Self-pay discounts are dangerous
Many healthcare providers offer a discount to financially vulnerable patients. These go by various names:
- Self-pay discount
- Cash-pay discount
- Prompt-pay discount
These discounts have good intentions. Unfortunately, they create some fairly serious dangers for both providers and patients. There is probably only one viable way to address these dangers, which is through a non-insurance network.
Breaching insurance contracts
Insurance contracts usually specify reimbursements as a percentage of the provider's "reasonable and customary" prices. For example, "Insurer's reimbursements shall be made at 50% of the provider's reasonable and customary fees." This language makes self-pay discounts dangerous.
If a provider offers a discount to anyone who walks in the door, then the discounted prices are effectively the "usual and customary" prices. Especially if a provider offers a discount without patients requesting, the discounted price is clearly the "customary" price. Yet most providers will continue billing insurers at full chargemaster prices. This is a violation of their insurance contract. While it might not be intentional, providers can easily lose a lawsuit for breach of contract.
Misleading patients
A patient without health insurance might reasonably assume a "self-pay discount" would make their healthcare affordable. That's not correct.
Let's face it, chargemaster prices are deliberately inflated. Every provider does it. Most patients are insured, so insured prices must be near market prices or providers would go bankrupt. But inflated chargemaster prices put financially vulnerable patients in impossible situations.
For financially vulnerable patients, chargemaster prices don't become viable after the typical 20% self-pay discount. Chargemaster prices are too high for anything close to be viable. Even a 50% discount off chargemaster prices, which is rare, is probably not enough. That is still around market price. Most financially vulnerable patients only meaningfully benefit from a below-market price. Otherwise they're likely to be sent to collections.
Basically, offering financially vulnerable patients anything but below-market prices could mislead them into financial ruin.
Resolving the dangers
Providers need a safe way to substantially discount prices for financially vulnerable patients. To avoid violating their insurance contracts, providers can only discount their prices to patients in a network. Because insurance networks are expensive, only a non-insurance network is viable.
Pocketero is a non-insurance network for financially vulnerable patients. It allows providers to offer their best price to financially vulnerable payments, without any risk of violating their insurance contracts. Please join our network now – it's free and easy.