How to Reduce
Your Hospital Bills
March 13, 2006
Vol. 2, Issue 3
The medical industry, unlike virtually every other business, loves to keep their prices secret. They do this, very simply, so they can make more money. Only by shopping your medical care, demanding price transparency, negotiating for the best price, and carefully reviewing your bill can you be assured that you are getting a fair price, and not being ripped off.
The Valley Hospital Medical Center in Las Vegas, Nevada charges $233,259 for open heart surgery involving a heart valve replacement. The Mayo Clinic, recognized as one of the top heart care centers in the world, charges $79,601 for the same procedure. As another example, The Miami Herald recently published an article about hospital pricing in Florida. A woman going to Palmetto General Hospital in Hialeah for physical therapy following a car accident had tried to find out what the treatment would cost her, but to little avail. After eleven sessions she started receiving the bills - $1,560 per visit. She was able to find the same service at Memorial Regional hospital in Hollywood, FL for only $50 per visit.
The great promise of Health Savings Accounts is the potential they have to inject price transparency and price competition into the medical marketplace. By demanding to know prices up front, HSA holders will force medical providers to compete on price and quality, just like any other business does.
Anyone who has ever tried to decipher a hospital bill knows that they can be next to impossible to understand. This conveniently makes it easy for hospitals to hide improper charges by using mysterious medical technology and codes. Whether through deliberate overcharges or honest errors, experts estimate that hospitals overcharge patients by $10 billion a year, or an average of $1,300 per hospital stay.
Hospitals have been known to charge $129 for a "mucus recovery system" that was really a $2 box of tissues, $57.50 for a "free" teddy bear, and even $1,004 for a toothbrush. Most people never see an itemized statement, and so have no idea what they're being charged for.
Nora Johnson, a medical billing advocate, was quoted in a recent article saying that over 90% of the hospitals bills that she has audited have had gross overcharges.
How To Avoid Overcharges
Hospitals often go to extraordinary lengths to discourage you from delving too much into your bill. Nevertheless, there are some specific things you can do to make sure you're not getting taken for a ride.
- If possible, call the hospital's billing department ahead of time and ask them what you will be charged for a room and what that charge includes. If it doesn't include something you might need, such as tissues, bring your own.
- Ask your doctor to estimate your cost of treatment.
- Bring your own prescription medications to avoid paying top price for medications purchased from the hospital.
- If possible, keep your own lists of tests, medications, and treatments. Hospitals have been known to charge men for pregnancy tests and adults for newborn tests.
- Never pay the bill before leaving the hospital. You may be told this is required, but it is not. Before paying your bill read it carefully, and compare it to the estimated costs you were given before being admitted.
- Demand an itemized bill, and ask for a detailed explanation for any items you don't understand. Don't accept generic answers like "lab fees" or "miscellaneous fees".
Bill Review and Settlement Services
Since very few people actually know what the lowest wholesale price available from the medical provider actually is, you may want to have a professional review service check out your bill. HSA for America has secured for our readers a free membership with Insnet. This is a company that will provide an independent review of your out-of-pocket medical bills to ensure that you are paying the lowest wholesale rate that the medical provider offers.
For any medical bill over $200, Insnet will act as your negotiator, at no charge to you. Third party administrators, HMOs, and large companies routinely negotiate with hospitals in order to get the lowest price available. This company makes that available to the individual consumer. If they can save you some money, they take 30% of the savings as their fee - you get the rest. (This special offer is only available to Maximize Your HSA readers.) If they cannot reduce your bill, there is no charge.
I used this service last summer when I had my appendix removed. When a hospital bill is submitted to an insurance company, the bill is routinely reduced by the insurance company's wholesale reimbursement contract. After this discount, I had hospital and doctor charges totaling $3,228.56. Upon giving My Medical Control authorization to negotiate my bill, they were able to negotiate additional savings, reducing my bill to $3,027.05. They kept $70.13 of the savings as a fee for their services, and I was able to save $130.98. (Not a huge savings, but not bad for something that took about 5 minutes of my time).
Supply and Demand
The great promise of health savings accounts is that they will re-inject market competition into the healthcare market. As all of us who were fortunate enough to take Economics 101 understand, the balance of supply and demand provides the public with the greatest value at the lowest possible cost. If company B can produce and distribute the same quality widgets as company A, but at a lower cost, then the average price of widgets will fall, more people will be able to afford more widgets, and the average quality of a widget will increase, as businesses compete for customers.
This is a wonderful system, and is part of what has made the United States the wealthiest country in the world. Unfortunately, this system has not been in play when it comes to healthcare, because the consumer has not typically been paying the bill. As a result, the consumer doesn't care what the service costs, and most doctors, hospitals, and pharmacies are very reluctant to reveal their (high) prices.
Health Savings Accounts are changing all that. By being proactive and demanding price transparency and billing integrity, you will not only lower your own medical expenses, but you'll help change the system for the better.
If you still do not have an HSA plan, you can lower your taxes and premiums by switching now. Instant quotes and online applications are available on our website, www.HSAforAmerica.com. Every month you delay reduces your maximum contribution (and tax deduction) for 2006. If you would like to consult with us before choosing a plan, you may schedule a personal consultation.
P.S. Thank you for all the positive feedback about this newsletter, and for forwarding it to your friends and colleagues. Please continue to let me know what you like, or don't like. Next month I'll discuss how you can reduce your out-of-pocket exposure for accidents to only $100, even if you carry a high-deductible HSA plan.