Save thousands on medical bills

By Kiplinger's Personal Finance Magazine

Kellie Brown had rarely suffered from an ailment worse than a runny nose when she let her health insurance lapse in August of last year. Brown, 23, had always been covered by her father's plan. But when he retired in July 2007, she lost her coverage, and "it just seemed like an expense that I didn't really need."

Big mistake. Less than two months later, Brown ended up making two very costly trips to hospitals: one to have her appendix removed and another, a few days later, to be treated for an infection resulting from the surgery. Altogether, her tab came to $40,000.

A visit to the emergency room, for yourself or a loved one, is no time to be haggling over prices or shopping around for a good deal. On the other hand, even if you're uninsured, huge medical bills don't have to bury you in debt, wreck your credit or banish you to collection hell.

When Brown got sick, she was a junior at Virginia Commonwealth University in Richmond. She had few assets to speak of, and her parents were living overseas. When she told the hospitals about her financial situation, the hospital that had removed her appendix slashed her bill from $32,000 to less than $10,000. The hospital that treated her infection wouldn't budge on her $8,000 balance because it was below the $10,000 level that qualified for charity.

After an extended recovery, Brown had missed too much school to complete her semester at Virginia Commonwealth. Last October, she picked up an office job with a local catering company to begin paying down the remaining $18,000 of her debt. Then, in February, a group of friends organized a fundraiser to lend a hand. The event, called "Show Some Love for Kellie Brown," brought together bands, dance groups and an art auction, and raised $6,000.

Armed with that lump sum (plus $2,000 from her parents), Brown was able to bargain with the first hospital, which agreed to settle her outstanding $10,000 balance for $8,000. She's still paying $50 a month toward the remaining $5,000 she owes the second hospital. But her monthly installments won't break the bank. And in September she'll head back to college to resume work on her dual degree in sociology and psychology.

"It pays to have good friends," Brown says.

But you don't need a fundraiser in your honor to slash your medical bills. There are plenty of other options if you know how the system works.

Read your bill

If your balance from a hospital appears out of line, give it a reality check by requesting and reading an itemized bill. Pat Pane, a specialist in medical-claims assistance in Wilmington, N.C., who helps patients interpret their bills and appeal them if necessary, says she once worked with a woman who had been billed for four hernia surgeries when she'd had only one.

If you don't find any errors but your bill still seems questionable, call your insurer to make sure a paperwork snafu isn't gumming up the works. For example, a claim filed under your maiden name instead of your married name could throw a wrench into the process. So could a medical procedure or diagnosis that was coded improperly.

"Say you've got bronchitis, but the doctor codes your condition as chronic fatigue," Pane says. "Chronic fatigue is an ongoing condition, so your insurance may not pay for your tests."

If you find an error, "contact the provider and ask for a corrected claim to be filed," Pane says.

Continued: Know your coverage

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