5 best practices for offering prompt-pay discounts

November 10, 2025

What every provider should know about offering reduced rates.

Tag(s): Practice Management, Perfect Your Practice

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Key Takeaways

While offering prompt-pay discounts can benefit both patients and providers, it is essential to understand the legal and contractual implications.
Prompt-pay discounts offered to private-pay patients should be no more than 20% to 25% of the total patient base and no more than 20% to 25% of the total patient bill.

Private-pay patients are those not using any form of insurance but rather using cash, check or credit/debit card at the time of the service or purchase.
Regularly reviewing state and federal policies and consulting a legal or financial professional can help mitigate risks associated with prompt-pay patient arrangements.

Excerpted from page 18 of the Fall 2025 edition of AOA Focus. Written by the AOA’s Coding & Reimbursement Committee.

Some health care providers offer prompt-pay discounts to patients not using insurance—known as private-pay patients—when payment is made in full at the time of service by cash, check or credit/debit card. While this practice can benefit both patients and providers, it is essential to understand the legal and contractual implications of offering discounts below the Usual, Customary and Reasonable charge. Because the costs to the practice can be less when no insurance is involved, health care providers sometimes offer prompt-pay discounts to patients without insurance.

Prompt-pay discounts offered to private-pay patients should be no more than 20% to 25% of the total patient base and no more than 20% to 25% of the total patient bill. We define private-pay patients as patients not using any form of insurance but rather using cash, check or credit/debit card at the time of the service or purchase.

By following best practices, doctors of optometry can offer prompt-pay discounts while maintaining compliance with legal and contractual obligations. Regularly reviewing state and federal policies and consulting a legal or financial professional can help mitigate risks associated with prompt-pay patient arrangements.

Review third-party payer contracts

Before implementing prompt-pay discounts, ensure you are permitted to do so by carefully reviewing your contracts with insurance payers. Violating these agreements could lead to penalties, contract termination or other legal consequences.

Consider federal and state laws

Discounts offered to induce patients to receive other services payable by Medicare, Medicaid or other government programs may violate federal fraud and abuse laws. The Anti-Kickback Statute and Civil Monetary Penalties Law prohibit offering remuneration to induce referrals for services covered by federal health programs. State laws may have their own anti-kickback statutes and regulations regarding discounts. Some contracts explicitly require the collection of copays, coinsurance and the patient cost-share amounts.

Document pricing and payment policies

Maintain clear internal policies regarding prompt-pay discounts and pricing, which should be no more than a 20% to 25% discount on the total bill. Ensure staff are trained to apply discounts consistently and document any prompt-pay discounts accurately to prevent discrepancies.

Monitor your practice’s proportion of prompt-pay patients

If prompt-pay patients become a significant portion of your practice—generally over 25% of your total patient base—and you offer prompt-pay discounts, you should review your “usual and customary” rates reported to the Centers for Medicare & Medicaid Services and other insurers. Failure to align these rates appropriately could raise compliance concerns and affect reimbursement structures. To remain within best practices, prompt-pay discounts should apply to no more than 20% to 25% of your total patient base and no more than 20% to 25% of the billed amount.

Be mindful of all advertising

While offering prompt private-pay discounts is permissible, a practice generally should not advertise that they are offering one fee for private pay and a separate fee for patients using insurance.

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AOA members can access resources and support including the 2026 Codes for Optometry & Common ICD-10 Codes card, AOA Coding Today online database, or contact AOA’s coding experts with questions.