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(Updated, 2022) Are you paying more for health care because you have health insurance than a cash customer pays?

It’s definitely happening for some people. Many of us are accustomed to thinking that we pay insurance premiums to get access to a lower cost for health care procedures — that being the “negotiated rate” or “contracted rate” that the insurance company and the payer agree to in contract talks. But increasingly we are hearing, in our New Orleans, Philadelphia and California PriceCheck projects and elsewhere, that insured people are paying more than uninsured people — not everywhere, and not all the time, but not infrequently.

I wrote about this initially because we thought it noteworthy. Now more and more examples are coming to us. Here’s one.

“I was worried about the cost of the MRI, so I had it preauthorized as preventative care, which in theory is 100% covered,” our community member wrote as she filled out the online form in our PriceCheck project in California. She then called the provider, and “asked what the cost would be if I didn’t have insurance, which was $938.

“I figured I would likely pay $500 or $600 using my insurance. I was SO wrong. An uninsured person would pay $938 but my insurance was charged $5,265 and my responsibility was $2756.47, approximately THREE TIMES the cash cost. Afterwards I called to complain to my insurance company and the MRI place. I also begged to be allowed to pay the cash price and was told I could not after the fact.

“It was very frustrating considering all the time I spent trying to investigate the costs ahead of time.”

Listen to two of our community members from our PriceCheck project crowdsourcing health care prices in California:

“I was told procedure would be 1850. I have a 7500 deductible. So I talked to the office mgr who said if I paid upfront and agreed not to report the procedure to Blue Cross, that it would be $580.”

On our Facebook page, one contributor wrote, “I was going to be billed $830 through my PPO for an MRI. The cash price? $500.”

Another MRI: Billed price $1,407; paid price $900. “Worked with billing for several weeks to work down price. Goes to show the price isn’t the price….”

So what’s happening here? It seems clear that the language in your insurance policy might obligate you to pay the full, charged rate (sometimes called the Chargemaster rate) until your deductible is met, depending on the plan. But sometimes, you can save a lot on cash.

So it pays to ask, carefully: “How much will this cost? How much will it cost me?”

We also have learned that it’s important to ask a third question: “What would it cost as a cash or self-pay person, without insurance?”

I’ve written about this before, but it seems to keep coming up so I’m writing again.

How it works, most of the time

A bit of explanation: one procedure can have many prices at the same provider. There’s the charged price, also often called the “sticker price” or the “rack rate” — say $100 for a routine office visit. Then that same provider may receive $100 from a cash customer, $80 from Insurer A, $75 from Insurer B, $70 from Insurer C, and so on — in the form of a negotiated rate, or contract rate.

It’s called that because providers and insurers negotiate payment rates in contracts: Payers generally want to pay less, and providers want to get more, so they have contract negotiations governed by things like power in the marketplace, last year’s rates, prestige, number of providers offering the procedure and so on. That same $100 procedure may win $50 from the federal government in Medicare payments, and $40 from Medicaid, depending on many factors.

Insured people have long thought their insurance policies grant them access to the negotiated or contract rate for an in-network provider, rather than the sticker price. At an out-of-network provider, a patient might need to pay the sticker price.  But increasingly, we’re hearing that insured people are being asked to pay the sticker price — if they haven’t met their deductibles yet — for in-network providers.

Other full-price insured people

Here’s another, from a person who had an MRI of the lower spine, CPT code 72148. The total charge was $2,885, the insurer paid $944.97, and the individual was left with a bill of $1,940.03.

“Includes separate billings from hospital ($2607) and third-party technician company ($278),” was the comment.

Over on Reddit, there was a similar case:

“So my insurance doesn’t really kick in until I reach my $6000 deductible. OK, fine. But dang! Having insurance doubled what I owe to the hospital!

“Long story is, my doctor said I had to get some bloodwork. The receptionist told me to check out the lab in the hospital (1 minute walk from the doctor’s front door). I’m dumb. I went. Mistake #1. I asked if they take my insurance, they said ‘Heck yeah we do’. 5 minutes of bloodwork later and I’m driving home. (If I had not listened to the receptionist’s advice and just driven to the lab down the street………)

“I get a bill in the mail 3 months later. The total bill is $1600. Since I don’t have insurance (what?) they want $290. This is where I make mistake #2. I call the hospital’s billing company and tell them ‘Hey I have insurance, what the heck? Why am I being billed $290 for 5 minutes of bloodwork?’ They say ‘Oh dear, looks like we took your insurance number down wrong. We’ll put the payment on hold while we contact your insurance company.’ In hindsight I should have paid the $290!

“1 month passes. I get an updated bill in the mail. The total bill is $1600. Since I have insurance, they want $550. From me. My insurance, bless their hearts, got my bill down from $1600 to $550. What?

“I called the billing company and asked if I could just pay the $290 from the original bill. ‘Sorry! $550 please or we send it to collections!’

“I called my insurance company and asked if they cared, at all, about any of this. They don’t care. Does anyone have any ideas? Am I screwed? Just pay the $550? Is there some magical word I have to say to the insurance person to get them to fight for the $290 rate?”

What can you do? Redditors offer help, and so do we

As we always suggest, ask: “What will this cost? What will it cost me?” And lately we have been adding another question: “What would that cost on cash?”

Redditors, as people who use Reddit call themselves, offered some other advice.

Redditor One: “The lesson here, which my wife and I learned for fewer dollars but many more hours on the phone, is to tell a fib when you get to the receptionist and they ask if you have insurance. ‘I’m paying out of pocket.’ Once you get the bill, you go to your insurance company’s website and look up their negotiated rate for that particular service. This is often straightforward, but some weird procedures are hard to find, and some insurance companies’ websites suck. Anyway, once you know their negotiated rate, you decided whether you want to submit the bill to the insurance or not.

“It’s quite a bit of extra work, but can save you a small fortune. Not that if you pay out of pocket, what you pay doesn’t count against your deductible, but can still be reimbursed from an HSA.”

Redditor Two: “I went in to do an annual physical with my doctor as my employer offers discounts on my insurance if I complete this at the beginning of the year. It was my first time with this medical provider. I met with the doctor for like 20 minutes and then he told me to head downstairs for lab work. I went, and a week later started getting bills in the mail for  … blood work. The total came to almost $400. My insurance plan indicates that annual physicals are covered 100%.
“I called… and explained to the rep that it was my first time using this medical network and that as a customer, I felt scammed that I was not advised of the additional costs for my exam. At no time was I ever told that the lab work would cost me out of pocket. I explained that it was extremely unprofessional that they would just bill me without letting me know the true costs of the tests. They asked if my concerns were due to economic hardships and I simply said NO, that I could easily pay bills, but that the relationship had already been soured.

“A week later I got a letter saying that the charges were waived.”

Redditor Three: “Same here. I spent a lot of time talking to a lot of different people and everyone just kept the circle of blame going. Told the doctor’s office I’m never coming back, told the insurance company I’m switching plans, told the lab to screw off. No one cared! Yay.

“So, I got on a ‘payment plan’ where all I have to do is pay something every month. … So, I set up an auto-draft for $2/month. In 250 months I’ll be free and clear! (No, no interest and no reporting to the credit companies as long as I pay something).”

Redditor Four: “Call the hospital and say you do not want to use your insurance on that claim and that you want to pay the discounted rate of $290. If you explain the situation, they should be willing to accept that.”

If you have information about this, or anything you’d like to share with us, let us know at info (at) clearhealthcosts (dot) com.

(Update: Here’s another blog post from me about the same topic. Here’s a Wall Street Journal article about the topic. Here’s a recent piece from KevinMD about the topic, and one from The Los Angeles Times. Here’s our post about “Find out what stuff costs: 10 easy questions,” and a more detailed version of that.)

Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...