Patients upset by lack of price transparency

The idea of cold, hard cash may be appealing to hospitals that offer significant discounts for self-pay patients, but according to Business Insider, patients are livid over the practice.

A widely cited Los Angeles Times article recently called out California hospitals that offered discounts for patients who shelled out their own money and worked around the middleman insurance company. Although the self-pay model isn't new for hospitals, patients were shocked to hear about the discrepancies and the lack of price transparency.

According to HospitalBillHelp.com, a consumer information project, all hospitals offer discounts of 25 percent to 30 percent for up-front cash payments. And 85 percent of people are paying that way, Business Insider noted.

In a nutshell, cash is simpler, according to John Graham, director of healthcare studies at the Pacific Research Institute, The Heartland Institute reported. Calling the current system of payment a "bureaucracy," Graham noted that hospitals offer cash discounts for impressive savings for both the provider and patient.

"When the patient pays cash, he knows how much he has to pay up front and what funds he has available. The provider wins because he doesn't have to waste time submitting paperwork to the insurance company to get paid."

Still, there's no transparency in medical pricing because the healthcare system is based on third-party payers, Roger Stark, a physician and healthcare policy analyst at the Washington Policy Institute, said in the Heartland Institute article.

A lack of price transparency costs the United States about $36 billion a year in healthcare overspending, according to a February Thomson Reuters survey.

For more information:
- read the Heartland Institute article
- see the Business Insider article

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