EDITOR'S NOTE: This article was originally published in the February 2012 issue of Kiplinger's Retirement Report. To subscribe, click here.
You wouldn't pay sticker price for a car these days, would you? If you don't have health insurance, you may be able to negotiate a big discount on your hospital bill, too.
That's what Dorene Spak, 60, did a year ago when she was told that a hip replacement would cost her $66,000. Spak, a consultant who lives in Cuyahoga Falls, Ohio, had dropped her individual health insurance because she could not afford the premiums.
Spak went to the Web site of Healthcare Blue Book (www.healthcarebluebook.com) and found that the "fair price" for the surgery -- the price that insurers pay hospital and other medical providers in the area -- was considerably less. After visiting several hospitals and the physicians involved in the surgery, she bargained the price down to $22,000. "Because I was self-pay, one hospital off the bat offered a 62% discount," she says. "But you have to ask." Spak opted to delay the surgery.
There's a little secret in the hospital billing world. Insurance companies and Medicare negotiate their own prices for procedures, and prices for the same procedure can vary widely. The only ones paying the full tab are the self-insured, experts say. "Nobody pays the sticker price unless you don't have insurance and don't know to negotiate," says Dr. Jeffrey Rice, chief executive officer of Healthcare Blue Book, a firm in Brentwood, Tenn., that scours billing and medical payment data to come up with its fair prices.
You have several options to seek better deals from hospitals if you are uninsured or have a high-deductible policy. If you've already had the procedure, the first step is to ask the hospital for your itemized bill and look for errors. Medical Billing Advocates of America, a Roanoke, Va., firm that reviews bills for consumers, estimates that 80% of bills contain errors.
You also should look for duplicate charges for lab tests and drugs and for services, such as an MRI, you did not get. "If I didn't take the medication after one dose but I'm charged for 23 doses, I can dispute that," says Pat Palmer, founder of Medical Billing Advocates.
Moreover, Palmer recommends that you keep tabs of the time you spent in the operating and recovery rooms. She says hospitals charge between $60 and $270 a minute for operating-room time. "If the bill shows two hours but you know the procedure only took an hour, that's a huge amount of savings," she says. Also, she says, you should not be charged separately for surgical supplies or items such as gloves or tissues because they already should be included in the operating room and daily room fees.
Play Hardball on Discounts
If you prefer, you can ignore the small stuff and seek a reduction in the overall cost, either before the surgery or after. One route is to get the help of a claims specialist such as Medical Billing Advocates (www.billadvocates.com; 540-904-5872). In Austin, Tex., Marc Chapman, president of Chapman Consulting (www.hospitalbillreview.com; 512-852-8265), maintains a database of hospital charges to private insurers. He'll come up with a "fair and reasonable" charge for a procedure and then negotiate with the hospital.
Chapman generally charges 25% of what he saves a patient. He says he's been able to persuade hospitals to reduce bills by 75% or more. "It's amazing how inflated and nonsensical these bills are," he says.
If you want to negotiate yourself, you can pay a claims specialist to recommend a reasonable charge. Alternatively, check Healthcare Blue Book or ask the hospital what Medicare pays for the procedure, which tends to be the hospital's actual cost. Palmer says she generally uses the Medicare payment plus 25% as her negotiating base.
Armed with data, visit the hospital's finance office and ask to speak to a supervisor or chief financial officer. Palmer recommends that you ask about the hospital's charity assistance. You may increase your odds of getting a big reduction if you agree to pay immediately.