Want to Save on Medical Bills? Learn to Negotiate!

SAN JOSE - JUNE 7: U.S. President Barack Obama speaks about Affordable Care Act at The Fairmont Hotel on June 7, 2013 in San Jose, California. Obama was trying to spur people to sign up for health insurance in California, the nations largest health insurance market, with hopes of convincing younger people to enroll in order to keep the price down.  (Photo by Stephen Lam/Getty Images)
Stephen Lam/Getty ImagesPresident Obama speaks to a crowd in San Jose, Calif., in June to encourage residents to sign up for health coverage through the state's new insurance exchange.

As Oct. 1, the deadline for health care insurance exchanges, draws ever nearer, the Obamacare debate is heating up, with critics of the health care plan still fighting it tooth and nail (while, perhaps, quietly implementingportions of the program). It seems likely that the Patient Protection and Affordable Care Act (the less-known and less-euphonic name for Obamacare) will manage to survive its opponents. But, even if it doesn't, chances are very good that consumers will be having to take a more direct role in their healthcare.

As I pointed out a few weeks ago, a big part of this equation may lie in domestic medical tourism. For years, the low cost and high quality of overseas medical care has made it attractive for cash-strapped people with health problems. But even within the U.S., there is a wide range in treatment costs for most medical problems. Personal finance site NerdWallet recently unveiled a new tool that enables patients to compare prices across the country -- and, in the process, find the best places to save money on their medical bills.

NerdWallet's tool is great for people who are willing to fly cross-country to save on hip replacements or pacemakers, but what about people who can't travel to a doctor in a faraway state? Another useful tactic may be to haggle with your health care providers. Rebecca Palm, co-founder of patient advocacy site CoPatient, notes that any doctors and hospitals are willing to negotiate when it comes to treatment costs: "There's no harm in trying to negotiate your bill up front. And after, for that matter!" With that in mind, here are a few suggestions:

Tip 1: Know Your Prices
When it comes to negotiating with your doctor, your first step is to gather information. Palm suggests checking your insurance information and talking with your health plan administrator to find out what, exactly, your insurance covers. This will give you a base idea of your bargaining position.

Another useful piece of information is the actual price of a procedure. NerdWallet's tool, as well as sites like the Healthcare Blue Book, can help you figure out the range for most major procedures. Beyond that, though, a growing number of healthcare centers are publishing their prices up front. Unfortunately, as Palm notes, health centers that do so are not able to accept Medicaid or Medicare because of federal regulations that prohibit this sort of menu pricing. The irony is that these regulations were enacted with the best of intentions: "Some Medicare rules that were created to prevent fraud are now preventing innovation in this space," Palm explains.

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Tip 2: Talk to Experts
Hospital billing can be incredibly complicated -- and this is a place where ignorance will definitely work against you. If you have any friends with experience in medicine or medical billing, Palm suggests reaching out to them. As she notes, "They will be better equipped to understand your bill, and may be able to help explain it to you."

If you don't know anyone in the medical business, you can also reach out to professionals. Palm's company, CoPatient, will audit your bill free-of-charge. By comparing your charges against similar cases, they can identify places where your doctor or health care center may be inflating your bill. They can even negotiate for you, in return for which they will keep 25-30 percent of your savings.

Palm notes that, "Roughly two thirds of the people who come to us have some opportunity for savings on their bills." She points out, however, that there's a bit of a self-selection bias: "Patients generally come to us because they think they're being overcharged!"

Tip 3: Ask About Flat Billing
Tracy McDougald, a patient advocate at CoPatient, notes that, before you go into the hospital, you may be able to negotiate a pre-treatment price for your procedure. This is especially true for services that insurance doesn't cover, like plastic surgery or uninsured child birth. The best thing about this, she notes, is that it's all-inclusive, "meaning no extra surprises in the mail a couple months down the road." She advises, however, that you "Make sure post op care is included in the contract as well as supplies, diagnostics," and other incidentals.

Tip 4: Making a Deal After Your Procedure
McDougald also notes that, after the fact, you may be able to continue to deal with your provider. She suggests starting with an offer to pay half the bill in 30 days, noting that "A lump sum of cash is worth more in the short term for the hospital then billing for monthly payments."

Even if your hospital isn't willing to negotiate, it may offer payment plans or financial discounts. If you agree to a payment plan, McDougald advises that you look into your hospital's collection policy, "make sure that if/when the account is referred to collection that the agency doesn't report this on your credit report," and ensure that your hospital "will honor the same payment arrangement you set with the provider of care." Most importantly, she notes, you need to make sure that they don't charge interest!

Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.