoning care are not the patients that are coming in. They are abandoning care.”

Now, the second reason a “normie” practice might want to be thinking about how to help patients get the best possible price here is maybe less intuitive, but it’s a financial motivation for the practice.

I just saw Eric Vanderhoef. He wrote on a Listserv recently, and this is what he wrote:

Patient no-shows and cancellations cost healthcare providers as much as $7500 per month. That’s a loss of $375 per patient.

Hmmm … okay. Keep this in mind: The whole cancellations costing providers upwards of $7500 a month would help reduce this. Coincidentally, I was talking to Paula Muto, MD (she’s the founder of UBERDOC) about this exact same topic the other day—just the crazy no-show rates that many practices experience—and she made some really good points, which are exactly in line with the Tebra report Eric Vanderhoef referenced above.

She said that if a patient knows exactly how much a physician visit is going to cost—because they’re paying cash and the price is set between the doctor and the patient, so the price is the price, the end—no-shows will go down, and this is especially true when the appointment is tomorrow and not six months from now when appointments are booking these days. It’s kind of not normal for anybody to know what’s gonna be happening in lives six months from now, so no wonder patients fail to show.

Dr. Muto is recommending maybe having a couple of slots open every day for patients who want to pay cash. Doing this could help improve some—not all, for sure, but some—practice cash flow issues which are caused by the no-show thing or the getting paid by the insurance carrier net whatever months later after a billing fight kind of thing. And it’s also a win-win for patients with high-deductible plans, especially those patients who are coming in asking to pay cash.

In the conversation today, Marshall Allen, my guest, explains how to, in a simple enough way, operationalize the ability of a practice to take cash. There’s a form that you’ll need for insured patients. You’ll actually need a cash price. It’s also a marketing opportunity. For example, you can get listed with entities that connect consumers to practices that take cash, like UBERDOC, but there’s also a growing movement of employers, especially in some parts of the country, who are looking around for providers who will do direct contracting or cash prices.

In fact, I just saw a study the other day: “New polling conducted by Marist … found that 94 percent of adults agreed that hospitals, insurance companies and doctors should ‘be legally required to disclose all of their prices, including discounted prices, cash prices, and insurance negotiated rates across hospitals and across plans in an easily accessible place online.’”

Alright, if I know you, you are thinking right now about all of the reasons why this won’t work. So, let me head you off at the pass. My guest today, Marshall Allen, solves for the most common issues that everybody brings up, including the big kahuna issue, the “I am contractually forbidden by a health plan to allow patients to pay cash.” You will need to listen to this podcast for the answer.

Now, there are, of course, other hairballs to untangle that we do not address today. As Marshall Allen says, there are layers of dysfunction here. One bit of weirdness is something that David Schreiner, PhD, told me about the other day. David is CEO of Katherine Shaw Bethea Hospital in Dixon, Illinois; and he’s also the author of a new book entitled Be the Best Part of Their Day: Supercharging Communications With Values-driven Leadership.

David said that sometimes hospital payer contracts have the payer reimbursing the hospital for a percentage of overall charges. Yes, you heard that right. The hospital totes up, using their charge master rates, the total amount of billings for the entire year; and the carriers pay a percentage of that total. So, the hospital has a big incentive to keep charge master rates as high as possible. If some patients pay lower cash amounts, then their carrier reimbursement (the hospital’s carrier reimbursement) will drop. Probably some math there, I guess, because if it’s determined that patients aren’t actually showing up for services due to cost, then they might be getting paid a percentage of zero by the carriers; but point taken still. There are, for sure, considerations to be thought through; and, for sure, having contracts like this is one of them.

I was talking to Lauren McAteer the other day, and she told me when she worked for a hospital and went to meetings, sometimes she’d bring in a hospital gown and hang it over a chair in the conference room to make it harder to not consider the patient perspective and think about how decisions impacted patients. Good idea, because where there’s a will, there’s often a way.

My guest today, Marshall Allen, probably needs no introduction. But I ask Marshall for the skinny on how he started Allen Health Academy, and you will hear him introduce himself. So, in the interest of eschewing redundancy, let’s do this thing.

You can learn more by signing up for Marshall’s newsletter at marshallallen.substack.com.

You can also go to Allen Health Academy or to Marshall’s site.

Marshall Allen has spent more than 17 years investigating the healthcare system as a journalist. He is the founder of Allen Health Academy and the author of Never Pay the First Bill: And Other Ways to Fight the Health Care System and Win. His book and his health literacy videos, The Never Pay Pathway, are helping working Americans save hundreds and thousands of dollars—per healthcare encounter. Marshall is a two-time finalist for the Pulitzer Prize and winner of the Harvard Kennedy School’s Goldsmith Prize for Investigative Reporting and dozens of other journalism awards. For more information, visit allenhealthacademy.com and sign up for his newsletter at marshallallen.substack.com.

07:04 What Allen Health Academy is doing.

11:01 What’s the problem with the system now?

14:19 EP363 with David Scheinker, PhD.

14:27 EP413 with Will Shrank, MD.

14:34 What’s the hack Marshall Allen shares for insured patients paying cash?

15:06 How can patients cite HIPAA to pay cash instead of using their insurance?

19:00 What’s the first recommendation Marshall Allen has when dealing with healthcare billing?

21:26 EP297 with Jerry Durham.

21:48 What are the other benefits of a clinic accepting cash payments?

25:36 Why do we need to have more direct pay happening?

26:36 How should a medical provider set a cash price?

27:12 Research tools for fair pricing: fairhealthconsumer.org, BILLY, colonoscopyassist.com, Jason Health, Green Imaging.

32:36 How do you find the win-win between a patient and a doctor?

32:51 What’s the final tier of partners in creating more direct-pay opportunities?

34:30 What’s Marshall Allen’s opinion on having to pay credit card fees?

You can learn more by signing up for Marshall’s newsletter at marshallallen.substack.com.

You can also go to Allen Health Academy or to Marshall’s site.

Recent past interviews:

Click a guest’s name for their latest RHV episode!

Stacey Richter (INBW39), Peter Hayes, Joey Dizenhouse, Benjamin Jolley, Emily Kagan Trenchard (Encore! EP392), Cora Opsahl (Encore! EP372), Jodilyn Owen, Ge Bai, Andreas Mang, Karen Root (Encore! EP381)