Tips for negotiating a large hospital bill
Neal Templin
Medical bills are a leading cause of personal bankruptcies and, even if you’ve got insurance, the prices often make no sense, and the explanation of what you’re paying for can be bewildering.
Without insurance, negotiating your best price is a must. And even with insurance, if you have a large deductible or other out-of-pocket obligations, it makes sense to try to bring the price down.
The good news is that it’s become easier to peel open the onion and figure out the discounts that hospitals are handing out to everyone but you. In January 2021, the federal government forced hospitals to disclose prices for many “shoppable services,” including their negotiated price with insurers.
Hospitals customarily charge a multiple of their true costs — whether for open-heart surgery, basic blood work or a simple bandage. If you have insurance, your insurer will negotiate a heavily discounted price that more closely reflects the hospital’s costs. But if you don’t have insurance, are covered but have a big co-pay/deductible, or your insurance doesn’t cover this particular cost, you’re on your own.
How well you negotiate can save or cost you thousands of dollars. Ignoring medical debt isn’t an option. If you don’t pay up, some hospitals will put liens on your home and eventually seize it. Your credit will be wrecked.
I live in northern New Jersey, and decided to look at the price list posted by Atlantic Healthcare Systems, which operates nearby Overlook Medical Center. The difference between official charges and actual prices paid was illuminating. For example, the official charge for a lipid panel, which measures cholesterol and triglyceride levels, was $163; some insurers pay as little as $12. A test to detect hepatitis C had a charge of $1,067; some insurers pay as little as $32.
At the same time, websites like FAIR Health will tell you how much local hospitals charge for procedures and how much insurers actually pay. I looked up the cost of gall bladder surgery in Northern New Jersey. FAIR Health told me a hospital would normally bill $11,000 for this operation, but that insurer might pay $4,484.
That shows you how much room hospitals have to negotiate. Whether or not they want to give you their best price is partly up to you. Some negotiating tips:
Negotiate before treatment. If you have an actual emergency, of course, you’re not going to say, “Hold on with treating my stroke, I want to talk price first.”
But a lot of tests and routine surgeries are scheduled months in advance. Ask the hospital what the anticipated charges will be. Check sites like FAIR Health to see what an insurer would pay. Politely try to get as close to that price as you can. Be persistent, even if it means talking to multiple hospital functionaries at multiple meetings. Patient advocates (many hospitals have them) can often help connect you to the best person.
Don’t negotiate prices with the first person you talk to. That person is probably not empowered to give you a break. Ask to speak to a director or a department head. Tell them that you want to make good on your bill, but you simply can’t afford it.
Stay polite and professional. Yelling at hospital bureaucrats isn’t going to lower your bill. If anything, it will have the opposite effect. Never forget: The hospital is under no obligation to give you a discount. You want to be that charming customer that the billing person decides to help.
After the procedure, request an itemized bill. Make sure you aren’t being charged for things that you didn’t receive, and that you aren’t being double charged for something you did get. Ask the hospital to remove any unwarranted charges before you begin negotiating the price.
Remember that hospitals have different margins for different services. Margins are higher on outpatient treatment and lower on inpatient treatment. Absent better information from FAIR Health or other sources, your starting offer might be to pay 50% of the charge on an inpatient bill but only 30% on a more lucrative outpatient bill.
Don’t agree to pay a bill over time until you’ve negotiated the lowest price possible. Hospitals will try to put you on a payment program, but their opening offer is often for you to pay the entire bill over a period of years. That’s a terrible idea.
Beware of hidden charges. A dozen years ago, I had surgery to remedy swallowing difficulties connected to a rare esophagus problem. It wasn’t done right, and two years later I went in for a redo of the operation from a top surgeon in New York City.
The surgeon was out of my insurance network. He wanted a $24,000 fee for a complicated operation that would take three or four hours. I had good employer insurance, which would only pay him $12,000. His business office assured me before the operation that the surgeon wouldn’t press me for the extra $12,000, and they were true to their word.
I didn’t quite cover my bases, as it turned out. The assisting surgeon still billed me $600 after the operation that my insurance wouldn’t cover. I called his business office, whipped out my credit card, and offered to pay $300 on the spot if the bill would go away. She said, “How about $350?” I said fine.
I was proud of myself. I shouldn’t have been. A friend of mine negotiates insurer contracts with hospitals. He says surgeons have fat margins, and my opening offer should have been 30% of the bill not half.