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5 steps to negotiating your hospital bills and avoiding medical bankruptcy

Sept. 6, 2013
Health, Managing Medical Bills
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The high price of healthcare affects all of us. In fact, one recent study found that medical bills are the leading cause of personal bankruptcy. Insured Americans struggle with high deductibles, relentless monthly premiums and unforeseen out-of-pocket costs that can add up to thousands of dollars each year. Meanwhile, millions of Americans are uninsured, underinsured or simply between jobs and temporarily uninsured. Whether you are insured or not, follow this approach to negotiate your bills and reduce your costs.

1. Find a less expensive hospital for your care

Did you know that hospital prices vary widely? For patients seeking knee surgery in Dallas, TX, one high quality hospital, Baylor University Medical Center, charges $43,852 while nearby Las Colinas Medical Center – a mere 21 minute drive away – charges nearly four times this price, a whopping $160,832. By choosing a less expensive hospital, you will start your negotiation process in a more advantageous position.

Search free hospital price transparency tools to learn about costs in your region. Then, contact your preferred hospital to ask for an estimate for your care. Since many surgeries are planned weeks in advance, you may find that the quickest way to reduce your bill is to simply find a hospital offering the treatment for less.

2. Calculate what the government thinks your treatment is worth

Medicare negotiates discounted payment rates with hospitals across the country. In fact, a recent NerdWallet Health study shows that Medicare receives an average 73% discount on medical bills. While hospital billing rates can vary dramatically, Medicare rates are generally fairly consistent and offer an approximation of the value the US government places on a hospital services. Take your medical bill and multiply it by 27% to know what the government would likely pay for the service. This is a good starting point for your negotiation.

3. Ask for a lower rate

Call the medical billing office at your hospital and propose a lower rate for your care. Your negotiation might take dozens of calls, lots of unreturned voice mails, and several “no’s”. But it is worth it: 60% of American personal bankruptcies are due to an inability to pay medical bills.

4. Make your best offer

Even though the full cost of a bill may seem unaffordable, consider how much you are able to pay. Offer this amount to the hospital billing office, and if you can, try to pay it all in one lump sum.

If a lump sum payment is not possible, offer to pay a modest amount every month – but if you do take this approach, be sure to get a written contract. It is important to agree on how much is owed each month and when your debt will be paid off. Although this seems like a tempting approach, once you agree to this type of deal you will be responsible for making your payments in a timely manner. If you miss even one small payment, you may find a collections agent knocking on your door.

5. Get the help of a professional

To lower their expenses, patients are turning to a growing number of medical bill advocates. These advocates are often experienced medical billing professionals who offer their expertise to interpret your bill, look for errors and overcharges, and ultimately negotiate a lower rate. Many families have saved tens of thousands of dollars through these services, and often there is little or no upfront cost. Instead, these negotiators typically earn a fee as a percentage of the dollars they save you. If you’d like to learn more about how a medical billing advocate can help you, get started by asking your question on NerdWallet’s Ask an Advisor Forum.

Bills photo courtesy of Shutterstock.