You hear the compelling stats, like the number of concierge and DPC practices growing by 83% in recent years, and you wonder if it’s your time to make the move. But before you do, you want to make sure this is the actual future, and not just a fad.
In hopes of helping you make your decision, allow us to help frame what the experience would look like. Today we’re going to explore a step-by-step guide that outlines what it would look like to transition from a traditional practice, rather than looking at what it would be like if you started from scratch. If you want to know how to start a cash-based practice from scratch, click that link.
What is a Cash-Pay (Cash-Based) Practice?
The spectrum
Cash-based medical practices are often exactly what they sound like: practices that steer away from the insurance model in favour of full cash/cash-only payments.
However, a number of other business models fall under that umbrella. You might opt for a hybrid model with insurance and cash options, which could also include DPC, concierge, or even a membership model.
And there is always room to change your model as your practice evolves. Many cash-only doctors experiment with the hybrid model in the early stages.
Cash-pay vs insurance-based, and where superbills fit
Superbills help cash-based, Direct Primary Care (DPC), and hybrid practices give patients a way to seek insurance reimbursement without requiring the practice to bill insurance directly. A superbill is an itemized document that typically includes the provider’s information, patient details, date of service, services provided, and relevant CPT and ICD-10 codes.
In a cash-pay medical services model, patients pay the provider directly and can submit the superbill to their insurer for possible out-of-network reimbursement. The practice avoids much of the administrative burden of insurance billing while still giving patients documentation they may need for a claim.
In a DPC practice, superbills may be provided for eligible services outside the membership fee, depending on the practice model and payer rules. Monthly DPC membership fees generally aren’t treated like traditional insurance claims.
For hybrid practices, superbills can complement insurance billing by supporting cash-pay or non-covered services while other services are billed directly to insurers.
Is Going Cash-Pay Right For You?
Pros
It’s likely you’ve already thought of all the pros. You’re opening yourself up to faster payments, more control over your pricing, longer visits and more attentive care, combined with less administrative work.
Of course, there are always cons. In this case, you’re probably worrying about attracting adequate volume and opening yourself up to low revenue.
The good news is you’re not starting from scratch. You probably have an existing customer base, and a large percentage of them will follow you if you position your new model the right way. Then it’s just a matter of marketing yourself the right way to replace the patients that don’t follow you.
Who it suits
The cash pay model is a particularly good fit for practitioners with the following specialties:
- Primary care
- Psychiatry
- Functional/integrative medicine
- Personal Training
- Chiropractic
It’s also a strong option for affluent or under-insured markets.
How to Transition to a Cash-Pay Practice, Step By Step
Here is a broad overview of the steps involved.
Step 1: Run the financial model
Before dropping insurance, model what the practice needs to remain profitable. Review your current:
- Payer mix
- Reimbursement rates
- Overhead
- Patient volume
- Revenue per visit
Use these numbers to calculate your break-even point under a cash-pay model, factoring in the patient panel size and pricing required to replace lost insurance revenue.
For further reading on the cost savings of a cash-only medical practice, click that link.
Step 2: Choose your model
Decide how far you want to move away from insurance.
Your options include:
- Fully cash-pay practice
- Hybrid model
- Direct Primary Care practice
- Concierge medicine practice
- Membership medicine model
You will want to factor in your specialty and your patient population. At the same time, be realistic about your desired workload relative to your revenue goals.
Step 3: Set pricing & membership tiers
Be aware of what other practices are charging, but don’t base your own pricing on those numbers.
You will want to build your own pricing around your specific:
- Costs
- Specialized services
- Projected market demand
- Target income
From there, determine if you want to offer per-visit pricing, monthly or annual memberships, or multiple membership tiers.
Step 4: Research and plan compliance
This aspect is so crucial. You need to be sure to review any and all federal and state requirements before entering the new space.
Pay particular attention to Medicare participation because the opt-out rules will vary from provider to provider. At the very least, you’re likely looking at filing an affidavit and entering into private contracts with Medicare beneficiaries.
At the same time, self-pay practices often have Good Faith Estimate obligations under the No Surprises Act.
Don’t take any chances with this. Consult a qualified healthcare attorney who has helped people down this road before.
Step 5: Set up billing & superbills
Cash-pay doesn’t necessarily mean patients lose access to insurance reimbursement. Practices can provide a superbill for insurance containing:
- The diagnosis
- Procedure codes
- Provider information
- Charges
- Anything else patients may need when filing an out-of-network claim
You also need to give patients clear instructions on how to submit a superbill to insurance, without promising reimbursement.
Click on the following link for further reading on ACH & recurring membership billing.
Step 6: Plan the payer wind-down & contract terminations
A phased wind-down can make the financial and operational transition easier to manage.
Don’t simply stop submitting claims. Review each payer contract for termination notice requirements, effective dates, patient notification obligations, and other restrictions. Develop a timeline for terminating contracts and depaneling from insurance networks while continuing to meet existing obligations.
Step 7: Communicate the change to patients
Should you simply send some sort of ‘dropping insurance’ letter to patients and give them the dates involved? No, they deserve much more than that, particularly if you want them to follow you.
Of course, you want to clearly communicate:
- What is changing
- When it takes effect
- What they will pay
However, the WHY is just as important. This isn’t just a business move; it’s a change in philosophies. Explain why you’re making this move, and what they can potentially gain in terms of longer visits and potentially better health outcomes.
Also explain your new:
- Pricing
- Memberships
- Superbills
- Important deadlines
Again, put a high focus on what they can gain from your new model.
Step 8: Choose your EHR & tech
The best EHR for cash-based practices should support the workflows you’re actually adopting.
Look for:
- Membership and recurring billing
- Superbills support
- Secure and intuitive patient portals
- Scheduling
- Custom intake forms
- e-prescribing
- Lab workflows
- Telehealth
Cerbo is a cash-pay and DPC EHR that combines many of these capabilities within its platform. Click here to see it in action!
Step 9: Market to cash-pay patients
Your marketing needs to answer the question patients will immediately ask: Why should I pay directly for care?
Focus on the value your model provides, such as:
- Better appointment access
- Longer visits
- Transparent and no-surprise pricing
- Personalized care
- Improved communication
Market your benefits, not your model.
Step 10: Launch & monitor
It’s time to see if the projections in your financial model are holding up.
Keep an eye on KPIs such as:
- Patient retention
- New-patient acquisition
- Patient churn
- Membership growth
- Cancellations
- Revenue per patient
- Appointment volume
- Overhead and cash flow
If your projections were way off, don’t beat yourself up or declare a failure. Learn from them and adapt.
Handling Medicare & Insurance
For a new cash-pay practice, handling Medicare and insurance starts with deciding whether you will:
- Remain enrolled
- Become non-participating
- Opt out of Medicare when legally permitted
Medicare opt-out often requires you to file an affidavit and enter into private contracts with your Medicare beneficiaries.
In terms of commercial insurance, review your existing payer contracts before transitioning to cash pay to check the various termination requirements and notice periods.
You also need to establish clear payment policies and provide itemized superbills when appropriate so patients can pursue out-of-network reimbursement. You need to make it clear that reimbursement isn’t guaranteed. Because federal and state rules vary, have a healthcare attorney review your approach before launch.
Transition Timeline & Costs
As we said in our previous section, these numbers can be very fluid, and if projections don’t match reality, that’s okay.
Your transition timeline can range anywhere from 6 to 12 months, depending on your current practice and patient size, and how aggressively you want to pursue the new model.
The numbers for startup costs can vary even more. You could be looking at a start-up cost of about $10,000 for a small online-only clinic, or well over $150,000 for a specialty clinic that requires office space and specialized equipment.
In any case, try to leave yourself enough runway for 1 to 3 months.
Common Mistakes
Based on the experiences we have heard from practices that have successfully made the switch from traditional to cash-pay, we recommend you avoid these all-too-common mistakes:
- No financial model in place before launch
- Being too aggressive or too fast with the wind-down with poor patient communication
- Ignoring the No Surprises Act
- Choosing the wrong EHR
Any of these mistakes could cost you hundreds of thousands of dollars.
Tips From Practitioners
Other practitioners have made these mistakes and learned from them, so you don’t have to:
- They WILL follow: Psychiatrist Elana Miller, MD, says that practices transitioning from insurance to cash can retain 30–50% or more of their existing patients with the right strategy.
- You don’t have to abandon low-income patients: Practitioners on Reddit have discussed sliding-scale fees, reduced-fee slots, pay-what-you-can structures, and occasional pro bono care as ways to preserve access.
- Expect competition: As we said, this marketplace is growing month-over-month and cash-pay and DPC practitioners want you to know it’s a hyper-competitive space.
- Beware of ‘Insurance Brain’: Other practitioners warn that patients used to the traditional insurance model need education to change their thinking.
Tools & Tech For a Cash-Pay Practice
Looking for cash-pay friendly features like membership/recurring and one-time cash billing, or superbill generation? How about a patient portal, e-prescribing + labs, scheduling, telehealth, or intake forms? Cerbo is purpose-built for cash-pay practices like yours!
Click here to learn more about one of the best cash-based practice management software options on the market.
FAQ
Will I lose my patients?
Some patient churn is inevitable, but you can mitigate the damage by thoughtfully and strategically communicating the benefit of the changes to your current patients.
Experts say you can expect to retain 30–50% or more of your existing patients with the right approach.
Do I have to opt out of Medicare?
Not necessarily, no.
Whether you need to opt out or not will depend on:
- Your provider type
- Your services
- How you intend to charge Medicare beneficiaries
Remember, many clinicians who opt out tend to enter private contracts with Medicare patients and cannot bill Medicare during the opt-out period.
At the end of the day, Medicare rules are complex, and exceptions DO apply. That’s why it’s best to speak with an experienced attorney who has success in helping other cash-pay practices.
What is a superbill, and will patients be reimbursed?
A superbill is an itemized document showing the services a patient received, including:
- Diagnosis
- Procedure codes
- Provider information
- Itemized charges
As a cash-pay practice, you can give your patients superbills to submit to their insurance company for possible out-of-network reimbursement.
But remember a superbill does not guarantee payment! Reimbursement depends on the patient’s plan, deductible, benefits, and the services provided.
How much should I charge?
There’s no universal cash-pay price. Start by calculating your:
- Overhead costs and recurring costs
- Desired income
- Appointment volume/capacity
- Desired visit length and break-even point
You will want to research the comparable prices in your local market. Your specialty and model also matter. A DPC membership, functional medicine package, and one-time cash-pay visit require different pricing structures. Review pricing periodically as costs and demand change.
Which EHR is best for a cash-pay practice?
Go with a cash-pay or functional & integrative medicine EHR that was purpose-built for smaller cash-pay practices (Like Cerbo), instead of overspending and underusing a big-box EHR designed for complex and traditional medical facilities.
