Save thousands on medical bills

Know your insurance

If your treatment falls into a gray area that your insurance may not cover, bolster your case by submitting letters from your doctors that explain why the treatment you received was necessary. And verify that you provided the insurance company with any required referrals from your primary-care physician.

Mark Rukavina, the executive director of the Access Project, a nonprofit group that works to improve access to health care, recommends that you submit official paperwork whenever possible.

"Often people call their insurer's customer-service department and get discouraged," Rukavina says. "But sometimes you just need to file an official grievance to clarify whether something should have been covered."

Similarly, if you used an out-of-network service because of a medical emergency, make sure your insurance company is treating the episode as an emergency. If that's the case, you'll more likely be charged as you would for an in-network service, and the insurer will pay more of the bill. If not, file an official appeal or submit a letter from the doctor who treated you explaining the urgent nature of your illness.

Health-maintenance-organization, or HMO, participants generally have to walk a thinner line in terms of hospital care. "You may have to notify your primary-care physician within a certain time period of going to the hospital," says Tom Bridenstine, the head of Virginia's managed-care ombudsman program. Or if your situation isn't immediately life-threatening, you may need to speak with a registered nurse at your HMO before heading to a hospital. Bridenstine's advice: Study the ins and outs of your policy.

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Shy away from plastic

What if four or more zeroes still stare at you from your bill? Avoid the temptation to break out the plastic. When you apply for credit, owing money on a medical debt isn't viewed as negatively as, say, splurging on a Lexus, says Gail Cunningham of the National Foundation for Credit Counseling, because "you don't choose to get sick." But once you transfer the debt to a credit card, says Cunningham, you lose the benefit of the doubt. And don't convert your medical debt, which is unsecured, to a secured obligation by, say, paying it off with your home-equity line of credit.

If the hospital offers you a credit line from an outside lender at 0% interest, turn that down, too. That 0% rate usually jumps into the 20% to 30% range if you miss a payment. Plus, once your balance is off the hospital's books, you lose any negotiating leverage you have.

Drive a hard bargain

And you do have leverage. The first thing to understand about your balance is that "the total charges bear no relationship to what the provider or hospital will accept as payment in full," says Nora Johnson, who runs her own business in Caldwell, W.Va., that helps patients appeal their bills.

Hospitals bill everyone the same, from Medicare to private insurers to the uninsured. But the full tab that appears on your bill is much higher than the hospital's actual costs. That's called the hospital's charges-to-cost, or markup, ratio, and nationally the average is about 3-to-1, says Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management.

Anderson says any hospital should be able to tell you its charges-to-cost ratio, but you'll have to ask because the hospital won't necessarily volunteer the information.

Medicare traditionally compensates hospitals based on their actual costs, and private insurers that bring in many patients also have the clout to negotiate rates that are closer to a hospital's actual costs. Only patients who are uninsured or underinsured are expected to pay full freight.

Continued: Negotiate 

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