In a month marked by the story of a man who robbed a bank for $1 in an attempt to go to jail and become eligible for health care, I did a segment about more rational means negotiating medical expenses for the CBS Early Show. Here are some related notes:
Laissez-Faire Health Care
Americans' attitude toward health care is stunningly laissez-faire when you consider the average family spends $3,000 a year on it beyond their monthly premiums -- too big a cost to overlook.
"Consumers are in avoidance mode and really don't have a clue, " contends Tomar Shoval, CEO and founder of Simplee, a Mint.com-like site that helps people manage health care expenses. "You get a bill and you're never really sure if you've paid it or not." He describes the current system for navigating health care spending decisions as "broken" and compares the whatever-they-say-goes attitude toward health care pricing with talking to a travel agent 15 years ago. You're in the dark, they're in the know, and the price they quote goes unquestioned.
Already, 30 states have mandated that hospitals disclose certain medical . Economists argue that transparency is needed to open up a free-market dynamic, which could disrupt some of these stunning statistics of the existing health care billing system:
- 80% of all medical bills contain errors. (Source: Consumer Reports Health)
- 1 in every 4 Americans went into credit card debt to pay their medical bills in 2010. (Source: Bloomberg)
- $500 billion = total U.S. health care spending on duplicate processing, bad coordination and out-of-date scheduling. (Source: Bloomberg).
Tips to Negotiate Your Medical Costs
Price comparison shop: The health care equivalent of the Kelly Blue Book for cars is HealthcareBlueBook: Use it to determine the ballpark price range for specific procedures in your area at the rates generally accepted by the providers from insurance companies. As with the air travel, it often seems that no two customers pay the same fare, so having a baseline is comforting. The site adjusts by zip code, and even provides a sample, printable letter of agreement with the price quote, which you could bring to the doctor's office and say, "I'm thinking it's about this much" as a starting point for gracefully negotiating and using facts -- not emotion -- to guide the discussion.
Don't overplay your hand: Many patients are now attempting to start bidding wars between doctors. Dr. Michael J. Brown, a cosmetic surgeon, shares that in the last few years people are seeing two or three doctors, sometimes even six or seven, before making a decision. Be understated about this process or you could end up insulting the doctors. Brown says he sees it all the time. "This issue is, they're matching price against price and not factoring in the surgeon with no thumbs and the surgeon with thumbs."
Don't assume insurance is cheaper: This tip is initially counter-intuitive, but might be the single most significant variable. If you have a high deductible, working around insurance -- and not using it -- may be cheaper, especially if you're only in need of straightforward care. Robyn O'Connor, the head of a thriving physical therapy practice, says she's seen an uptick in patients asking to negotiate better rates since last year. Her firm has more wiggle room with self-pay customers when insurance is not involved and they are not contractually obligated to ensure consistent co-pays. She advises against defaulting to using insurance until you run the numbers. My DailyFinance colleague Catherine New's article: Don't Leave Medical Reimbursement on the Table has more information to help you make this assessment.
Watch the clock: Timing matters as well. Meeting your annual deductible fundamentally changes the math on health care costs. Elective procedures like breast augmentation and Botox tend not to be covered by insurance and don't work against your deductible, but if a procedure is marginally or fully covered by insurance, from a financial perspective, going the cosmetic route may still be the path of least cost especially if hospital costs are involved. Dr. Brown described a scenario in which a breast biopsy cost $1,300 with a fairly standard and generous 80%/20% insurance policy after all the co-pays come through. The same procedure done "cosmetically" without involving insurance might run $550.
Speak to the head of billing: The person who manages billing and receivables for the doctor or hospital you're working with can probably help you run through various scenarios. Don't have an attitude or seem presumptuous. Dr. Brown says that sometimes patients seem quick to think -- and even say -- "You have a really nice office. Obviously you're rich and don't need to make any more money." His counter: "Actually that means I'm more in debt." That said, deals are being sought and made at every price point in medicine -- $300 procedures are routinely being reduced to $275 and $3,000 procedures to $2,750.
Offer immediate payment: As long as you're good for the discounted rate and can pay it promptly, that's a win for the doctor. It's one of the reasons paying cash is sometimes suggested. It's less about the currency (cash vs. credit) and more about the speed at which the provider can consider it paid. To put the importance of this in perspective, a primary physician with a sprawling practice in a upper-middle income suburb told me they write off approximately 40% of all procedures due to nonpayment by patients and/or insurance companies.
Get an itemized receipt and bulk discount: Itemized receipts are smart for several reasons and get them up-front in the form of estimates if you can. First, you quickly see that there are multiple players and therefore potentially multiple outlets for negotiating, including -- in the case of surgery -- the surgeon, the facility and the anesthesiologist. Facilities have been known to jack up the costs of things like medical gowns, which is a line item that could easily be questioned. Also, if you are having multiple procedures at the same time, the cost of the additional procedures should be deeply discounted -- in some cases, the second procedure might be discounted by 50% and the third by approximately 25%. Insurance companies do this automatically. If you are a self-payer, you don't want to be in the position of being billed for each as a stand-alone charge. This especially holds true for dental work, where the case may be made that it will be less intrusive to do "all the work at once." It should be cheaper too, but -- based on firsthand experience -- it's not always presented that way. Instead, they may make it seem less painful for you, your spouse or child and more convenient. Talk about know your customer -- I almost fell for it.
DIY Health Care Reform Up and Comers
A new group of start-ups being promoted as leaders in "DIY Health Care Reform" is eager to be part of -- and cash in on -- the fix:
• Simplee: Like Mint.com with your personal finance accounts, Simplee securely links to your health insurance and transforms it into a clean, easy-to-read dashboard for tracking and controlling spending, reducing paperwork, expanding health care options and saving money. It's free and can help make sure you don't leave legit benefits -- like free dental cleanings -- on the table by inadvertently missing deadlines. They'll also track what you've already paid so when you get a bill, you'll know if you've reconciled it or not. Simplee cross-references your plan information, lets you know how to fix it, and can preclude falling into trap-language like -- and I quote directly from a just-opened envelope from my own home mailbox: This item has been filed to your insurance accounts 65 days or greater past due may be subject to a $50.00 administrative fee. Please contact our billing office to make financial arrangements. Simplee provides support for Aetna (AET), Anthem (ATH), Blue Cross Blue Shield (BCBS), Cigna (CI), Delta Dental, United Healthcare (UNH), Vision Service Plan and WellPoint (WLP), with plans to support approximately 80% of the entire U.S. market by the end of the year.
• Avado: Avado's Connected Health Record lets you manage your health and communicate with health and wellness providers securely and privately via the Internet or an iPhone application
• Brighter: Brighter helps patients reduce their dental bills through a membership-based program that has pre-negotiated prices with dentists nationwide.
• MedLion: MedLion Clinics offer a model that changes the way primary and urgent care is delivered. Patients pay a monthly fee and a low per-visit co-pays -- no insurance needed.
• Massive Health: Massive Health develops mobile applications to help treat chronic diseases using data, analytics, social and game mechanics.
• PatientsLikeMe: PatientsLikeMe has developed a platform where patients can share and learn from real-world, outcome-based health data.