Managing Debt

Big Hospital Bill? Negotiate!

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Brett Goldstein is used to dealing with big numbers. After all, he runs a pension service company. But nothing quite prepared him for the shock of the medical bills he received after his daughter broke her leg and spent less than 24 hours in the ER. The total tab? Around $30,000.

Although Goldstein had health insurance, his daughter had broken her leg in a fall on someone else’s property, and their insurance would pay the bills. All he had to do was forward them to the property owner’s insurance company. That twist, though, led Goldstein deep into the complicated world of medical billing. If he hadn’t forwarded them,”the bills would have gone straight to my health insurance company,” says Goldstein and he probably wouldn’t have discovered that the hospital had made billing errors. Even though the charges would be covered by insurance and thus wouldn’t come out of his pocket, he dug in, questioning every item.

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“I was double billed. I was billed for things (my daughter) didn’t receive,” he says. “Some of these charges were ridiculous.” Twenty minutes in the operating room, for example, resulted in a $7,400 charge.  ”I have an $800 anesthesia bill from the hospital but they don’t provide anesthesia,” he says, noting that he also received a separate $1,800 bill from the third-party anesthesiologist who did provide that service.

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Goldstein, who has also written a book about retirement, developed a list of steps patients can use to challenge and negotiate medical bills.

Among the most important: Request your medical records. (You may have to pay a small fee for copies.) The medical records include information like doctor and nurse’s notes, the medications you were given, and notes about your care. Then request forms UB-04 (typically used for hospital, rehab or surgery center or clinic bills) and/or CMS 1500 (typically used for doctor’s bills).

Goldstein explains that the UB-04 is what the hospital uses to bill the insurance company. It lists what department generated revenue from the patient. He warns that it may not be easy to get these forms. “The hospital doesn’t necessarily want you to see this because if you matched up the codes with the medical records, you’ll be able to find mistakes,” he says. He provides a sample letter to send to the hospital demanding the forms.

[Article: Is Your Health Insurer Ruining Your Credit?]

In the report he offers consumers on his website, MedicalDebtReview.com, he explains:

On the CMS-1500 there are two sets of codes you’ll be looking at. The first code is the CPT code which is used by insurance companies to determine the amount of money they will pay a doctor or hospital. The other code is an ICD-9 code, which tells you what type of injury or illness you had.

“If the codes don’t match with your medical records, you have found a mistake,” he further explains. His daughter’s bill listed code 72170-26—the CPT code for an X-Ray of the pelvis. But her records listed ICD-9 code 821.01, indicating that they fixed a fracture of the femur.

With medical records and billing codes in hand, you can challenge mistakes. A simple web search can help you find out what various codes mean.

After you’ve disputed errors on the bill, the next step is to find out what the services you did receive actually cost. Goldstein says the UB-04 will list a code that states what Medicare would pay for that service.  You can use that information to negotiate more reasonable charges for the services you received.

Goldstein recognizes that not everyone has insurance that will cover large doctor or hospital bills. He encourages them to make sure their bills are accurate before they start negotiating payments or discounts. ”Everyone says to negotiate medical bills,” say Goldstein. “But I’d rather get the bill down in the first place (by challenging mistakes) and then negotiate.”

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Image: Tony Crider, via Flickr.com

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  • Heather McClane

    Hi Ms. Detweiler:
    I have a hospital bill of $25,000 on my credit reports from a hospital stay almost 4 years ago (I had no insurance, by the way). I was unable to be admitted into the hospital without a $15,000 downpayment, which my father paid at my admission. In addition, my father also signed as the “primary financially responsible party.” However, I was informed that I had to sign as well in order and discharge from the hospital, which I did. Following my discharge 4 years ago, the hospital immediately sent the bill to a collection agency, but the collection agency was calling me to try and get information about my father because he signed as the primary responsible party. My father never paid; however, I never heard from the hospital or collection agency again to date. I tried to prequalify for a home loan (my credit score is 709), but I am unable to get a loan due to the massive unpaid medical bill! I want a home so badly for my family; especially my children. What do you suggest I do? Thank you very much for your kind assistance!

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  • http://Credit.com sue soto

    I was invoved in an auto accident 11/18/2009.At that time I went to the hospital and gave then my Social-security Medicare card for payment.
    Approx. 18 mons . ago a credit collections tried to collect the debt from the hospital,apparently the hospiatal never billed medicare.
    The insurance company from the person who hit me has a check for pain & suffering ,now the credit collections wants the money ,the hospital should have billed.
    the debt went fron 6000.00-8000/20,000.
    I have asked for a written bill .and offered to pay what medicare would have paid ,BUT NO LUCL. Do you have any suggestions ? Thanks ,Sue Soto

    • http://www.credit.com Gerri

      Sue,

      The hospital was supposed to bill Medicare and then the hospital sent it to collections when it failed to do that. So it’s the hospital you need to deal with here. It would have been much better for you to try to resolve this before it went to collections – or at least soon after – but that doesn’t mean you can’t still try to straighten it out.

      I would suggest you start with Medicare and find out what the rules are when a provider fails to bill Medicare in a timely manner. With private insurance, if a participating provider fails to bill the insurance company in a timely manner then the provider is not allowed to try to collect from the insured. The same may apply here.

      I’ve written more about how to complain about hospital bills here. I’d suggest you take a look at those resources and start reaching out for assistance. Document every phone call and keep a copy of every piece of correspondence you get or send. This may not be easy to straighten out but it will be worth the time involved.

      I’d also suggest you send a letter disputing the bill to the collection agency and tell them that if they continue to try to collect while you are disputing this bill you will contact a consumer law attorney. They may decide to hold off for a while.

  • Kim

    Hi Gerri,

    I had a visit to Eric about 2 years ago and I was billed for around $7000.I failed to pay and the debt was sent to the collection agency. Do you think it’s a good idea for me to settle the debt with the collection agency? I want to try lump sum payment and make an offer with discount. What is the percentage I should start with? I have read online and a lot of articles suggest start with 25% of the total amount owned. Do you think that’s a practical way to do? Thanks!

    • http://www.credit.com Gerri

      Kim,

      These are good questions. This article is focused on negotiating with the medical provider, especially when there are mistakes. Once the bill goes to collections, it’s a different process.

      If you know you owe the bill and you can’t afford to pay it, then negotiating a settlement could be a good strategy. The collection agency isn’t required to accept your offer, but it may be willing to in order to resolve the debt. That also protects you from being sued for the balance. (Note that paying a collection account doesn’t help your credit scores.)

      There’s no specific percentage you should start with; it all depend son what you can afford. you’re not likely going to be able to settle for a much smaller percentage AND be able to pay that amount in small monthly payments. So you should figure out what lump sum amount you can pull together to settle for, and make an offer lower than that amount.

      Make sure you get any agreements in writing before you pay.

      • liz singleton

        Depending on the collection agency and what deal the have with the company that turned over the account – lump sum payments can go for up to 40% discount. Our local hospital will not discount at all, but doctors and providers will. If they have to turn your account to collections they are generally losing 25 to 30%. The collection agency is then only making money off of people they can collect from

        In small towns using local collection agency – . If you get to the collection agency quickly you can set up a plan which includes they will not report the debt. In those cases you will be paying in full and cannot miss a payment. If debt is old some will accept 60% as payment in full if they know you are in limited circumstances and you have not acted like s jerk towards staff who tried to get you to pay. The economy being what it is we do that with accounts because something is better than nothing, especially if you have no assets that can be attached.

  • Vicki

    I have been making steady payments on a medical bill of which a payment amount was agreed upon with this company and now they are demanding 5 times the amount agreed upon and if I cannot pay they will turn me into collection company. I am not sure about Iowa laws, but I guess I assumed if there was an agreed upon payment set up then that’s what it would be. I have not skipped any payments and I have not been late with any payments. I am on a very limited income and even if it does go to collections there is still no extra money for me to pay on this bill. Any help on this for what I should do?
    Thanks, Vicki

    • Gerri Detweiler

      Vicki – Unfortunately it’s usually a myth that they can’t send you to collections if you are making payments. I wrote about that in this article: Four Medical Myths That Can Cost You Dearly. I don’t know what this bill is for, or how much the amount, is but did you ever try to negotiate it or get financial assistance due to your limited income?

  • Vicki

    I did read your four myths article and found it very informative. I have tried to work with them to negotiate for this and no luck there – they would not even consider it. it is for an anesthesia bill from a surgery I had. I am not sure where to go to find financial assistance but I will do a search on that. Thanks Gerri!

    • Gerri Detweiler

      Financial assistance programs are usually available for hospital bills where the patient doesn’t have insurance (or adequate insurance) and meets certain income or financial qualifications. Since this is the anesthesiologist’s bill (not the hospital bill) it may not be available. It’s really a shame they won’t negotiate.

  • liz singleton

    What s the time period in which a hospital must bill your insurance and bill you? I have a bill I have been paying on for over a year, but they did not bill me until 6 months after the procedure.

    I have another one on my credit report because the hospital after I made arrangements to pay for and paid off the bill for multiple ER visits apparently found one they did not include which they then tuned to collections and reported me. I did not know it was there until I got a car loan last summer. But since that debt is now over 5 year old, I figure it will drop off my report in the next two years. My bank officer told me challenging it now would just make it new issue that would stay on my report longer. It did not prevent me from getting mortgage 3 years ago or from credit cards ringing from 9.9 to 13.9%. Am I wrong to continue ignoring it?

    • Gerri Detweiler

      Providers have contracts with insurance companies that cover how quickly they must bill. If they fail to bill in a timely manner, you should not be held responsible because of that. (For example, if they wait a year to bill, it’s past when their agreement with the insurance company says they must bill – they can’t try to collect the entire balance from you. This only applies to participating providers, of course.)

      In the first case, did it show up in collections before you got a bill?

      In the second case, it sounds like it should drop off your credit reports in about two years. That’s true regardless of whether you pay it. It’s hard to say whether you should try to resolve it or not. What state do you live in?

  • Harriet

    I presented with abdominal pain on a Saturday and my doctor told me I had to go the emergency room because they were the only facility that could perform necessary tests to diagnose on a weekend. I went and had an ultrasound and blood test. I was diagnosed with pancreatitis, sent home with dietary instructions and a prescription for pain. I was there a total of 3 hours and saw the doctor for 10 minutes. I have now been presented with a bill from the hospital for $2900.00 and the ER doctor for $700.00. I have compared the ICP codes with the “usual, customary and reasonable” charges through the FAIR health website and find that I am being charged 260% over the UCR rates. I am uninsured but don’t qualify for assistance because I own my home and have a savings account. I have pointed out to them the outrageous charges and the comparison and all they will give me is a 10% discount if I pay the full amount. This is a “non-profit” hospital, but it seems to me they are making their profits off the backs of the uninsured. Is there a watch-dog agency that I can file a formal complaint with? Is there any other avenue that I could take other than being sent to collections for refusing to pay? I don’t mind paying a reasonable percentage over the UCR but 260% is bit ridiculous.

    • Gerri Detweiler

      Harriett – Other than their financial assistance policies, I am not aware of any regulations that would require them to discount the bill further. But that doesn’t mean you shouldn’t try. I have to warn you, though – the hospital could turn you over collections in the meantime. I wrote about ways to file a complaint here: http://blog.credit.com/2012/06/how-to-fix-your-medical-bill-problems/

      One thing you may want to do is to insist on an in person meeting with the head of the billing office. Find out what medicare reimbursement rates are for these procedures. Insist on a better compromise and if you come to an agreement, get it in writing. Be polite but persistent.

      Let us know what happens OK?

  • http://www.credit.com/ Credit.com Credit Experts

    Sadly, this is a story we hear too often. When you initially received the bill, did you contact the provider/hospital to see if they’d be open to accepting payments? One of the biggest misconceptions about medical bills is that by making payments towards the bill, it can’t be sent to collections. Unfortunately, it can, and they often are. The problem here is that hospitals and medical providers are not legally obligated to accept payment terms or agree to payments based on what a patient can realistically afford. And typically, if the bill isn’t paid in full within 30-90 days (this would be stated on the initial bill), the debt is often sent to collections internally or sold to an outside collection agency to collect.

    If you’ve paid $6,000 of the $10,000, they can’t collect more than what you legally owe. (A collector may add interest to the balance, but they can’t collect on money you’ve already paid towards the debt.)

    Gerri has written about this topic in-depth here at Credit.com and while there’s no way to completely prevent a medical bill from being turned over to collections (other than paying it in full which is often not possible if the debt is significant as in your case), you do have a few options available to you. The following resource is well worth the time and will give you some helpful advice on how to handle the debt from here:

    The Ultimate Guide to Solving our Medical Bill Problems

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