Prompt Pay Discount

A prompt pay discount (also called a self-pay or cash discount) is a reduction a provider offers when a patient pays at or near the time of service, typically without going through insurance. The discount reflects the provider's savings on billing, coding, denial management, and collections — often 20 to 40 percent of the total costs of running an insurance-driven billing operation.

The discounts are real and often larger than people expect. I've watched Texas hospitals drop bills 40 to 60 percent for uninsured patients who called and requested the self-pay rate in writing. Physician practices frequently have a published cash rate that runs 30 to 50 percent below the chargemaster and often at or below the negotiated insurance rate. Some plan documents explicitly forbid providers from offering members a cash discount below the plan's negotiated rate, but enforcement is spotty and many providers offer it anyway. Federal law prohibits Medicare beneficiaries from using cash discounts on Medicare-covered services in most cases, so this strategy works best for commercial-plan and uninsured patients.

The takeaway: for any bill over $500, ask the billing office in writing whether a prompt pay or self-pay discount is available. The answer is often yes, and the discount is often meaningful — the ask is free.