As health care consumers endure higher deductibles and reduced insurance benefits, it is becoming more important to understand and even negotiate prices before receiving medical treatment.
Dr. Kathryn Stewart, medical director of care management at Mount Sinai Hospital in Chicago, believes that patients can and should be more proactive about seeking the best prices for their services.
“Hospital costs are probably 40 (percent) to 50 percent of what their (list price) charges are,” she says. But when it comes to billing, “most hospitals are happy to break even or have a little bit of profit.”
This means there is plenty of room to negotiate and reduce your out-of-pocket expenses.
- Ask your doctor to be your ally
- Compare costs by using the CPT code
- Find friends in the billing department
- Negotiate lower prices, payment arrangements
- Ask if recommended services are necessary
- Explore state-sponsored hospital Web sites
- Check your insurance company’s Web site, too
- Ask for the Medicare rates
- Go generic
- Sweat the small stuff
1. Ask your doctor to be your ally
If you’re shopping around for medical services, you probably have a primary physician who directed you to seek the service in the first place. “You have to get diagnosed by somebody,” says Stewart. “So let that person be your advocate.”
She advises patients to ask their doctors where the best hospitals are for the recommended procedures, which centers will work with patients to lower out-of-pocket costs, and to even ask for help communicating with that facility’s finance department.
“If the hospital where a physician admits is approached by that physician on behalf of the patient, I think (the patient) might get somewhere with the hospital. Let’s say I have a patient in my practice who has one of these really high-deductible (insurance) plans, and they need to have a hysterectomy. (I could) approach the finance department and say ‘I’ve got this patient, but they don’t have (enough) insurance and they can’t afford to pay full price, but they can afford to pay something. Can you work with them?'”
2. Compare costs by using the CPT code
Though your doctor might be willing to initiate a conversation with the hospital finance department, you can still expect to have several conversations with them on your own. Before calling, make sure you have the “current procedural terminology,” or CPT, code for the procedure you are seeking.
“CPT is the industry term for the ‘billing code.’ It’s a five-digit number that is used to bill the procedure,” says Jane Cooper, president and CEO of Patient Care, a health advocacy company based in Milwaukee. Cooper says that your physician or physician’s office can provide you with the code, and the number is the same across hospitals. With this code, you can call multiple medical centers to compare prices for the same procedure.
3. Find friends in the billing department
When calling different medical centers, ask for the billing department, and then ask what they charge for the procedure you want.
You should be able to get (the pricing information), by being persistent, about 80 percent of the time,” says Cooper. “If the representative does not give you the answer you need, ask for his or her manager. And keep asking for the manager.” Your success in this area can help determine whether you ultimately choose to use this facility for your medical treatment.
“If the hospital or doctor won’t tell you what they charge, then my advice would be to go to a different doctor or hospital,” says Cooper.
4. Negotiate lower prices and payment arrangements
If you’re fortunate enough to get comparative information and an alternative hospital is cheaper, go to the original hospital to see if it can match the lower price. If all the hospitals you contact charge similar amounts, see if you can negotiate a prompt payment discount with one of them.
Don’t forget that hospitals are willing to work with people who have severe financial problems. If you need to have a procedure performed but feel there is no way you can pay the bill, ask if the hospital is willing to work out a payment plan. “Lots of hospitals have policies about (serving) underinsured people. They have sliding fees scales and (are able to arrange) various payment arrangements,” says Stewart.
5. Ask if recommended services are necessary
“One of the major pieces of advice I would give any patient is to not be afraid to ask questions,” says Dr. Charles M. Cutler, medical director of quality for Aetna, an insurance company, and co-author of “Navigating Your Health Benefits for Dummies.”
Ask about all the services your physician is recommending, including hospital room stays, lab tests, medications and anything else.
“If you’re concerned about the cost of a procedure, and whether or not it is discretionary or could be done at a later time, you should ask your doctor,” he says. One factor in lowering costs may be postponing, or even eliminating, a needless test or procedure. That decision needs to happen in partnership with your doctor, but by asking, you could save money.
6. Explore state-sponsored hospital Web sites
The Health Care Price Transparency Act of 2006 requires hospitals to report to the public information on specific inpatient and outpatient charges.
According to the American Hospital Association, 33 states already require hospitals to report pricing information and 10 more are voluntarily doing so. As an example, the South Dakota hospital pricing information Web site lists average annual costs for the 25 most common procedures performed at the state’s hospitals. That site reveals that the average charge for delivering a baby at one hospital is nearly $500 more than the same service at another hospital in the same city.
While these rates represent averages, checking a Web site before checking into a hospital could save you hundreds of dollars on your medical bill. Check your state’s hospital association to find out if local pricing is available online.
7. Check your insurance company’s Web site, too
One major drawback of looking up prices online or contacting finance departments is that the pricing information you receive is likely to be a hospital’s high list prices. If you are insured, your insurance company probably negotiates a lower rate for you, even if you have a very high deductible.
Fortunately, several providers are helping solve this problem by proactively placing their customer’s out-of-pocket price information online.
Cutler says that Aetna is implementing an online rollout of comparative cost information in several states, since primary care doctors usually aren’t able to provide this information to their patients.
“Most physicians wouldn’t know the cost of lab fees or what the cost of another specialist is,” he says. “That’s one of the reasons why we’ve been trying to provide more information. (We want) to help people get some of that cost information.”
Check with your insurer to see if it lists comparative costs online. Also, be sure to verify that any additional specialist you plan to use (such as an anesthesiologist) is covered by your plan.
Even though your insurer’s negotiated rates are likely to be lower than the hospital’s list price, be sure to understand how your deductible and co-pay requirements affect your total out-of-pocket expense.
“If you see that procedure is $2,000, and your insurer pays 80 percent, you might assume that your 20 percent (out-of-pocket expense) is $400,” says Jason Beyrouty, a director with Benefit Advisors, an employee benefit plan consulting firm in Salem, Ore. “But I’ve seen cases where employees forget to factor in their $500 deductible,” so they have to pay an extra hundred dollars.
Even worse, it’s possible that the $2,000 charge listed was in addition to the deductible, so the employee’s total expense would be $900, not $400. The lesson: Learn to ask how deductibles and co-pays are calculated with respect to listed fees. Doing so may not lower your expenses, but it might prevent those expenses from being higher than you anticipated.
8. Ask for the Medicare rates
If you have no insurance or are otherwise faced with paying a hospital’s list price, another negotiating strategy is to inquire about your hospital’s Medicare rates. The government-funded Medicare program has prenegotiated fees that hospitals accept for certain medical procedures. It’s likely that these negotiated rates are less than the hospital’s listed rates, says Stewart. “Ask, ‘What would you get for doing this procedure if you were getting reimbursed by Medicare?'” she says. “If you can get (the hospital) down to those rates, you’re doing pretty good.”
9. Go generic
Patients who are comfortable with their out-of-pocket deductible and co-pay amounts might still be in for a shock later on when they go to fill a prescription. “No one is going to be able to negotiate (pharmaceutical costs). The best cost savings result when people use generic (medicines) versus brand,” says Cooper.
Cutler agrees. “Generic drugs are, in the vast majority of cases, exactly the same as brand drugs. So, if your doctor prescribes something for you, ask whether that drug is available as a generic,” he says.
Another tip: “Make sure the drug your physician prescribes for you is on (your insurer’s) formulary,” says Cooper. The formulary is the list of drugs a health plan covers. If you don’t have any prescription drug coverage, contact the Partnership for Prescription Assistance at (888) 4PPA-NOW to see if you qualify for an assistance program. The PPA serves as a national clearinghouse for programs that help patients who lack prescription drug coverage.
10. Sweat the small stuff
After you negotiate major services, pay attention to incidental costs that might add up on your hospital bill. If there are any toiletries that are not included in the price of your hospital room, bring them yourself. Also ask about using your own prescription medicine if you already have it on hand.
Taking cost-reducing steps ahead of time can eliminate unpleasant hospital bill surprises later. Nevertheless, remember that it is nearly impossible to forecast what the final bill will be. If there is a complication during your medical procedure, you’ll obviously need more services and your charges could be higher than expected. However, if you believe your charges are erroneous, you will be in a better position to dispute them because of your familiarity with the services you selected.
As health plan premiums and out-of-pocket payments continue to rise, consumers will have to do more research and negotiating to get the medical care they need. Discussing costs upfront can help ensure that both you and your wallet remain healthy.