Time Magazine‘s recent article “What Happens When Doctors Only Take Cash” cites the growing trend of medical centers offering a “direct pay model” in which the centers only accept cash payments rather than health insurance. As an increasing number of medical centers incorporate this model, there are some potential implications for consumers and for healthcare policy as a whole.
Oklahoma Surgery Center exemplifies this trend by being one of the first centers to post their “all-inclusive” prices online. As listed on their online menu, “A rotator-cuff repair for the shoulder costs $8,260. A surgical procedure for carpal tunnel syndrome is $2,750. Setting and casting a basic broken leg: $1,925.” These unprecedentedly low prices (compared to a full-service traditional hospital) are due the fact that the small surgery center does not need to account for the additional administrative expenses necessary to interface with insurance providers or request Medicare reimbursements. The low prices of these services are attractive to individuals with high deductible healthcare plans. If consumers are already paying high prices from their deductibles, the thinking goes, they might as well pay for the service entirely with cash.
Self-insured companies also drive this trend, because they typically pay for medical bills out of operating costs, thus incentivizing organizations to find the lowest-cost service provided.
With the potential changes to the health insurance market in the coming year, consumers might purchase more high-deductible plans, thus encouraging growth of the “direct-pay model.” Even under pre-existing law, cash-based medical services are growing, as consumers feel the need to find the cheapest services available given that they will already be paying for the procedure. This strategy is beneficial to those whose companies prefer paying for this cash only system, but also poorer individuals bearing health costs without the assistance of companies or who cannot afford this type of care.
For more information, read the article in Time.