4 Ways to Prevent Huge Medical Bills
If you've ever combed through an itemized medical bill, you have an idea of how dizzying it can be. In our current fee-for-service system, even outpatient procedures lasting a couple hours can result in a page or more of charges. Negotiating hospital bills is no fun and can last months, and it's usually not what we think about when we need medical care.
It's time to start. The current state of our health care system is flawed at best, and it shows in the finances of American families. A recent NerdWallet study found that nearly 1 in 5 American adults will be contacted by a collections agency about medical debt this year. Meanwhile, the same study found that rampant coding errors by hospital billing departments are driving costs up as much as 26 percent.
To avoid overpaying, think of your future health care as a financial decision, not something that's beyond your control. Taking health care costs into your own hands starts before you even need treatment: with research and planning, just like any other big financial decision. Here's where to start:
1. Prevent the cause, whenever possible.
Medical billing may be confusing, but this much is crystal clear: The best way to avoid a huge bill is to avoid a big medical problem in the first place. Not to mention, preventing illness or injury means skipping all the pain and stress that come with it. Prevention isn't always possible, but it's easier than we like to admit.
Consider this: America's two leading preventable causes of death, tobacco use and obesity, cost our health care system more than $280 billion per year combined. That's the most conservative estimate; the true costs may be well over $300 billion. That figure climbs to $500 billion when lost productivity is factored into the equation. While those costs don't entirely fall on consumers, a large portion does.
Smoking and obesity are lifestyle factors that are widely campaigned against for this reason -- those directly affected are not always those who pay the costs. But addressing these two issues is only half the preventive medicine picture.
The other half is routine care and screenings, many of which are now mandated inclusions in Obamacare-compliant health insurance policies. They include women's health screenings and special services for those over 65, in addition to counseling for obesity, alcoholism and smoking. They're also free when you're insured, so you have no excuse for avoiding them. And you shouldn't avoid them: The sooner any potential health threat is caught, the sooner it can be controlled, and that includes controlling its costs.
2. Shop smart.
Consumers are increasingly demanding health care pricing transparency, and many institutions are responding. There are now several ways to research health care prices online for services in many areas across the country. NerdWallet's Best Hospitals tool, Health Care Bluebook and FAIR Health Consumer all provide cost assessments or estimates for care. If you're lucky enough to live in an area with many health care providers, you already have a number of resources available to research pricing.
So when you're choosing a doctor, imaging facility or hospital for future care, you can now compare prices in your area -- step one of shopping smart. You might be surprised to find that Hospital A, 20 minutes from you, is much cheaper for a service you need than Hospital B, 15 minutes in the other direction. You could potentially save hundreds or thousands of dollars by simply choosing a hospital five minutes farther away.
But if Hospital A isn't covered by your insurance, you won't be saving any money at all. That's why step two of shopping smart is making sure any provider you choose is in your insurance network. Stay in your network whenever you can, or else you could be stuck with the full sticker price for medical services.
3. Get preauthorized.
Health insurance really doesn't do much good if it doesn't cover the tests and drugs you need. Insurance providers don't like to pay for unnecessary tests, though, so they may require your doctor to get their approval before ordering one. This is known as preauthorization or prior authorization.
Preauthorization is normally required for imaging exams, such as X-rays and MRIs, because they can cost thousands of dollars and are overused. According to the Food and Drug Administration, 30 to 50 percent of medical imaging exams are not medically necessary, meaning they're unlikely to affect your health. So your insurance provider may require your doctor to explain in writing why you need a test.
The same is true for expensive medications not on your insurance provider's drug formulary, or list of preferred prescription drugs. For many diseases, there are a variety of drugs available -- but your drug formulary may only include one of them, with preauthorization required for the rest. Your insurance provider may also require you to try the one that's on the formulary before agreeing to cover another.
Even though obtaining prior authorization falls on the shoulders of your doctor, it's your responsibility to know it's needed in the first place. If you don't tell your doctor when preauthorization is required, and a test or drug is ordered anyway, your insurance may not cover it and you'll be stuck with the bill.
4. Take notes.
You can shop smart and get preauthorizations for planned medical care. But what about when you need care unexpectedly? In an emergency, options for ensuring coverage are limited. There is, however, one more thing you can do to avoid overpaying.
Always keep records of your medical care, especially if you're hospitalized. After the hospital stay, you can and should request copies of your medical records. If you're overcharged later, they may help you prove it. Since the bill is created based on medical records, you should be able to trace every charge back to the records after care.
However, medical records are subject to clerical errors, just like any other document. During your stay, keep track of anything that doesn't go as planned, or appoint a friend or family member to do so if you're unable. This includes doctors' orders that are cancelled, imaging exams that are repeated and drugs that are discontinued if you don't tolerate them. These changes are often the result of quick decision-making on the part of your doctor, and are small enough to be easily overlooked in medical records.
