How to Negotiate Medical Expenses before and after you Receive a Bill

By Thomas BrightApril 15th, 2014Managing Credit and Debt

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Today, medical costs have spiraled out of control for the average consumer. On top of this, doctors continue to recommend unnecessary procedures and tests, arguably to increase their own profits, and wide pricing discrepancies exist between physicians who offer the same services. Despite these trends, medical costs remains a taboo subject (one that consumers are hesitant to discuss openly) and talk of price research and cost comparison remains limited. At Clearpoint, we want to provide consumers with two important strategies. First, we want to teach the skills of negotiating payments for medical bills. In most cases, the full price is unfair, and it can be lowered by having a frank conversation with your healthcare provider. Secondly, we want consumers to understand the importance of upfront price research so that they can get fair prices from the beginning and avoid falling victim to the unfair and unreasonable tactics used by providers. This is all part of an effort to help consumers avoid being burdened by medical debt, which can bring other financial goals to a screeching halt.

Medical Bills: Negotiation and Repayment

You aren’t alone in the struggle against medical debt. It’s affecting millions of consumers, and 33 percent of non-elderly adults struggle to pay it. Thankfully there are some great strategies you can use to make this more manageable.

Here are several strategies you can use to negotiate a lower repayment plan for your medical debt. Some of these can be used prior to receiving treatment or service, but our focus here is on negotiation after receiving a bill.

Lump Sum

One strategy for negotiating repayment is to offer a lump sum. This gives cash to the provider immediately, which they might prefer to a payment plan that takes months or years to complete. This also protects them against the risk that you might not be able to pay, in which case the account would be sent to collections. When this happens, they get much less money than if you pay a substantial lump sum.

You can try this approach with collectors too. Just like the original provider, they are typically interested in a deal that guarantees them the money upfront. One thing to keep in mind is that their willingness to do this may be a little different depending on who they represent. If they are representing the original provider, then they may have limited flexibility. On the other hand, if they have purchased your debt from the original provider for pennies on the dollar, they might take a deal pretty quickly.

Evidence of Cheaper Service

If you don’t have a lump sum of cash on hand, you still have other options. One great opportunity for leverage during the negotiation process can come from being able to demonstrate that your provider over-charged you. You can do this by showing how much the same service costs elsewhere, and you can do this in a variety of ways.

Use the Healthcare Bluebook

The Healthcare Bluebook is a valuable free resource that allows you to see average prices for a variety of medical services in your area. You can search by zip code and select from categories such as hospital care and procedures, physician services, X-rays, lab work, and more. By comparing costs in your area to other nearby localities you may be able to find cheaper service up front. Or, when negotiating a medical cost with your healthcare provider, pointing out that they are charging significantly higher than the average cost in your area can be a powerful bargaining chip.

The Bluebook website also has a printable “Fair Price Agreement” for each service that you can take with you to your provider. Displaying the fair price in this way could be a useful negotiating strategy.

Point to Competitor’s Pricing

It would have been ideal to do some upfront price comparison (more on this below), but even if you didn’t you might be able to use competitor price points to your advantage. Call around to other providers and collect price information for the service you received. If you find that the prices are significantly lower than what you are being charged, mention this in your negotiations. There may be an element of wanting to keep your business, so the office may be willing to match the price of their competitor or at least lower what you owe.

Compare to the Medicare Price

Doctors regularly give discounts to Medicare patients. While they probably can’t give you the same discount, this is an indicator of flexibility in the repayment. Cite the average 73% discount for Medicare patients or research more specifics about Medicare costs at www.cms.gov. This information can be an additional bargaining chip.

Payment Plan and Hardship Program

A payment plan is great for those consumers who can’t pay upfront and need to pay on a monthly basis in order to keep their finances afloat overall. It doesn’t mean that you shouldn’t still try to leverage and negotiate a lower payment.

If you do end up with a payment plan, another point you might be able to negotiate is the interest rate. Go for an interest-free payment first, and if that doesn’t work at least try to keep it as low as possible. Also, when you discuss the terms of your payment plan, mention the “hardship” that you may be facing and ask if any discounts can be applied.

Debt Management Program

If you continue to struggle with your medical debts even after your initial attempts to negotiate and enter a payment plan, there still may be help available. Our Debt Management Program, for example, allows you to repay the debt with certain additional benefits, such as reduced interest rates. Now, keep in mind that this depends on several factors. First, your doctor or medical care provider has to agree to work with our program, and secondly you will want to make sure the program is in your best interest. In some cases, we recommend that consumers just work out an arrangement with their doctors, as that can sometimes be easier than joining the plan. This really depends on the specifics of your situation.

On the other hand, putting your credit cards on a debt management program can prove useful. By getting reduced interest rates and more manageable monthly payments on these accounts, you might be better positioned to pay off your medical debt.

Staying Calm

In these types of negotiations, it’s typically better to remain calm and friendly, and to use an emotional appeal when asking for better payment arrangements. Explain the hardship you are experiencing and why you are having difficulty with repayment. Being genuine in this way will increase your chances of eliciting sympathy, which will increase your chances of getting a more affordable arrangement.

If you feel as though things aren’t going smoothly and you aren’t being heard, don’t be afraid to ask for a manager, and continue to go up the chain until you find someone who is helpful. If the situation continues to look unpromising, consider mentioning that you will likely not use the facility again, due to poor customer service. Explain that you will share this bad experience with friends and family and in any other circles where you have influence. Don’t be too threatening, but sometimes these tactics can work, especially if nothing else has.

Pro Tip: Note, if you receive a negotiated payment arrangement be sure to get the details in writing. This is extremely important not just for your own records but because of the way communication works between various departments and companies in the medical setting. While you may negotiate a payment with one person, that information may not be properly transmitted to the biller. Having a written record will allow you to protect yourself.

Comparing Medical Costs in Advance

Comparing medical costs before you go to the doctor is arguably the most effective way to keep your costs down, although it’s an underutilized strategy. Consumers might go to the doctor they have seen for years (and rely on that doctor’s referrals for other services) or might choose a provider based on location. But doing it this way does not account for price discrepancies. Even providers that are in-network for a consumer can have varying price structures. So the best bet to save money is to shop around. If you have insurance, this means checking prices across your in-network options, and if you are uninsured this means calling a variety of providers.

Doing this successfully requires a mentality shift. Think about it…

We take our automobiles to multiple mechanics to save a buck, we shop around online for electronics and clothing, and we compare coupons in the weekly newspaper before buying our groceries. So why don’t we do this with our medical costs?

It’s a combination of several things. First, we tend to think of medical procedures as “different.” Because they are geared toward health and pro-longing our lives, we feel strange at best and guilty at worst for adopting an economic perspective.

Secondly, we put too much trust in our service providers. Remember, doctors want to make money. And even if they do really care about your financial situation, they also care about their bottom line, contracts they have with other providers, etc.

There is also a lack of communication. Doctors don’t hand usually hand over quotes or estimates, and services they suggest can end up costing thousands, even though they didn’t mention it being expensive.

Long story short, you have to take control of the situation and be responsible for your own financial destiny. Once you know what type of service you need, the next step is to do your homework.

Start by understanding your insurance. Does it cover the cost of the service you need? What percentage of the cost does it cover? These are two incredibly important items to have figured out, and you should not rely on a healthcare provider to provide this information. Next, use tools and resources to find where this service is offered at the best price. Your insurance company may have online tools for this purpose (with an emphasis on staying in-network), and there is also the Healthcare Bluebook, along with other online tools for price comparison.

From there, make a list of these providers and call them to get more information about pricing. If possible, have the CPT code handy (more on this below) to make it easier for them and to increase your chances of receiving a quick and friendly response.

Once you’ve gathered this information, you will be better prepared to make an educated decision about where to go for the medical service you need. Note: When you choose a provider and agree to a price, be sure to get this in writing.

Pro Tip: Know the Codes

If you’re going to communicate with doctors and service providers about your medical costs, then you will want to speak their language. In this case, you should be familiar with the coding system they use for various procedures. The Healthcare Common Procedure Coding System or HCPCS is composed of two levels of code. The first level is made up of Current Procedural Terminology (CPT) codes, which represent the “medical services and procedures furnished by physicians and other health care professionals” (source: CMS.gov). These codes are also used when the providers bills the insurance company.

Why they’re important
It’s a good idea to know the code for your service when you are comparing costs. It will make your research more convenient, because when you call a servicer to inquire about the price, you will be making it easier for them to look it up and provide a quick response.

Another note about these codes is that by knowing where to look them up, you may be empowering yourself with the type of knowledge than can help avoid billing errors. For instance, you may receive a bill with a code, and you might just assume that the code represents the service or procedure you had done. In reality, this code could represent something else—something more expensive. In this case, by spotting the error and having your doctor or insurance change the code to the proper one, you could save yourself significant money.

On the other hand, there have been cases of doctor’s offices responding to billing disputes involving third-parties by changing these codes even after the service. For example, a doctor’s office may refer a patient to a lab for blood work. If this test was not a covered expense by insurance, the patient may complain and express difficulty with the payment. In these cases, sometimes the doctor’s office will try to change the code on the bill (either themselves or via the third-party lab) with the hopes that the insurance will approve the request. This way, they still get their money, but the consumer does not face as much of an expense. This can ensure they get their payment, rather than counting on the patient to have the money, but the ethics of this practice are questionable.

Other Tips for Managing Medical Debt

Here are some other tips you should keep in mind while trying to save on medical costs.

Choose Outpatient

Typically, you can save money by getting outpatient treatment as opposed to inpatient. According to the Healthcare Bluebook website, this usually does not sacrifice quality of service.

Choose Independent

Also according to the Healthcare Bluebook website, diagnostic tests and procedures are typically less expensive at independent facilities as opposed to hospitals. Keep this in mind when doing initial price comparisons.

Walk In

It’s also good to know that walk in clinics often offer the same services as traditional doctor’s offices and in today’s market do so at comparable prices. These can be useful if you don’t have the luxury of scheduling an appointment in advance and can help when comparing costs.

Get an Itemized Bill

This is a really important step when you are reviewing your expenses. You will want to see each and every charge to make sure that the charges match the service you received. This is also a good way to spot places where the doctor may have overcharged for medical supplies and items by a quantity larger than what was actually used.

Generic Meds

If you’re already struggling with repaying doctor’s bills, the thought of additional prescription costs can be horrifying. If possible, opt for generic medication so that you can free up some extra funds to put toward your medical bills.

Additional Resources

We have covered a lot of information here on ways you can negotiate repayment for medical bills in order to make them more manageable. Hopefully you can put these bargaining tactics and other tips to work for you. If you continue to struggle or experience financial difficulty, we may be able to help, either with a free budget and credit review or with our debt management program. If you think these can help your financial situation, let us know!