Texas Tech University Health Sciences Center
Cash or Coverage: Complexities in High-Deductible Health Insurance

Cash or Coverage: Complexities in High-Deductible Health Insurance

It was bound to happen and it did last week. A complaint came to me from a patient who has one of the new high-deductible plans. This person didn’t care for what we had billed him for two visits to one of our specialty departments. Actually, as we talked further, he was upset that his insurance had not pay anything on the claims because his deductible had not been met. One of the things that he had tried to determine was if it was less expensive for him to pay cash and get a 40 percent discount or to file on his insurance.

This approach is a problem to us, but we may start seeing it more often. I noticed a story on KCBD a few days ago of a person advocating paying cash to doctors. The problem lies in the way insurance contracts are typically structured between Texas Tech Physicians and insurers. Generally, we are required to charge the full, negotiated rate that we have agreed to, even though the patient is paying the entire bill. We typically are not allowed to “just take cash” from a patient with insurance, even if the patient wants to self-pay. This can create the odd situation where someone who is uninsured and paying cash with a discount might get a better price than someone with insurance, even if both of them are paying the whole bill themselves. Of course, as a principle, discounted cash prices are intended for the uninsured, not those who have coverage.

Some patients may be tempted to “fib” and tell us they don’t have insurance to get a cash discount. The downside of doing this, to the patient, is in addition to the fact that we are not supposed to fib, by not telling us that he or she has insurance, the payment won’t count towards the deductible. Some will reason, “Why does it matter since I won’t get anywhere near my deductible anyway?” Of course, paying lower prices as a self-pay patient makes it even less likely the patients will hit their deductible.

I explained this to the gentleman that a deductible is the amount that he pays for health care services before his health insurance begins to pay. So, in this case the person had two visits. The charge for the first was $350 and we accepted a contractual adjustment of $140, which left the patient liable portion to $210. The other visit resulted in a charge of $220, and with a contractual discount of $20, the remaining patient liability was $200. So, the patient owed $410 ($210 + $200.)

If the patient had paid cash for both visits, we would have offered a cash discount of $228 ($570 X 40 percent) and he would have paid $342.00. If his $2,500 deductible had been satisfied, the patient would have owed an $80 or $40 specialist co-pay for both visits.

Deductibles have been rising as companies shift costs to employees. I am contrasting this with insurance purchased on the Affordable Care Act marketplace. The average annual deductible in employer plans is $1,320 for individual coverage according to the Kaiser Family Foundation. I looked on the government website and the silver plan that FirstCare sells in our area has deductible for an individual of $1,750, and the Blue Cross silver plan has a $3,000 individual deductible. Interestingly, the IRS defines a high deductible as anything more than $1,300 annually for an individual.

I have been in health care for 35 years. For most of this time, patients paid a co-pay and rarely owed anything else for the visit. So, we can understand how they might experience “sticker-shock” by the new financial reality of the high-deductible or consumer-driven health plan.

When I explained all of this to him, he said he pays $250 per month in premiums, which I thought was pretty inexpensive, and I am sure the school district where he works (he said he was a teacher) pays the majority. But, that is $3,000 annually to him and then he has to be out the $2,500 deductible before insurance will pay.

“If I have to pay $5,500 before my insurance does me any good, why do I even have insurance?” he asked.

I explained that in the event of a major illness his insurance would give him protection. Plus, many plans cover such things as preventive services like mammograms and colonoscopies, and maybe even generic drugs or visits to a primary care doctor before the patient’s deductible is met.

Still, I somewhat understood his frustration.