Personal Finance

How to Negotiate Your Medical Bills

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Two years ago, Michelle received treatment at a hospital and racked up a $7,000 bill. Now the hospital is threatening that it wants to get paid — immediately — or it’s going to damage Michelle’s credit.

“They told me today that I had to pay them $200.00 a month to keep out of collections,” a Credit.com reader using the screen name “Michelle” said in response to a story, and the hospital wants its first payment “by the end of the week.”

Michelle is disabled, and lives on a limited income, so she can’t afford to spend $200 a month on a medical bill. Also, “This is the first statement I received from this hospital,” she says.

It appears that whomever Michelle is talking to at the hospital is trying to rush her into paying too quickly, and possibly too much, says Gerri Detweiler, Credit.com’s consumer credit expert.

“I think she’s dealing with a billing clerk who doesn’t have a lot of incentive to help her, and may not be aware of all the assistance that may be available,” Detweiler says.

But first a note of warning to other former patients who find themselves in a similar position: Michelle may actually be lucky. Many hospitals don’t send reminders or make phone calls regarding unpaid bills. They simply send the bills to a collection agency, which hurts the consumer’s credit automatically.

“They don’t have to warn you, even,” says Barry Paperno, Credit.com’s credit scoring expert. “It’s good that they’re calling, because that gives you a chance to work it out before they send it to collections. And the fact that they’re willing to work out a payment arrangement is even better.”

So, the bad news is that the payment plan offered by the hospital is not much of a deal for someone in Michelle’s position. The good news is that it hasn’t yet been handed over to a collections agent, which means Michelle still has time to negotiate before this unpaid bill damages her credit.

What can she do now? Here are some steps consumers can follow to slow down the bill collection process, learn their options, and possibly negotiate their way into paying less.

Get the Bill — The Whole Bill

The first thing Michelle should do, Detweiler says, is get an itemized copy of the hospital bill. After that, she should read it line by line. Are there procedures on the bill that were never performed? Was she charged for an entire box of surgical gloves? If so, she can get those overcharges removed. “The fact that she hasn’t even gotten a bill concerns me,” Detweiler says. “The bill is probably too high to begin with.”

Get Help

If it’s a nonprofit hospital, it has programs to give free or reduced-cost care to people who are low-income and disabled. Since Michelle is both, she probably qualifies. “She may not have to pay any of that bill,” says Detweiler.

Go Up the Chain

At this point, it sounds as though Michelle is dealing with a low-level hospital employee whose only job is to collect unpaid bills. Michelle needs to be dealing with someone else. She should ask to talk to a hospital employee who work in the programs for low-income and disability assistance. If they fail to respond adequately, demand to speak to their managers. If she finds mistakes on her bill, she may have to speak to a manager in the billing department, too.

This is one of those cases where being a little more assertive could make a big difference. “Go to someone higher up in the hospital,” Detweiler says.

Explore Your State’s Options

A nonprofit hospital should be able to tell Michelle if she qualifies for similar aid programs for the low-income and disabled from her state. But if hospital employees don’t, she can contact those programs directly.

Know Your Rights

Under the recently-passed Affordable Care Act (dubbed “Obamacare” by its critics), hospitals must establish written policies regarding who is eligible for free and reduced-cost care, financial assistance programs, and must make those policies available to patients and the public, according to a recent story for Credit.com by healthcare and medical billing expert Mark Rukavina, of Community Health Advisors. Hospitals must refrain from pursuing collections actions until they have screened patients to find ones who qualify for financial assistance. And for patients that receive aid, hospitals cannot charge any more for services than they charge Medicare or the lowest amounts negotiated by insurance companies.

“If you believe you are the subject of aggressive billing and collection practices after receiving treatment at a non-profit hospital, contact the billing department and ask for information on their financial assistance and billing and collection policies,” says Rukavina. “It is your right.”

The final rules to enforce the act have not yet been written, Rukavina says. Still, these protections are part of federal law, and Michelle can use them to slow the hospital bill collection process down, and negotiate for a low a lower bill.

Image: kokopinto, via Flickr

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