Prompt Payment Discounts for Patients

Giving patients “cash” discounts patients can be problematic. However, a carefully developed, written  prompt payment discount policy could work for your practice. 

One concern is that most of your health care payment plan contracts likely specify that the plan will pay “the lesser of” the provider’s usual charge or the plan allowable. When you give a reduced price to other patients, the plan could possibly claim that that reduced price is your REAL usual charge. If the plan has been paying you more than that, it could try to recoup the difference.

However, a carefully developed prompt payment discount policy such as the following could work for your practice.  Be sure to put the policy in writing.

  • Offer the discounts only for services that are paid in full at the time of the service, in advance, or maybe within a certain number of days. 
  • Make it clear that the discount is available to anyone who meets your terms, unless their insurer’s policies or contracts prohibit it. If an insurer can pay you in full within your terms for the discount, it receives the discount, too.
  • Apply the discount s to your standard fees, not to any contractually reduced fees.
  • Inform your patients of the availability of the discount as appropriate during the billing process.
  • Make efforts to ensure that the amount of fees discounted to patients bears a reasonable relationship to the amount of avoided collection costs. 

For details about the legal issues involved, read TMA’s white paper, “Prompt Payment Discounts for Patients.”  membersonlyred(2)

Also, remember that under Texas law (House Bill 1731), you must post a notice in your waiting room to inform patients they can request a copy of your billing policies.

Need help developing billing and payment policies? TMA Practice Consulting can evaluate these, and other office policies and procedures. An Operations Assessment identifies risks within a practice and shows you how to reduce or eliminate them.  The TMA Education Center has on-demand webinars that can help with billing, prompt payment, and clean claims issues.

Published Aug. 28, 2012

NOTICE: This information is provided as a commentary on legal issues and is not intended to provide advice on any specific legal matter. The Texas Medical Association provides this information with the express understanding that 1) no attorney-client relationship exists, 2) neither TMA nor its attorneys are engaged in providing legal advice and 3) the information is of a general character. This is not a substitute for the advice of an attorney. While every effort is made to ensure that content is complete, accurate and timely, TMA cannot guarantee the accuracy and totality of the information contained in this article and assumes no legal responsibility for loss or damages resulting from the use of this content. You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought.

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Last Updated On

June 01, 2016

Originally Published On

August 28, 2012