Home > Managing Debt > An Insider’s Guide to the Insane World of Medical Bills

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Have you ever had a near heart attack after getting a medical bill? It happened to me a few years ago after my daughter was thrown from a horse and ended up in the ER with a possible broken arm and collarbone. Turns out nothing was broken, thank goodness. But even though we had health insurance, the high deductible for emergency room care meant we received a bill for $2500 to cover the x-rays and the brief conversation with the physician’s assistant on duty.

I paid the bill, but now I feel like a bit of a sucker for not trying to negotiate. Turns out uncomplicated x-rays like she received should only cost a few hundred dollars. If I had been persistent, I may have been able to get the hospital to settle the bill for less. Who knows? But I should have at least tried.

Why are medical bills such a mess? David Belk, M.D., a practicing physician, has been delving into the issue and has been revealing some surprising facts about medical bill madness on his website TrueCostofHealthcare.org. He shared some of these in a recent interview on my radio show, Talk Credit Radio. Following is an edited excerpt describing a few key things I learned from talking with Dr. Belk.

If you have insurance, you may be overpaying for your medication.

Don’t assume your co-pay is the lowest price you can get for your medications. Dr. Belk explains why: “When you are talking about price, you can categorize medications into two types. There are brand name medications for which a pharmaceutical company still has the patent. They’re the only ones who can make it and they can sell it for whatever they like. Until the patent runs out, nobody else can make it and so regardless of the cost to produce the medication, they can just sell it for not what people will pay, but what the market will bear.

“Then, there are generic medications. Keep in mind all these medications are very easy and inexpensive to make and therefore they do that. And since anyone can make it and sell it, there’s more of an open market for it. They sell these at only slightly more than what it cost to produce them.

“Most medications commonly prescribed today are generic. The interesting paradox is that your insurance co-pay may be more than you can get the medication for if you didn’t use your insurance. And so, if your doctor gives you a prescription for Lisinopril, which is a standard blood pressure medication that works just fine, your insurance co-pay might be $10 a month, whereas you can get a whole year’s supply at Costco for about $20.

“The first thing when a patient comes into my office, I say, “What medication are you on?” And they tell me. I ask, “How much do you pay?” And they usually tell me, ‘Oh, I get a good deal, my insurance lets me have it for $10 a month.’ If I have a little bit of extra time that day and I feel a little bit theatrical, I’ll simply call Costco right in front of them and say, how much would you sell 365 (tablets) of this drug for? And they’ll tell me something like $32.95 or $26.95. Really? $26.95 for a whole year? And the patient’s jaw hits the ground.

“Sometimes, I’ll give them six prescriptions because they’re on six medications and I’ll say, ‘Take this to Costco, tell them you don’t have insurance and see how much it costs.’ And they get a whole year supply of six medications for less than their month’s co-pay.  It’s usually a shocker, but it’s my way of introducing the fact that there’s a tremendous amount of deception in this business at all levels.”

Your doctor probably has no idea how much you’re paying — or how much he or she is getting paid — for her services.

Dr. Belk says physicians are often as much in the dark about your healthcare costs as you are. Here’s why: “Your doctor probably has about 15 different or more insurance providers, all with their own arbitrary set of rules of what’s covered, what’s allowed, and how things are paid. They all pay you a different amount, each following their own system. (And by the way, no, I don’t negotiate any of these with them. I just send them a bill and they send me a check.)

“Most doctors long ago gave up on this system because it is so complicated and difficult. They contract billing companies to do all of it for them. They hand the billing company a list of patients they saw and what are called “superbills” with codes. The biller does all the billing, and does all the collecting, and gives them a check. So they have no idea what individual services got paid or how much they were paid for them.

“My wife does my own billing and I even do my own taxes. So, I know everything that goes in and everything that goes out. It was hard for me to figure it out. You literally have to look at each individual patient’s payment to say, ‘Okay, this patient has Cigna, this patient has Blue Cross and couple together the deductibles, co-pays, the co-insurance fee, the payment itself and say, for that visit, I got this much money.’

“It’s maddening and it’s really, really easy to hide a lot in a system that’s that confusing. And that’s what they’ve managed to do for the most part, since most doctors have no idea even how they’re paid. It’s not really easy for us to make good judgment on what should or shouldn’t be done in terms of medical costs.”

An Insider’s Guide to the Insane World of Medical Bills (cont.) »

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  • norm

    Dr Belk is my PCP and what he says is 100% of what he practices. I shutter at the price differences between many “non-copay consumer ” and “insurance rate” medicine. Smart fellow and nice guy who is grounded. Great interview.

  • M.G.Kalina

    Hi Dr. Belk;
    Thank you for corresponding with me. Last year my wife was hospitalized for two days for adenocarcinoma stage 2 and had a total hysterectomy. We carry a small policy in addition to medicare that is supposed to pay for 100% of hospital miscellaneous costs less $25 plus daily room rates as listed. The policy requires hospital confinement to pay benefits. The hospital (or Medicare) classified her treatment as ‘outpatient’, the company refused to pay. We are in litigation right now. We have owned this policy since 1965. We don’t want to cancel it now as angry as we are because of advancing age and declining health. Any suggestions?

  • http://www.copatient.com Katie Vahle

    I have been seeing lots of instances of what appears to be an inpatient stay (i.e. I stayed overnight at a facility for several nights) be billed as an outpatient stay. Many factors drive this classification but from what we can tell it seems to be driven by the hospital strategically managing their reimbursements (i.e. they can bill services differently and get paid differently) and quality metrics (i.e. readmission rates). I’d be happy to connect offline to discuss your case in more detail if it would be helpful. I work at a medical billing advocacy service called CoPatient and can be reached at info (at) copatient (dot) com. You can learn more at http://www.copatient.com. Thanks, Katie Vahle

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  • http://sinophibe.blogspot.com Chris Maloney

    I didn’t really know that the whole system was this FUBAR — I guess I’ve been naive. I wrote this blog post, “Patient Financial Policy” (http://sinophibe.blogspot.com/2012/09/patient-financial-policy.html) to describe my response to it — refusing to accept charges that I’m not informed of ahead of time. But it’s not working very well. I now have two establishments that repeatedly send me bills — albeit for small amounts — that I have refused to pay several times. I don’t know how to get them to stop harassing me.

  • cathy

    My dentist recently passed away. I have been paying monthly on my bill. Now that she is deceased tho office wants me to pay bill in full. I do not have the finances to do this. Someone told me that as long as I’m making payments I couln not be sent to a collection agency. Is this true?

    • Gerri Detweiler

      Cathy – You have been given incorrect advice. The account may be sent to collections. I wrote about that in this article: Four Medical Myths That Can Cost You Dearly. Unfortunately, the dentist’s office may need to collect their outstanding accounts in order to either sell or close the business. Can you pay off the balance with some other type of loan?

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  • Pat Burdette

    Dr. Belk,

    My husband has a large hospital bill for his ex-wife where she was seen in the hospital after their divorce was final. He was not required to carry insurance on her and she gave them his insurance information and signed his name. How can we get this out of his name and into hers? Thank you

    • Gerri Detweiler

      Pat – This sounds like fraud, plain and simple. I can’t give him legal advice, but if this were happening to me I would fill out a fraud affidavit form and send it to the hospital with a letter stating that I have no financial responsibility for this bill. I’d send it certified mail. If they tried to pursue it I would talk with a consumer law attorney. I would also monitor my credit reports to make sure that it isn’t turned over to collections.

  • Suckered

    Excellent article. Wish I would have read it before getting slugged with a $100k medical bill that my wife was told before I went in would be $6k. Never would have let them touch me if I’d known the truth. I can’t even begin to make a dent in that one, just waiting the 4 years for it to become uncollectable and the 7 years for it to fall off my credit report. Meantime I’ll have to figure out what to do if shows up as taxable income. What a racket our system is.

    • dagm131

      please read my comment, and good luck to you and your wife

  • dagm131

    BS you can be sued forever. Once the 7 yrs is almost up the account goes to collections, if not paid ,before the next 7 yrs the collection agency sells it to another collections and on and on and on. I wish people would stop saying they can’t go after you after 7 yyrs because they can and do. I know this for a fact. I got hurt 8 yrs ago couldn’t pay dr. hospital and credit cards, had to go on ssd. What they do is if you own a house when you sell they will take they full amount, if you work they will garnish, if u are on ss or ssd they may reduce amount or charge you nothing but send you a 1099 which you have to put on your taxes as income. Since my income is so low that is what I hope for, and in 8 yrs that is how I paid off 50,000, with alot more to go. I am not the only one in my house who has been sick so has my daughter for 3 yrs, she just had surgerfy 4 days ago—and they told me they new all along what was wrong with her===3 yrs of pain and bills, and they knew. So please don;t believe people when they say you are in the clear, because your nolt!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • http://www.Credit.com/ Gerri Detweiler

    It depends on what interest rate they are legally allowed to charge in your state. Unfortunately, many states deregulated their interest rates a number of years ago. At this point it’s in collections so you can try to negotiate with them but they are not obligated to reduce the amount. You may want to contact your state attorney general’s office or the agency that licenses dentists to see whether the interest they charged was legal.

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