Why Alternative Reimbursements Work

If you’ve been insured, you know the cost of health insurance premiums is only going up. At the same time, deductibles have more than doubled in the last decade. This means that while premiums continue to increase, the burden of payment has shifted onto the insured.

This presents a major problem because according to a Federal Reserve Report in 2018, about 40% of respondents wouldn’t be able to come up with $400 for an unexpected expense. This explains why over half of the medical debt sent to collections is for less than $600 and why currently, 32% of American workers have medical debt, and half of them have defaulted on it. 

As this problem continues to grow, hospitals have had to turn into collections agencies, but despite their persistence, 67% of out-of-pocket expenses go unpaid. 

This may sound like all bad news, but it actually presents an opportunity for you and your employees to receive better care at a lower price.

With healthcare providers regularly getting stiffed via traditional insurance, they’ve become more open to alternative reimbursements as a way to ensure their costs are covered. Two that are gaining popularity are paying the deductible up front and offering cash discounts. 

Paying the deductible up front is exactly what it sounds like: before receiving care, you pay your entire deductible, allowing the care provider to ensure they won’t be chasing you for out-of-pocket expenses and allowing them to send costs beyond that to your insurance provider. 

As many people can’t afford to pay their entire deductible in advance, providers are also offering cash discounts. By offering to pay cash, providers will give you upfront pricing and a decrease in cost, if you pay them directly instead of going through insurance. This can save you thousands of dollars and is often offered with payment plans that can make large bills more manageable. 

Unlike traditional insurance, by offering alternative reimbursements, healthcare providers can ensure they will have their costs covered and give you a discount for doing so. Even more than saving money, by having a more direct relationship with the healthcare system, you’re not beholden to choose from an insurance company’s in-network list. You’re able to choose exactly who you want for your treatment and thereby increase the quality of care you receive. This saves your company valuable costs while increasing the quality of care and building relationships with your healthcare providers.

As this arrangement benefits employers, employees, and healthcare providers themselves, it’s clear to see why alternative reimbursements are quickly gaining popularity.