Self-Pay Discount

A self-pay discount is the reduction a provider gives a patient who is paying the bill themselves rather than through insurance. It is usually stated as a percentage off the gross charge, and at hospitals it commonly runs 40 to 70 percent. Physician practices, labs and imaging centers offer them too, though they rarely advertise it. The discount exists because a bill that gets paid promptly and in full is worth more to the provider than a larger bill that goes through a claim, a denial, an appeal and a collection agency.

Two things trip people up. The first is that a self-pay discount is applied to the chargemaster price, which is already inflated, so a 50 percent discount can still leave a bill higher than what an insurer would have paid. A $9,000 gross charge for an outpatient procedure, discounted 50 percent to $4,500, is not a deal if the carrier's negotiated rate at the same hospital is $2,800. Always compare the discounted number to a real negotiated rate or to a surgery center's published cash price, not to the sticker price. The second is that most providers will not mention the discount unless you ask, and some will not apply it after the fact if you have already let the bill go to collections.

The takeaway: ask for the self-pay discount before the service, in writing, and ask what the final dollar amount will be. Then compare it to the published cash prices at freestanding facilities nearby. The best discount is often not at the hospital at all.