HealthcareI'm going to go out on a limb and bet that you probably wouldn't buy a house or car without comparison shopping online. Heck, you probably wouldn't buy a $70 pair of sneakers without shopping around. Yet many of us think nothing of moving forward with a dental or medical procedure with no sense of what the average going rate is, and no true grasp of what we're ultimately paying at the end of a running stream of bills and "this is not a bill" notices.

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  • $500 billion = total U.S. health care spending on duplicate processing, bad coordination and out-of-date scheduling.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."

As shopping comparison tools evolve, those doctors will have the upper hand and consumers will be able to more readily make decisions about which insurance policy makes sense for them, factoring in doctor preferences. Already, some top doctors, including Dr Brown, try to hold the line with a "no barter" policy.

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.

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43 Comments

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Lyla Burns

Thank you for this article. I think we can all use some tips on how to save on medical expenses. My parents have had bad health for a while due to being overweight and now they are losing with the assistance of mic lipotropic injections. http://www.nmrmedical.com/products/lipotonix-plus-injections/
We are hoping that their medical expenses will go down when they each lose a bit more weight.

May 18 2012 at 10:57 AM Report abuse rate up rate down Reply
pacedr

Many patients are erroneously trying cut cut dental costs by giving up rountine preventive maintainence. Then procedures that might have required a simple filling now turn into something that requires root canal treatment and a crown at a cost that expands to eight to ten times the cost of what the filling would have been. Even considering what they saved by skipping routine prophylaxis appointments, they are considerably worse off. Your article then suggests that these people should negotiate for lower fees, and even if the doctor compassionately treats the patient for a lower fee, they are still worse off than if they had exercised routine preventive care. I have had some patients ask me for assistance in these tough times, and even though my practice revenues are way down, I am more than willing to help my regular patients with reduced prophylactic fees while they are struggling financially. How about writing an article about something like that? You might be surprised to learn that most of us doctors went into the health professions because we love the work that we do, even though we knew we would never make the kind of money that many of the other big buck professions garner.

July 06 2011 at 6:11 PM Report abuse rate up rate down Reply
mhmgr03

This approach only applies to (1) individuals who do not have insurance (2) individuals who not qualify for Medicare and have an "open-ended" insurance policy (3) care providers who do not participate in negotiated agreements with insurance companies nor accept Medicare/Medicaid patients. Both the federal government (Medicare/Medicaid) and the majority of private insurance companies have negotiated rates with primary care providers and hospitals. Since these "negotiated" rates are already below what the providers believe to be the local "customary" charges and in many cases represent a write-off of actual costs, it is very unlikely that any provider under the control of the insurance company or the federal government would feel inclined to further accelerate that day when he/she simply can't pay the bills and either quits taking Medicare/Medicaid patients and most insurance companies, or takes early retirement. But why are we even talking about this. Didn't the "Affordable Health Care Act" eliminate all of the affordability issues?

June 28 2011 at 3:07 PM Report abuse rate up rate down Reply
1 reply to mhmgr03's comment
Nate

Most of the health care reform act hasn't taken affect yet, include the bits about limiting how much insurance companies can take out of premiums (or rather how much of your premiums have to be repaid in actual health care, vs. overhead).

Why does it have to have eliminated ALL affordability issues before it's even taken affect? Just because you don't like it?

June 29 2011 at 12:33 AM Report abuse rate up rate down Reply
Robert Batey

If your going to talk about Medicare, know how it works. If your Doctor participates with Medicare he accepts assignment of what they will pay, he can't jack the bill up and make you pay the difference. Most people purchase a Medigap policy to pay any co-pays or deductibles that you may have with Medicare. If you purchase an Advantage Plan that is different, you will pay some out of pocket costs and you might have some issues if you travel alot because some of these plans function as a in-network/out of- network program. The problem is when your enrolling into Medicare when your 65 most people "think" they know how it works, but they don't and then that is when the trouble starts and pointing to a system that failed them. It works, if you know how to plan for it. Here is a bit of advice. Don't look at what it is going to cost you a month for healthcare, look at the 12 month window. Do the math. Look at the premiums and what your potential out of pocket costs would be for 12 months. Most people find it beneficial to enroll into Medicare and purchase a Medigap policy, you may pay the same or a little more per month in premiums, but if a major health issue occurs your out of pocket cost are virtually nothing. My wife is in Medicare and had a $50,000 back surgery. They participated with Medicare, and between Medicare and her Medigap policy we paid $12.53. Do your homework and talk to a respected professional in your area that specializes in Medicare benefits and how they work before you enroll.

June 28 2011 at 6:44 AM Report abuse rate up rate down Reply
1 reply to Robert Batey's comment
Nate

Actually, "most" people will not find it beneficial to purchase Medigap insurance. Medicare is an entitlement, so I would certainly advise everyone eligible to participate. Buying supplemental insurance, however, does not benefit the "average" person, unless that person knows they're a bigger health risk than the insurance company thinks they are. That's how insurance works. The insurance company charges you the average amount they have to pay out in claims, plus their expenses and profit. Just like the casino, the house wouldn't be in business if the game weren't rigged to pay off in their favor.

Optional insurance is for people who want a warm fuzzy "peace of mind" feeling, even though it means it costs them more, on average.

June 29 2011 at 12:41 AM Report abuse rate up rate down Reply
Robert Batey

What did this article have to do with Medicare? It mostly talked about general health insurance plans,
As a cancer survivor I don't shop for the best discounted doctor. This article talked to doctors who do face lifts and other cosemetic procedures. This was a joke. Typical CBS. They look for pretty faces and call them experts and try to pass them off to the public. Their OB doctor they have (Jennifer) is even a bigger joke. How is she an expert in everything to give adivice on topics. What average American is going to go into the doctors office and want to wheel and deal about what they want to pay and then pay cash? In this economy? REALLY? One piece of advice for the news networks, forget about the pretty faces and get real experts on the subjects your discussing.

June 28 2011 at 6:22 AM Report abuse rate up rate down Reply
ajacquez

Try negotiating with an emergency room. It is naive to believe that free market principles apply to medicine. I've tried and many doctors simply say "it is going to cost what it costs, do you want to proceed or not?". They hold all the cards.

June 28 2011 at 3:49 AM Report abuse +1 rate up rate down Reply
Rick Weber

Another great startup is MediBid.com which bills itself as "The Marketplace for Medicine". As it grows it will be an increasingly great place for doctors and cash-paying patients to find one another.

June 28 2011 at 1:23 AM Report abuse rate up rate down Reply
vigoddess

What is positive about this article is the fact Americans do not
even read the bills sent to Insurance Companies and Medicare
and do not even know they have bargaining power in not
only buying products, but in establishing a competition in the
field of medical care itself. Asking for an estimate is the best
way to regulate the rising prices in health care.
Seniors pay their co-pay and instead of asking for a copy of
the bill that's sent to the government Medicare, do not know
that many of those bills are prices that are beyond what the
service should cost. For example - a person who needs a
blood test for a medication blood thinner. The test cost
$20.00, but the bill goes to Medicare for $85.00, so you
are paying for the stool you sat on while having the test.
The patient doesn't realize they are actually paying for
a hike in medical costs and that's adds up to millions
of dollars. Or, a person is diagnosed for oxygen, and
gets a monthly cost of $36.00 for renting an oxygen
tank, and hundreds of dollars are sent for that same
rental to the Medicare program.
There're many more hustles going through the
health system, so people not only have to
create a competition between health providers,
they have to ask for a copy of the Medicare bill
as well.

June 27 2011 at 9:55 PM Report abuse rate up rate down Reply
2 replies to vigoddess's comment
conic

We do NOT have bargaining power where I live. I had to get a new Bipap machine. I talked to ALL of the providers in my area regarding the cost of a machine. They ALL quoted me the exact same price of $2800. One person actually told me that all of the medical supplies companies locally all charge the same... which coincidentally, is the maximum allowed by insurance.

This is disgraceful and uncalled for! I bought the same exact unit online for $1200 and filed it with insurance myself. The doctors all do the same. They charge the most that insurance will pay because there are too many that will skip out on the there bill leaving the rest of us to pay for it.

The only bargaining power we have is to not use their services.

June 28 2011 at 4:03 PM Report abuse rate up rate down Reply
Nate

Actually, vigoddess, when you use Medicare as your insurance, you do get a bill for every service that was charged to Medicare. It comes from CMS (center for Medicare services). It always lists what the care provider charged, what Medicare agreed to pay them, and that what's left, that the provider may ask you to pay. That's how it works.

The Medicare rate is almost always below the "going rate", not above. That's why doctors are always whining that Medicare doesn't pay enough (which is ridiculous, because without seniors, a huge customer base would disappear for doctors. Medicare has every right to expect volume discounts.)

I'm sorry you think that the cost of stools, and other office equipment shouldn't be factored into the cost of your care, but that has nothing to do with reality. An office can't just charge you for the blood test. They have to charge you a portion of their costs for running the office. The receptionist, the lights, the stools, everything.

Every business works that way.

June 29 2011 at 12:47 AM Report abuse rate up rate down Reply
Joel

Regina Lewis has it all wrong. Free market is reserved for luxuries, NOT for necessities, which should be price controlled. Health care is a necessity, so it should be socialized like trash collection, fire rescue, police protection and education to the 12th grade. I should NOT be shopping around for the best price on lisinopril or an appendectomy any more than I should shopping around to see what fire station can put out a fire in my 1,500 sq/ft home for the best price. Further, lisinopril and appendectomies should cost the same no matter where in the US you need them. Flat screen TVs, leather recliners and Swiss watches are all luxuries; therefore they should be priced according to what the market will bear--free market.
Remember, your employer doesn't offer you trash collection benefits (and if you lose your job, you lose your trash collection). Why, then, should your employer be subsidizing your healthcare?

June 27 2011 at 7:31 PM Report abuse +1 rate up rate down Reply
2 replies to Joel's comment
vigoddess

You are absolutely right Joe. Health care should be a service. In France, England, Australia,
and other countries, it is a service to people, and their longevity is greater than the US so
they must be doing something right. Only in America has it been made a business and
a profit enterprise for Insurance companies. One of the 2% at the top are the Drug companies,
and they charge more for the American market than other countries. In India and Spain
drugs are cheaper, so again, it's greed.
We are experts at greed. We invented it.
But, competition is still a good way to get the companies to go against each other in
prices for medical services as well as drugs.
Canada is cheaper and the Euro dollar is still higher than ours.
We have to separate services without declaring it socialism but rather universal
needs.

June 27 2011 at 10:04 PM Report abuse +1 rate up rate down Reply
rokdoc3

Tell you what, Joel- you make the salaries I pay employees (which are higher in metro areas), the rent, the malpractice premiums, the cost of living, the cost of medical supplies and other business necessities- like medical insurance for my employees, disability, parking, workman's comp insurance, etc etc all equal then we'll talk about how everything should cost the same. You have a very superficial understanding of regional economic variances. Does your gas cost the same as California? Your winter heating bill cost the same as Bismarck?

June 28 2011 at 11:44 AM Report abuse rate up rate down Reply
rokdoc3

From a Physician practicing over 25 years:
Dear Parade Of Clueless: Allowing that there are corrupt, inept, and simply unethical docs, speaking as one let me share a few tips and insights:
If you go into a facility as an emergency, you have NO bargaining power unless you're a fool or it's not really an emergency.
If you have a high deductible, you should ALWAYS ask about a cash discount- for ALL medical services. We offer 40% off up front; it's easier for us, and overhead costs are enornous so avoiding them saves us both.
Stark laws generally preclude any meaningful ownership of labs, scanners, etc unless it's part of your office- and as with any test or cost incurred, you should always ask the purpose and cost upfront. Then you can decide how badly you need to know the information the test will provide (and incur the risk of the consequences should the test subsequently prove to have been useful).
Don't talk about "abusing" health plans, "gouging" fees, etc- you reveal your ignorance. I can charge whatever I want, but what gets paid is the agreed-upon "usual and customary" fees set by the insurance plan. And with Medicare, Medicaid and virtually all managed care, by joining their panels you agree to accept that as full payment and cannot bill the patient for the excess.
All docs are NOT the same; you go cheap you very much risk getting the outcome you've paid for.
If you sue frivilously, your name will get around. Docs talk and avoid high-risk patients like the plague.
As it stands now, Medicare, Medicaid and Social Security will ALL be insolvent within a matter of a couple decades, max. Simple math. For you to demagogue what is financially irrefutable shows your ignorance and laziness regarding pursuing the truth. They must ALL be modified to continue existing; the only argument is how.
Happy trails. Be smart and learn your bodies- most of you are woefully uninformed and ignore your health.

June 27 2011 at 6:49 PM Report abuse rate up rate down Reply