8 Ways to Know Whether a Cash-Only Practice Is Right for You

Neil Chesanow


February 10, 2012

In This Article


The concept of cash-only practices is appealing to many physicians -- more time with each patient, fewer administrative issues, no dependence on insurers. But not every practice can make this arrangement work successfully.

If you're considering a cash-only practice, first examine these factors to see whether such a model is right for you.

1. Demographics

Does your area have the right kind of patients to support a cash-only practice? To find out, you need to know the population density; the number of competing local doctors; and the number of potential patients who lack health insurance, are underinsured, or are unemployed.

You should also know how many local companies offer their employees a combination of health savings accounts and catastrophic insurance, rather than policies with first-dollar coverage -- in short, patients who have no choice but to pay cash.

Kathryn Moghadas, RN, CHBC, principal of Associated Healthcare Advisors, Winter Springs, Florida, notes that municipal Websites are good sources of demographic data about your region, as are local realtors and physician marketing groups. To assess the competition, she also recommends the Little Blue Book, which covers 147 metro area directories of physicians and other healthcare providers, including their specialties, primary office locations, and health plan acceptance. Physician organizations, such as the American Academy of Family Physicians, can be troves of useful information on doctors in your area and on cash-only models as well.

2. Rates

Nonconcierge cash-only practices strive to charge affordable, fair rates, but "affordable" and "fair" are subjective. Once you stop taking insurance, you can charge whatever you please.

However, it is easy to determine what the market will bear. Cash-only practices are generally committed to price transparency. Search the Internet for their Websites, where their rates are commonly posted. Comparing several sets of rates in your area or a similar area should give you a sense of what to charge locally.

Both SimpleCare , a national organization that matches patients with cash-only local doctors, and Forrest Direct Pay, which helps physicians set up cash-only practices, offer guidance on rates and suggestions for "coding" in the absence of Current Procedural Terminology codes, which you will no longer need. In both cases, however, you will need to pay a membership fee to get details.

For example, here is what SimpleCare advises prospective physician members: "You establish the SimpleCare price that is fair for you and your patients. By eliminating administrative costs associated with activities such as billing, producing insurance claim forms, coding diagnoses and procedures, referrals, authorizations, payment delays, EOB reviews, claim denials, re-submissions, collection risks, and other 'managed care' costs, you provide patients a fair price for services without the administrative hassles and bureaucracy. Many physicians reduce their standard billed charges 30% to 50% for SimpleCare patients and benefit financially, but your SimpleCare price is your decision."

3. Medicare and Medicaid Patients

If you want to treat patients who have Medicare or Medicaid, you will need to contact the Centers for Medicare & Medicaid Services (CMS) and opt out of either or both programs for 2 years, after which you will need to formally opt out again. You cannot treat either type of patient selectively. If you see one Medicare patient on a cash-only basis, you must see all on the same basis.

You will also need to draw up a contract between you and the patient clearly stating that you are not a Medicare or Medicaid provider, and that patients who elect to pay you in cash at your going rate will not be able to seek reimbursement from CMS. Both SimpleCare and Forrest Direct Pay can provide you with sample contracts.

But why would Medicare patients opt to pay cash? "Our rates represent about an 85% saving over an insurance-based practice," Forrest explains, who estimates that 15% of his panel is Medicare patients. "The typical Medicare patient has a 20% copay. So he or she can save about 5% by coming here, paying cash, and not using Medicare.

"This is what fascinates a lot of politicians. I didn't send any bills to Medicare in 10 years -- ever. If we accepted insurance, we could probably send Medicare $800,000 in bills per year. If more doctors start to accept only cash, it will save Medicare a ton of money."

Forrest didn't even realize that he had any Medicaid patients until he went to a local pharmacy and asked to see insurance data on his patients. He was shocked at what he learned. "I was seeing 3 times as many Medicaid patients as local doctors who took Medicaid!" he discovered. "I asked these patients: 'Why are you coming here you could go across the street to a community health center and be seen for free?'"

They said, "Dr. Forrest, when we go to a practice like that, we wait for an hour and they only see us for 5 minutes. We feel like we get the worst care on the planet. We can pay you $25 a month and come here and get the best care on the planet.' I'm not going to turn those people away. If they want to come here and pay $25 a month, that's great."


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