Every shopper likes to get a bargain. But when it comes to health care, bargains can be hard to come by.
But that’s changing.
With health insurance premiums steadily climbing and the cost of medical services skyrocketing, more people are turning to high-deductible insurance plans to save money.
Last year, more than 43 percent of people under the age of 65 with private insurance bought into a high-deductible plan, according to a report from the National Center for Health Statistics. That’s up from 39 percent in 2016.
The report defines a high-deductible plan as one in which the deductible is at least $1,300 for self-only coverage or $2,600 for family coverage.
While consumers with high-deductible plans pay a smaller monthly premium, there’s a tradeoff: They have to pay more out of pocket before their insurance kicks in to cover costs.
That’s led to more savvy shoppers looking to cut down on their medical bills when they know they aren’t going to meet their deductible and will have to pay out of pocket for services.
That’s something Evansville-based Deaconess Health System has experienced directly. Steven Russell, patient financial services director for the network, said Deaconess has seen a huge increase in the number of people calling to get quotes and estimates on what things are going to cost.
“More and more consumers are getting to be more informed about how this process works,” he said. “We’re all facing higher deductibles, so people are getting smarter and shopping around to get the best deal they can get.”
Now, some Indiana hospitals have jumped on the discount-shopping bandwagon to meet the demand from consumers looking for a bargain on their health care.
BUY A ‘COUPON’
One way Deaconess offers discounts to patients is through an online shopping site called MDsave, which connects uninsured and high-deductible health insurance patients with medical providers who offer pre-negotiated savings on medical services.
Russell said Deaconess signed on with MDsave a few months ago to offer patients discounts on expensive, high-demand services such as MRIs, X-rays and CT scans. Consumers buy a voucher through the website, and then the health care provider bills MDsave.
The website was created in 2011 to allow consumers to buy a service up front and avoid surprise fees or bills. Since then, nine hospital or health care systems in Indiana have signed on to offer services at rates that are sometimes discounted up to 60 percent.
Russell said the discounts Deaconess has started offering through MDsave to consumers with high-deductible plans are similar to discounts the hospital is required by federal law to give to low-income consumers.
Now, when people call asking for discounts on services, Deaconess points them to the online shopping site, where they can pay cash up front, receive a voucher and save money.
“It seemed like the right time to jump in there and be a player in this,” Russell said. “That is today’s market: the high deductible plans. We wanted to partner with somebody to offer this kind of service for people who were shopping around, trying to find the best price.”
PAY CASH AND SAVE
Some hospitals are taking a more direct approach to the discount shopper: marking down the price of services or procedures for patients who are willing to pay cash up front and skip using their insurance.
Mark Norrell, a lecturer in health care management and policy at Indiana University’s School of Public and Environmental Affairs, said it’s an option some health networks have started offering to get around the sometimes timely and expensive insurance billing process.
He said many hospitals don’t even know how to bill a patient until a doctor files all the paperwork following a surgery or other procedure. That can sometimes take weeks. Then it could take another week or two for the insurance to determine how much it will pay and how much the patient owes.
And when the bill is finally sent to consumers, it often comes with major sticker shock.
“Most people look at the bill and say, ‘Oh, man, how am I going to pay that?’” Norrell said. “In many cases, the patient will be overwhelmed and just put the bill in the corner.”
That leads to what can be a years-long payment process. And the longer a bill goes unpaid, the more likely it is patients won’t pay it at all, he said.
Instead, some hospitals have decided it’s easier just to give discounted rates to consumers who are willing to pay for the service up front in cash.
“What’s most important to hospitals is getting money into their bank account,” Norrell said. “The nut of the issue is that hospitals can earn more return on the money if it’s paid off early. They’ll get their money now.”
He said people with high-deductible plans are now more willing to keep their insurance card in their pocket and pay cash to get a discount – despite the fact it won’t go towards meeting their deductible.
“It’s an option that’s gained more public awareness because of all these high-deductible health plans,” Norrell said. “It’s a function of these plans and how they can lead to people getting a whopping bill.”
No public data exists on how many Indiana hospitals offer cash discounts, also known as prompt discounts. Parkview Health and Deaconess said they do not offer those discounts.
Six other health networks – including IU Health, Community Health Network, St. Vincent Health Network and Beacon Health System – did not confirm whether they offer cash discounts or did not respond to phone calls.
HEALTH SUBSCRIPTIONS
Some consumers have racked up savings by turning down high-premium insurance plans and opting into subscription-fee health care facilities, often referred to as concierge medicine or direct-primary care.
Doctors who run the clinics don’t take insurance and instead charge patients a monthly fee that gives them access to basic services such heart and lung tests and skin biopsies, as well as longer office visits and more personalized care.
Dr. Praveen Rajanahalli last year opened one of the state’s newest fee-based clinics in Greenwood, called Supro Direct Concierge Medicine, after working in traditional pay-for-service facilities for a decade.
His individual patients pay $3,000 a year and families pay $6,000 a year for services such as 24-7 access to a physician, same-day appointments, mental-health services and chronic disease management.
Rajanahalli said he also negotiates dramatically reduced rates for his patients for lab tests and other procedures not done at his clinic. He said he’s contracted with some labs that give his patients a 90 percent discount.
“Our job is to get the lowest price possible, because if they go directly to the hospitals, they won’t get that discount,” Rajanahalli said.
He said his clinic makes the most sense for people with high-deductible plans. Their insurance provides coverage in the event of a catastrophic health issue. For most everything else, they can go to his clinic or get reduced rates from other providers.
“You need the insurance for big surgeries,” Rajanahalli said. “Otherwise, for the most part, you can get by.”
According to a 2016 study by the trade publication Concierge Medicine Today, as many as 12,000 physicians in the United States now operate concierge practices.
Rajanahalli said research he conducted through IU’s Kelley School of Business indicated the total number of physicians practicing concierge medicine has grown from 1 percent to 4 percent over the last decade.
“That’s a good spike, and it’s just going to increase,” he said.