Weapons of Mass Corruption (Part 4, 2025 Series): Mandatory Claims Submission Clauses
Most employers have never seen the contract between their carrier and network.
As fiduciaries of their medical plan, employers are obligated to be familiar with their contractual terms that cost their employees thousands of dollars unnecessarily. There are attorneys putting together class action lawsuits on behalf of employees, charging the employer or key officers/directors with breaching their fiduciary duties to members of their self-funded health plans. Here’s one example of where employers are failing to protect their employees:
In the complex world of American healthcare, few mechanisms are as quietly powerful—and potentially harmful to patients—as the Mandatory Claims Submission clause. Buried deep in contracts between healthcare providers and insurance companies, these clauses dictate that providers must submit claims to insurers for any covered services rendered to insured patients. On the surface, this might seem like a harmless administrative rule. In reality, it can significantly limit patient choice, inflate costs, and erode the very concept of consumer-driven care.
What Are Mandatory Claims Submission Clauses?
These clauses are contractual obligations that require healthcare providers to bill the insurance company for any service that is covered under a patient’s plan. Even if a patient wants to pay cash—perhaps because they’re on a high-deductible health plan (HDHP) and would be paying out-of-pocket anyway—the provider may be prohibited from accepting that payment directly.
Many of these contracts also include Assignment of Benefits clauses, which direct all payments to the provider and further restrict the patient’s ability to negotiate or pay independently.
Why This Matters to Patients
Imagine walking into a clinic and asking for the cash price of a routine MRI. You’re told it’s $400. But when the front desk sees you have insurance, they say, “Sorry, we have to bill your insurance.” That same MRI now costs $800—double the price—because of the insurer’s “negotiated rate.” And since you haven’t met your deductible, you’re responsible for the full amount.
This isn’t just frustrating—it’s economically irrational. You’re being forced to pay more simply because you have insurance.
Why Providers Offer Lower Cash Prices
Cash-pay prices are often significantly lower because they:
Guarantee immediate payment.
Eliminate administrative overhead (no billing, no claims, no appeals).
Avoid the delays and denials that come with insurance pre-authorizations.
In other words, cash payments are efficient, and efficiency drives down costs—just like in any other market.
Insurance Should Be for Risk, Not Routine
Insurance is meant to protect against catastrophic, unexpected expenses—like a car crash or a cancer diagnosis. But when it’s used for routine, predictable care, it distorts pricing and limits consumer choice. Most people on HDHPs never meet their deductible. So why should they be forced to pay inflated insurance rates for services they could get cheaper with cash?
The Bigger Picture: A System Rigged Against Transparency
Mandatory Claims Submission clauses are just one example of how the healthcare system is structured to benefit insurers and large networks at the expense of patients. They prevent price transparency, limit competition, and undermine the patient’s role as a healthcare consumer.
In this light, these clauses aren’t just administrative tools—they’re Weapons of Mass Corruption. They keep patients in the dark, inflate costs, and erode trust in a system that should be working for the people it serves.