Health care costs for services, devices, and procedures are inevitable.
Even if you’ve taken proper preventative health care measures and are covered by insurance, you WILL encounter medical bills at some point.
It might seem as though there is nothing you can do. Let’s say your physician recommends a certain procedure and even gives you the name of a doctor/place to get it done. Most of us would simply take the doctor’s recommendation, get the procedure done where the doctor suggested, not ask questions beforehand, get hit with a huge bill directly or with what the insurer didn’t pay (which may or may not be correct), and then hopefully have enough post-tax dollars left in the bank to cover the rest.
Who are we to question any of this?
You should question it. Learning how to navigate the intimidating world of medical billing and health insurance may be one of the best personal finance related skills any of us could develop this day and age.
Here are four strategies to help you limit the health care costs you do run in to.
Shop Around & Negotiate, Before Getting the Bill
The dirty secret of the health care industry is that everyone (outside of those on Medicaid and Medicare) gets a different price.
Your rates, negotiated by your insurer (or based on what you personally have negotiated if you are uninsured) could vary dramatically from one health care provider to the next.
Get to know CPT codes. CPT codes are 5-digit codes that your physician will put on referral paperwork. With the CPT code, you can call your insurer and then ask them what local health care providers can do the work for the lowest rate (as negotiated with the insurer). You could even make a few calls, tell the provider you are uninsured (even if you are not), and see if you can negotiate an even lower rate.
An expensive medical procedure, exam, or device should require at least as much diligence and negotiation, on your part, as you would put in to a vehicle, education, or home purchase.
Triple Check your Medical Bills for Errors & Don’t Give In if you are Right
Medical billing errors are extremely common. Depending on the source, it has been estimated that anywhere from 20-80% of medical bills contain errors (a wide range, for sure, but even at 20%, it’s 20% too much), and they are most commonly overcharges. This costs patients billions of dollars annually.
Last year, I ran into a billing error with Cigna, where they tried overcharging me $476 for simple blood work. After a lot of back and forth, I eventually got the incorrect charges dropped. I learned that the insurance company had billed all of the blood work as “non-preventative, illness related”, when only a small portion of it was.
It did take a lot of work and phone calls with my my physician’s billing rep and the insurance company before it was resolved. And it even took a little encouragement and wisdom from the billing rep to inspire me to stick with it, “most insurance companies have the customer service goal of frustrating you so you give up and pay”.
The incident, painful as it was, taught me some valuable lessons:
- knowing the correct CPT codes before you ever go in for service can help prevent errors
- triple check every medical bill for errors
- if you suspect error, get a case confirmation # right away
- document everything
- get the name/number/extension/email of the rep. you call, to help instill a bit of accountability on their end to resolve things
- keep pushing, until you win – don’t give in – tell them “I refuse to pay that amount”
- if you don’t get anywhere, but are confident you are correct, take up a case with your state’s insurance board
Pay your Medical Bills with Pre-Tax Dollars Through an HSA or FSA
Why would you pay for health care expenses with full post-tax dollars when you could be paying at discounts equivalent to your tax rate?
Just about all medical services allow you to pay with either a FSA (flexible spending account) or an HSA (health savings account).
To easily differentiate the two:
- HSA: you must be enrolled in a HDHP (high deductible health plan), in order to contribute in a given year. But you can use it in any year. Funds roll over from one year to the next. You own the HSA and can take it with you when you leave your employer.
- FSA: you do not have to be enrolled in a HDHP to contribute to an FSA. However, funds are use it or lose it in a given year, and do not roll over. Your employer owns the FSA, and you cannot take it with you when you leave.
If you only have an FSA, it takes a bit of planning. If you have a non-health threatening procedure but do not have funds remaining in your FSA for the year, you could wait until you have funded your FSA appropriately before having the procedure done. With an HSA, less planning ahead is required.
For a full list of what medical expenses are covered by an FSA or HSA, check out IRS publication 502.
Cut your Prescription Costs with Mail Order Prescriptions
If you have prescriptions, don’t settle for the price that CVS, Walgreens, or your local pharmacy quotes you. Shop around. Pharmacies can differ greatly in price (I’ve heard good things about Costco and Walmart pharmacies).
Beyond that, also look in to mail order prescriptions from your health insurer. I did this, and was able to save 25% on two prescriptions. I also got free delivery (saved fuel), and a 90 day supply (saved time and hassle of refilling and going out to pick up the prescription).
Your mileage may vary from what I found with Cigna, and later, Express Scripts. A quick search for “health insurance prescription home delivery” found that at least Humana, Aetna, and HAP are all running prescription mail order delivery programs.
Medical Bill Cutting Discussion:
What tips do you recommend for cutting medical bills and health care costs?