5 Steps to Negotiating Down Costly Medical Bills

Emergencies can happen at any time. A serious situation can strike out of the blue leaving you with costly medical bills in its aftermath. If your insurance company declines to pay for any reason, you might be left facing a scary amount of medical debt. A gigantic medical bill can be a terrifying thing, but you aren't completely helpless. We'll show you the proper steps to take in order to negotiate and lower your bill.

1. Go through your bill with a fine-toothed comb

You should receive two pieces of information in the mail: a bill from the hospital and a summary of benefits covered from your insurance company. Go through each of these documents line by line. You'll want to keep an eye out for services that don't match between the two, as well as medical codes that don't make sense or that aren't applicable to your hospital stay. Identify any coding issues that don't make sense or that you have a question about before moving on to step 2.

2. Call the hospital billing department

Make sure to stay cool, calm, and collected when you do call. You want to establish a positive relationship with the hospital billing department. They are ultimately the ones who can lower your bill. Although it may be tempting to start with your insurance company, it is essential to sort through what the hospital is actually charging you first. Take the opportunity to ask any questions you have about the charges received. It helps to ask open-ended questions that force the hospital billing representative to further explain and qualify the charges rather than answering a simple yes or no.

3. Negotiate your rates

Once you have a better understanding of what's on the bill, it's time to negotiate a better rate. 9 times out of 10 you can take this information back to your insurance company to determine if the correct codes were even used for the procedure you underwent. Sometimes this is enough to settle the issue completely.

If this doesn't solve the matter, however, there are a couple of ways you can  help negotiate a lower bill  with the hospital. It's helpful to ask the billing department what the doctors and surgeons charge as a base rate for the services provided to you. Armed with this knowledge, you can then inquire about discounts off that base rate. Many physicians offer a discounted rate for their service when asked.

It also helps to find out what the Medicare rate is for a service. Even if you aren't eligible for Medicare yourself, Medicare pays the lowest rates for  services which can be used to determine the absolute  base cost of a medical procedure should the doctor be unwilling to give any further discount.

4. Ask for a cash discount

Once you've negotiated your rate down, the next step is to ask the hospital if there's any further discount for paying cash upfront. Most hospitals bill under the assumption that they will recoup what money they can from patients. Therefore, they are more than happy to give a discount if you are willing to pay the bulk of the bill up front and in cash. This step might not be feasible for everyone, but it doesn't hurt to ask. Cash discounts can be sizable, sometimes up to 40% off.

5. Establish a payment plan

After you've taken all other applicable steps that you can to reduce the cost of your bill, the final question to ask the billing department is whether they offer payment plans. Almost any hospital will have some mechanism in place for regular repayments. In many cases this can mean a zero-interest plan. Again, the hospital is looking to ensure its cash flow and does not operate under the same rules or philosophy as a bank. This attitude is the cornerstone of the negotiating process and can be used to your advantage when disputing unreasonable bills.

You Have Options

These five steps represent a cross-section of your available options should you be faced with a gigantic medical bill. There are many other things that you can do to help reduce outrageous medical costs including involving a third-party health care advocate or taking out a medical loan, but most situations are easily resolved using these negotiation best practices. The best thing you can do is remain clear-sighted and calm and arm yourself with as much information as possible.