5 Ways to Lower Your Medical Bills

Insurers aren't the only ones who can haggle over costly treatments. Individuals can, too.

Video: Health Insurance Basics

Video: Health Insurance Basics

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Sanjiv Luthra of Los Altos, Calif., suffered from the pain and fatigue of rapid-onset arthritis so severe that he couldn't walk 10 feet until he underwent double knee replacement surgery in 2006. Now two years later, he can walk and run but still suffers the fallout from another ailment: medical bills.

Six hours in the operating room, two knee transplants, medications, and a five-day hospital stay added up to a bill of $80,000, Luthra estimates. That's not even counting bills for an anesthesiologist, physical therapy, additional medicines, and special exercise equipment to help him recover.

"One should know what the cost of the procedure is, and that is something that is just impossible to figure out before or after the procedure," Luthra says. "I had no way of knowing beforehand there were going to be these six different types of providers that were going to be sending me bills."

But Luthra's insurance company was able to negotiate with the hospital so that it paid out about $20,000, and he personally parted with about $5,000, including expenses outside the hospital.

Individual patients can, however, haggle for lower medical bills. Here are tips on how to go about it.

Work up the courage to ask. It's not just insurance companies that can negotiate. "The typical insurer gets about a 60 percent discount," explains Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. "If you go into the hospital and ask the chief financial officer, you may get a 30 percent discount, but you have to ask for it. It's totally up to the discretion of the CFO how much they or the person in the billing office are willing to give you."

But while it's common to negotiate with a real estate agent or car salesperson you will probably never see again after a sale, it's much more difficult to negotiate with a doctor you trust to make you well and to provide ongoing care for your family. Only 31 percent of Americans have tried to negotiate the price of medical bills, a survey by Consumer Reports National Research Center found. But of those who tried, 93 percent have been successful at least once, and more than a third saved over $100.

Explore low-cost treatments. Many doctors incurred large loans to finance medical school and probably understand the need to get a fair price as well as you do. But while almost 80 percent of physicians will prescribe a generic medication over a brand-name drug to save patients money, far fewer consider patient costs when recommending diagnostic tests (51 percent) or choosing between hospitalization and outpatient treatment (40 percent), according to a Center for Health System Change and University of Chicago survey of physicians. If money is an issue, you need to ask your doctor if cheaper, medically sound options are available. The trick is to keep it friendly and ask nicely. For minor health ailments like ear infections or pinkeye, drugstore clinics list reasonable prices upfront, with no negotiating required.

Find the correct person. Although they are heavily involved in treatment decisions, doctors may not be directly involved in other billing issues, so you need to find a person with the ability to adjust your bill. "I would suggest the consumer go to the office manager," says Timothy Cahill, a healthcare consultant in Louisville, Ky., who has negotiated hospital bills on behalf of patients skeptical about getting the best price. The office manager should be able to direct you to the person in charge of billing.

Offer cash payments. This could be a mutually beneficially solution for you and the medical establishment. "Paying cash is worth a lot to a doctor in terms of time and trouble, and it is a lot less complex for the hospital to deal with," as it saves hospitals the trouble of negotiating financing terms, paying credit card transaction fees, and sending collection agencies after patients who fail to pay, says Shankar Srinivasan. He is cofounder and chief technology officer of Vimo.com, a company that uses public records to figure out what prices insurers negotiate with hospitals.