If you have ever received an expensive medical bill, you may not have considered the possibility of negotiating the cost. Instead, you may have had to make tough life choices to determine how to make the payments or consider taking out a loan. Understanding what you need and who to call to negotiate your bill may lower your bill and your stress.
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Negotiating Medical Bills and Lab Fees
Just as you can negotiate the cost of buying a house, a car, or with a flea-market vendor, you can negotiate your medical bill. You will need to understand the items you were charged for, identify errors. You may want to consider hiring a professional medical negotiator - yes, those exist too (at an additional cost, of course).
Understanding your ability to negotiate may save you hundreds. Fifty-seven percent of insured Americans have been surprised by a medical bill, assuming their insurance would cover their payments. These surprise costs can be crippling; for low-income families experiencing treatment for cardiovascular conditions, healthcare expenses may be between 20 to 40 percent of their combined family income. Just out-of-network air transportation to the hospital may come with a price tag of $21,698, not including your inpatient care.
The outcome of medical negotiation varies greatly, according to Braden Pan, CEO, and Founder of Resolve Medical Bills. In many cases, you can get at least a 20 percent discount for prompt pay or self-pay discounts. Pan suggests that as the size of your bill increases, it becomes easier to negotiate larger amounts. At Resolve, they average 65-75 percent savings, help patients find savings nearly 85 percent of the time, and have helped hundreds of people lower their medical bills by millions.
Billing departments of hospitals and health care facilities are used to negotiating with patients and insurance companies to cover the cost of services, but you will want to be well-equipped.
The No Surprises Act
In December of 2020, the No Surprise Act (NSA) was signed into law under the Consolidated Appropriations Act of 2021. The NSA will take effect on January 1 of 2022, establishing criteria for health care facilities and physicians to provide disclosure to patients regarding billing protections. It also provides patient protections for emergency medical care and requires notice and consensual agreement for out-of-network care. While this rule continues to take effect, negotiating rates may reduce the burden of high costs of care.
Hospital and Insurer Price Transparency
In late 2020, additional initiatives took place to understand the cost of medical care better. Beginning January 1 of 2021, the Hospital Price Transparency rule took effect. Such a rule requires hospitals to provide clear and accessible pricing information online regarding the items and services they provide.
The Transparency in Coverage rule requires insurers and plans to disclose negotiated rates for in and out-of-network rate history and drug pricing information. This rule is intended to reduce the secrecy of health care costs and provide health care consumers with the tools necessary to access pricing information from their health plans.
Pan says that the hospital price transparency initiatives have not aided in reducing surprise medical bills, and hospitals have struggled with compliance with these regulations. Federal patient protections are what helps the most in driving down surprising billing.
Step 1: Get Organized
You will want to keep your medical documentation organized to find discrepancies later. After each medical service or treatment, you will want to ask for an itemized receipt. An itemized receipt will list out the specific charges for services rendered during your visit. While these receipts may be difficult to understand as medical services are categorized into a code system, this will help you understand what the insurance company is billing you for. Take note of the name on the bill, insurance provider, and medical services provided.
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If you have insurance, you will also want to have your Explanation of Benefits (EOB) on hand. Your insurance company provides this document after you have received medical care and services and submitted a claim. The EOB tells you the financial contribution that your insurance company made and what you are responsible for paying. Your insurer might not cover much if you received a service they specifically do not cover or if you haven’t yet met your deductible.
Step 2: Do Your Research
When negotiating, look out for online cost comparison tools for specific medical services and procedures in your state to strengthen your case. The Healthcare Cost and Utilization Project (HCUP) provides a comprehensive database of charges regardless of payer - such as Medicare, Medicaid, private insurance, or uninsured. These databases will tell you the average cost of services in your state, which may be useful in your negotiation if you notice major discrepancies.
You may first need to search the medical charges listed on your bill, as they are typically listed in an alphanumeric code for insurance companies to understand, not the patient. Researching the codes on your bill may help you identify billing errors or duplicate charges. These codes will include the services rendered, the medications provided, or any additional items and supplies used during your visit. These codes even vary depending on your location. There are three types of medical codes you may see that we have broken down for you below:
The International Classification of Disease or ICD codes were established by the World Health Organization (WHO) but dated back to 1893 as a vocabulary for classifying the cause of illness, injury, or death. The system has evolved into a revised ICD-11 system containing over 55,000 codes. These codes reflect a health care provider's diagnosis to provide accurate reporting and billing.
You may know of ICD-10 codes, but the ICD-11 system is a revised version, the 11th edition of the categorization system for physical and mental illnesses. ICD-11 is the first update developed and published in two decades. The system has been translated into 43 different languages in over 117 countries. You may consider buying an ICD code manual, but many sites exist to lookup commonly entered codes by specialty.
CPT refers to “Current Procedural Terminology,” providing codes classifying specific services and procedures for accurate and efficient reporting. This system was developed by the American Medical Association (AMA) in 1966. Various types of CPT-codes exist and are classified into the following categories:
- Category I: These codes describe the procedure or service and have sub-categories based on anatomy and various procedures and services. These codes range from 00100-99499.
- Category II: These codes are optional and not required for correct coding but are supplemental codes for performance measurement.
- Category III: These are temporary alphanumeric codes for new and developing medical technology, procedures, and services. These codes were created for new procedures and services that do not meet the criteria for classifying them as category I codes.
The Healthcare Common Procedure Coding System (HCPCS) is produced by the Centers for Medicare and Medicaid Services (CMS) as a collection. The HCPCS codes are also alphanumeric containing five characters with the letters classifying the type of service. Whether that be vision and hearing services or drugs administered - there’s a letter for that!
There are two levels to the HCPCS, Level I contains the CPT codes performed by physicians and other health care providers and laboratories. Level II represents non-physician services such as wheelchairs and other medical equipment and supplies.
Step 3: Check For Errors
Once you have researched the codes listed on your itemized receipt, you can look for any discrepancies. Perhaps some services were not actually rendered, which you can then negotiate. You may even find duplicate billing for services. Medical billers are responsible for reimbursing providers for their services, but human and electronic errors unfortunately happen. Below is a list of common simple medical billing errors to look for when reviewing your receipt:
- Incorrect patient information such as sex, date of birth, insurance ID, etc.
- Incorrect provider information such as an address, name, and contact information
- Incorrect insurance provider information such as policy number or address
- Incorrect codes or conflicting ICD, CPT, or HCPCS codes
- Mismatched medical codes of entering ICD codes with CPT codes
- Left out codes altogether for procedures or diagnoses
- Duplicate Billing when a biller has not checked if the procedure has already been charged
Chris Panteli, Director and Founder of Life Upswing, says that “in a study conducted by a non-profit health care company called FAIR Health, a whopping 59 percent of participants stated that they had received a wrong medical bill in the last year.” Still, some people claim that as many as 80 percent of medical bills contain errors, according to Braden Pan, CEO and Founder of Resolve Medical Bills.
Step 4: Speak with an Administrator or Billing Department
To negotiate, start by submitting a settlement request letter. This is a great starting point to write out the information you have found and the amount you are willing to pay if you want to avoid a payment plan. Be sure to be polite in your request and realistic in your ask. Medical offices also have payments they need to make, which will increase your chances of accepting your settlement offer if you can pay your proposed amount upfront, even better.
You will likely have to be persistent, says Pan. Call the billing department to ask how to submit a settlement letter and how long it typically takes to evaluate. You will also want to follow up in the following days to ensure they have received your letter. This phone number is often found directly on your bill, so be sure to have that handy.
Administrators may also have payment plans interest-free. If you are interested in a payment plan, you will want to ask what discounts the hospital offers or whether you qualify for a financial assistance program or charity care. All nonprofit hospitals are legally required to offer these programs, but many for-profit hospitals also provide these services. You may even qualify for a reduced fee based on your income, so having your recent tax return on hand may support your case.
During these calls, you should always take notes on what was said, when, and with whom you spoke. When it comes to your credit, having documentation may be useful for later reference. Having a settlement letter or a confirmation of this agreement of the new bill in writing is important.
Step 5: Prepare for Additional Resources
If you do not get very far in your negotiation or feel confident in your negotiation skills, there are individuals designated for medical bill negotiation. Keep in mind, these services typically come with an additional price tag, but they do not get paid if you do not get any savings.
Consider a patient advocacy nonprofit such as the Patient Advocate Foundation to assist patients with financial health care and insurance issues. Other advocacy organizations exist for various cancer types, side effects of cancer treatments, and more.
You should see if you are eligible for Medicaid if your bill is high due to lacking health insurance. Many states allow retroactive coverage for medical bills from three months prior. Medicaid and CHIP do not have Open Enrollment Periods, so that you can apply for them anytime during the year.
Understanding the ability to negotiate surprise medical bills can potentially save you hundreds. Recent government rules aim to reduce the secrecy of medical care. Still, itemized receipts, some simple online searches, and making calls to your provider’s billing department will help you strengthen your negotiation.
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