Why health care needs a Black Friday sale

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The best time to buy a car is at model year-end sales, and Black Friday deals can’t be beat for major appliances. Ever wonder why you don’t see a President’s Day sale on colonoscopies? Or ads for buy-one-get-one free knee replacements?

In most instances, offering patients a discount on health care services would be considered an improper patient inducement under the federal Civil Monetary Penalties Law and the Anti-Kickback Statute. These laws reason that discounts encourage patients to seek unnecessary care and overuse services — as though anyone would schedule a colonoscopy for fun!

From cars to shoes, just about every industry uses discounts or financial incentives like rewards programs to attract customers. They benefit the seller and the buyer. But if a hospital does this, it could face civil fines or criminal penalties. The law specifically prohibits incentives that are likely to influence an individual’s choice of provider for particular services.


Insurance companies build these laws into their contracts with medical groups, hospitals, and other providers. Waiving or discounting a patient’s share of the cost could result in a breach of these contracts, because it would mean the provider has overstated the pricing in the first place.

To be sure, laws are needed that require providers to demonstrate that the services they are offering are medically necessary, and many existing laws do this. If patients don’t know or understand the care that is being recommended to them (and whether that care is necessary), there is an opportunity for fraud to occur — and it does. But with patients shouldering more of the costs of care, current laws prohibiting patient discounts are a blunt instrument to address this problem and potentially bypass solutions for the burgeoning problem of rising health care costs. Legalizing patient discounts could help give Americans some control of health care spending.


The No Surprises Act has tried to address the problem. Tucked deep inside is a provision that entitles individuals to receive a good faith estimate before they receive medical care. In enacting this requirement, the government has acknowledged that consumers need pricing information “to compare costs and make a decision about from which provider they will seek care.” The estimate must list expected charges for all services and include a provider’s “typical” discounted prices. But because providers can’t legally offer discounts or “sales,” the “typical discounts” are the price the insurance company or the rare cash-pay patient would be charged.

So what does the consumer end up paying? In most cases, a provider’s “typical” discounted price will far exceed the patient’s co-pay or deductible, so patients probably won’t save money. But the intent — helping them save money by showing them a health care version of a price tag, something they get in virtually every other purchase they make throughout their lives — is a good step forward.

I believe it is time to eliminate the legal ban on patient discounts and empower health care providers and consumers to drive down costs. With the opportunity to advertise lower out-of-pocket costs, providers could compete through pricing, not just through quality and reputation. Providers would also be able to optimize their capacity by offering seasonal discounts during slow periods or special pricing for new services.

If these discounted prices were advertised and known up front, patients would be more likely to pay in advance rather than waiting for an insurance claim to be processed. Providers would capture more revenue and patients would pay less — not to mention avoid the endless loop of calls about their bills. Insurance companies would also benefit as savvier patients force providers to compete on price.

A public policy that prohibits providers from competing for consumers on pricing is out of step with the US’s free-market economy.

Government rules and insurance company policies have kept patients out of price negotiations for too long. It’s time to change the rules to let patients demand drive price competition in health care.

Stacy Bratcher is a health system general counsel in Santa Barbara, Calif.