Direct Pay (Cash Pay) Strategies Make Sense

By Bill Rusteberg

Direct Pay strategies, which I call Cash Pay strategies, has had a positive impact on a 400 life case we manage.

The first year there were 9 claims managed on Cash Pay for a total plan savings of $80,000. This equals to $17 pepm. Bear in mind this case is on a Reference Based Pricing model tagged at 120% of Medicare. So the savings were accrued by paying less than 120% of Medicare.

The second year there were 16 cases managed through the first 8 months for a total savings to the plan of $100,000. This equals to $21 pepm.

We anticipate a total of $150,000 for the entire year. This equals $31 pepm.

From the actuary studies I am privy to, generally the difference in funding between a BUCA network and RBP ranges from 20-35%. Then if you add a Direct Pay (Cash Pay) overlay, the differential is greater.

Here is an example of a San Antonio group:

$415 Employee rate using BUCA network

$321 Employee rate using 120% RBP

$290 Employee rate based on Direct Pay example above

As Dave Chase’s recent book explains, you can cut health care costs as much as half while improving benefits at the same time. The question is: Why Isn’t Everyone Doing This?

From a consumer’s viewpoint, spending up to 6 months and more in sorting through bills and balances due providers, a direct pay approach eliminates all of that frustration and hassle. No balance bills to contend with, no confusing Explanation of Benefits mailed to your home on every single claim associated with a surgical procedure (anesthesiologist, radiologists, surgeon, pre-op lab work charges, hospital charges, etc).

So I ask once more: Why Isn’t Everyone Doing This?

Note: Dave Chase’s book “Restoring The American Dream – How to Deliver World Class Health Care to Your Employees at Half the Cost” is a must read.