Want to save money on hospitalizations whether or not you're insured?
by Kevin Pezzi, MD
Even if you have medical insurance that covers hospitalizations, you may face astronomical co-payments and other charges. The situation is even worse for folks without insurance, who are typically billed far more than what hospitals accept from insurance companies.
Is there anything you can do about this? Yes, you can fight back, legally.
I'll explain. In my years as an emergency room doctor, I witnessed countless patients sign papers given to them by admitting clerks. Most patients sign those papers without reading or amending them in any way. By doing that, you are legally obligated to the terms of that contract. However, a few astute folks read them and crossed out ones not to their liking, or modified the contractual terms so they are more equitable. I never saw any clerk or hospital refuse those patients admission. I've sat in enough meetings with hospital administrators to know they want every penny they can get their hands on, so if they make only $16,000 from you instead of $20,000, then they'll accept that $16,000. It's far better than losing the money for the admission if you go to another hospital, and their ER doctors don't want the hassle of transferring you elsewhere.
Hospitals have many fixed costs, so adding (say) $10,000 of billable treatment usually costs them much less: often $500 or so. Do the math: accepting 100 such patients with $1 million of billable treatment might cost them only an additional $50K. If they get those additional patients by agreeing to treat them for half price, they'd still net a gain of $450,000.
So what do hospitals do? They accept your terms, instead of the other way around. The standard contracts that patients sign for emergency treatment and hospitalization are written by hospital attorneys who write one-sided documents favoring their clients, the hospitals.
Your financial health is imperiled by dirty tricks that hospitals often pull on their patients, such as charging for services, tests, medications, and procedures never rendered. (This and other hospital cons have been documented numerous times by 60 Minutes and other investigative journalists.) Try walking out of Wal-Mart without paying for a $5 item, and the store will call the police and prosecute you. In contrast, hospitals can fraudulently steal hundreds of times more from you and get off scot-free. Even if they are caught, they generally must only refund the overcharge. However, hospital bills are so difficult to make sense of that they can look like hieroglyphics even to doctors. Consequently, millions of patients have paid billions of dollars to hospitals that are, in my opinion, highly unethical for preying upon people when they are going through such vulnerable times in their lives.
How to fight back
Besides reading the hospital admission contract and crossing out or modifying any clause in it that is not agreeable to you, add the following:
For insured patients: You and all affiliated providers agree to accept my insurance coverage as payment in full for all charges related to this hospitalization.
For uninsured patients: As payment in full for all charges related to this hospitalization, you and all affiliated providers agree not to bill more than what you currently accept from any insurance company, Medicare, or Medicaid.
You may also wish to add the following terms whether or not you have medical insurance:
- You will furnish proof (not just an itemized list) that all products and services billed for were rendered.
- If you bill for any product or service not rendered, you agree to pay punitive damages of 1000 times the amount billed. Or take a tip from an insurance company that won't pay anything for a claim that involved any degree of fraud. They presumably have a legal basis for that, so when people who try to rip off insurance companies can have their entire claim denied, hospitals and other corporations should not enjoy the immunity to issue fraudulent bills. Stating “zero pay for any attempted fraud” in advance is a powerful way to deter it and to strengthen your legal justification for withholding all payment if they try to collect money from you that they are not entitled to. On top of this, you could add punitive damages of 1000 times the amount billed (for any product or service not rendered) as a civil penalty.
- If I request my medical records, you will promptly provide them to me at no charge.
- If I am elderly OR unemployed, you will treat me the same as you would younger and/or wealthier patients. Rationale for this clause: in Michigan and perhaps your state, doctors give their best care only to the latter patients because they know that only such patients can sue for significant (or any) economic damages. While in theory anyone or their estate can sue for malpractice, in reality plaintiff attorneys reject almost all cases involving patients who are elderly or unemployed because their expenses to sue often exceed what they might make from the case even if they win it or negotiate a settlement. Thus the malpractice pendulum has swung too far; patients could previously sue and win regardless of the patient's age or economic status, even if the doctor gave virtually perfect care.
- You agree not to refer my account to a collection agency, or report me to a credit bureau, for any reason.
- If my treatment did not meet the standard of care in any way, or was otherwise imperfect due to an error of commission or omission, I owe nothing.
Don't overlook the tremendous bargaining power of the last clause. Hospitals are filled with overworked doctors and nurses who make mistakes in caring for most patients. I could fill dozens of books listing the errors I've personally seen and heard about. Even seemingly minor mistakes can have devastating consequences, as in this example.
Healthcare workers sometimes botch easy, routine procedures. For example, I went to a local hospital to have two lab tests performed. Even though they are supposedly one of the top hospitals in the United States, their phlebotomist made several errors in drawing my blood. He likely follows the same procedure on every patient, so not only is he incompetent, but he has incompetent supervisors, too. And what about his co-workers? Several of them worked together in one room; hadn't anyone noticed what he was doing wrong? Are they following the same inept procedure?
That same hospital committed multiple errors during a transvaginal ultrasound; the tech didn't even know the correct hand-washing procedure! I explained it to her, and she still didn't do it correctly!
Women (and men who care about them): In researching the infectious disease hazard of transvaginal ultrasounds, I found that even the CDC is alarmed by some of the risks. If you value your health, educate yourself on this and other risks; don't assume healthcare providers know or even care about what they are doing, because many don't. In my books and websites, I discussed some of these hazards, which include premeditated murder (such as racist healthcare workers intentionally killing black patients), nurses talking about assassinating patients they abhor by injecting them with HIV, and screwing other patients in ways that ought to make you think twice if it is wise to put blind faith in people you usually don't know well.
For all the lip service they give to "quality assurance," hospitals remain places in which errors remain a routine occurrence. Perhaps it isn't fair to have 100% of your bill forgiven if one error is made, but for years hospitals have been the sole arbiters of fairness. It's time to level the playing field and give patients the same power that hospitals enjoy. Since virtually all admissions can be shown to be imperfect, you can use that last clause as a bargaining chip in negotiating a reduced fee with the hospital.
How you can help hospitals improve their quality of service
I reviewed countless medical records during the years that I served on a hospital's Quality Assurance Committee. If I spotted an error, such as not doing something that should have been performed, I'd let the guilty doctor know about it. However, I'd see the same docs making the same errors month after month, year after year, in spite of numerous notices from me. Is there a better way to force them to improve? Yes. If they were not paid for cases in which they made a potentially serious error, it wouldn't take them long to shape up. Hospitals are so hidebound that they won't utilize money as a motivational factor, but consumers can use their power to send a strong message to them: We won't pay for subpar performance.
Regarding the clause about collection agencies: There is a limit as to how mean and nasty hospitals can get, so when they want to be more thuggish and still seem to be a lily-white institution that's a warm and fuzzy part of your community, they let collection agencies do the dirty work for them. That's when the teeth come out and are sunk into your flesh.
One of my relatives listed me as a reference on some credit card that he subsequently defaulted on. Since then, bill collectors have phoned innumerable times—sometimes every few minutes—hounding me, even though I don't owe them a penny. I've found that many bill collectors behave like atavistic, knuckle-dragging Neanderthals. If you think you have health problems now, just wait until you and your relatives suffer months of stress after hospitals sic a collection agency after you.
Exactly how can you add those clauses to the hospital admission contract?
- Print a copy on paper and carry it in your wallet or purse, and then copy those sentences to the contract before signing it. You may wish to cut the paper to the size of a credit card and laminate it (the printing on uncoated paper eventually scuffs off).
- Have a stamp made bearing the desired clauses, and stamp each duplicate page of the carbonless form.
For more information, and to see a real-life example of how one person used my advice to save money, see Saving money on ER & hospital bills.
Disclaimer: I am not a lawyer and cannot give legal advice. However, modifying the terms of a contract before you sign it seems to me to be a God-given right that no court could deny. You may wish to consult a licensed attorney in your state, who may give you additional recommendations to make the hospital admission contract more equitable. If so, please let me know about his suggestions so I can add them to my list. Thank you!
UPDATE: In a long conversation with a hospital's director of patient billing, I learned that they bill everyone the same but what they accept varies greatly, so people effectively pay different prices depending on their health insurance status. People without insurance often pay much more than folks who are covered. In my opinion, that isn't fair, so even though they bill everyone the same, they make some patients pay more. This is analogous to a grocery store setting their price for a gallon of milk at $5, but allowing Mrs. Smith to have it for $2.50 while Ms. Jones pays $5.
Most hospitals and doctors go out of their way to make price comparison so difficult that most patients don't even try. As a fan of price transparency, I encouraged the billing director to post their prices online, but she said it would be too difficult. And why would it be difficult? Precisely because what they accept from various insurers, the government, and uninsured people is so different!
I think they don't want anyone to know what others pay, because if they did, every insurer and uninsured patient would want the lowest price they accept. If Smith and Jones get the same milk, how is it fair to charge Jones twice what Smith pays? It's not. Obviously. In fact, it violates the Golden Rule ethic of reciprocity and the rule of law—the basic principles of fairness expressing something we all know intuitively: that treating everyone the same and holding them to the same standards is ethically justifiable; anything else is not; it's preferential treatment, favoritism, and—in this case—a clever but dastardly system for helping the rich stay rich and the poor stay poor.
If this discrimination against poor people were extended so they also paid more for their food, energy, housing, clothing, transportation, and education, who in their right mind would blame them if they declared war on a corrupt system engineered to keep them down? If you care about fairness for all, as I do, are you willing to look the other way just because poor people often are asked to pay more only for their healthcare? One below-the-belt punch is better than seven, but it still is not justifiable.
Hospitals know what different insurers reimburse for various billing codes. That information is already in a database, so it would be easy to put that information online. Gee whiz, I could do it, and I'm a database novice.
I understand that average hospitals may write off millions of dollars per year as debt they cannot collect, but as stated above in the section discussing fixed costs, not collecting $1 million costs them much less. Here in impoverished Michigan, some not particularly large hospitals pay their CEOs so much they make the President of the United States seem like a pauper. So are those hospitals really hurting?
The billing director initially struck me as intelligent and nice but inflexible and doing her best to bring in as much money as possible for the hospital (which is her job, after all), but when she let her humanity slip out, it was clear to me that she had a heart of gold and really cared about people. Hence, if I get rich, I plan to donate a lot—hopefully millions—to fund their program so that people in the area who are down on their luck can get the care they need without worrying about their ability to pay for it.
As a doc, I've seen people worried about the cost of care delay it so they end up much worse off or dead. I want to help prevent that. An MSU college student, Carly Glynn, died from meningococcemia after she waited too long—perhaps concerned about money. I've done the same thing, from doing my own surgery (dermabrasion, finger laceration repair without anesthesia [ouch!], and removal of gangrenous tissue) and self-treating my cardiac arrhythmia, spending Christmas Eve in an ER waiting room one year frightened out of my mind after asking the triage nurse to treat me only if I collapsed.
I also want to give a small fortune to the hospital in Tawas City, Michigan. Of all the places I worked, that was my favorite. The people there—from the nurses I harmonized with as if they were beloved sisters, to the warm and friendly CEO—were gems.
My related articles:
- “60 percent of the nearly one million personal bankruptcies filed in the United States last year resulted from medical bills.”
— Journalist Steven Brill, author of America's Bitter Pill, in I Experienced America's Broken Healthcare System While Looking Up From a Hospital Gurney
- Information Technologies Could Remove 'Shroud of Secrecy' Draped Across Private Health Care Cost
Excerpt: “"The idea that American patients should 'shop around for cost-effective health care' so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will shop smartly for the merchandise they seek," said Reinhardt, James Madison Professor of Political Economy and professor of economics and public affairs at Princeton's Woodrow Wilson School. "In practice, this idea has been as silly as it has been cruel."”
- What Hospitals Charge the Uninsured
Excerpt: “With few exceptions, private insurers tend to be relatively weak when bargaining with hospitals, so that hospitals can extract from them prices substantially in excess of the full cost of treating privately insured patients, with profit margins sometimes in excess of 20 percent. Finally, uninsured patients — also called “self-pay” patients — have effectively no market power at all vis-à-vis hospitals, especially when they are seriously ill and in acute need of care. Therefore, in principle, they can be charged the highly inflated list prices in the hospitals’ chargemasters, an industry term for the large list of all charges for services and materials. These prices tend to be more than twice as high as those paid by private insurers.”
Comment: Read the rest of that article to find one of the most brilliantly incisive questions ever asked—a question bound to give nightmares to greedy hospital big shots.
- Shocked, Shocked, Over Hospital Bills
Excerpt: “As these earlier reporters and Mr. Brill underscore, all manner of amazing behavior can hide under the pious label of 'nonprofit.'”
Comment: Nonprofit hospitals are very eager to profit from you, as I discussed in my blog, but their avarice is so strong they don't distribute profits to shareholders; instead, they pay inflated salaries and benefits to their big shots who run hospitals as money-making machines for themselves.
To justify the loot they extract, many CEOs learn to play the buy-an-award game: schemes in which hospitals buy awards from organizations who use complicated schemes to hide the money trail. I spent months investigating that scam. Some of the awards are so transparently fishy it is truly a wonder why journalists don't see obvious fraud, such as a hospital I once worked in that claimed it was one of the top heart hospitals even though we didn't have a single cardiologist working there! We didn't have a cath lab or a CCU—and we're a top heart hospital? Really!
- Surprise Medical Bills: ER Is In Network, But Doctor Isn't
Excerpt: (quoting health policy analyst Stacey Pogue) “No other consumer services are sold to us this way. It would be like going into a restaurant, and ordering a meal and then getting a bill from the waiter, and from the restaurant separately, and the cook separately and the busboy separately. And some of them will negotiate with you on the price, and some of them will accept coupons, and the others don't.”
- Time magazine: Why Medical Bills Are Killing Us
- Emergency Room Patients Ask: How Much Will I Be Charged?
Excerpt: “It's a basic, reasonable question: How much will this cost me? For patients in the emergency room, the answer all too often is a mystery.”
- Save Big: Negotiate With Your Doctor
Excerpt: “61% of people who negotiated with a doctor were successful in getting a lower fee [but] only 12% of people surveyed had ever even tried.”
- How You Can Haggle for Health Care: Web site in Washington state lets users negotiate with doctors and dentists
- Why Are Patients Racing Out of America for Healthcare?
Excerpt: “Americans are paying a stunning amount for procedures that would be considered routine — and are highly affordable — in places like Australia, Spain, France and South America. … it should not cost $2,800 for MRIs that cost $118 in Argentina.”
Comment: Agreed. The American medical system shamefully rips off patients and ignores ways to economize. Five-minute procedures often cost as much as many people make in a week (example). This is ridiculous. I agree that doctors and other healthcare providers should be well-paid to attract the best and brightest, but having a medical license should not be a license to rip people off. But doctors are not the primary problem—it's hospitals and their executives, many of whom are paid much more than the President of the United States. They run hospitals as their personal money-making fiefdoms. Guess who pays them to make up to almost 40 times as much as the President? Patients who are robbed so a few entitled fat cats can live like kings.
Patients are financially bled and sometimes bankrupted so hospital CEOs can buy fancier airplanes, bigger boats, and more vacation homes—you know, all the essentials of life. One big shot I knew was surprisingly open about how he was sleeping with a much younger and very pretty employee who seemed to be his assistant, but from what little she did, I suspected that if her job title were accurate, it would have been prostitute.
This hanky-panky is easy to camouflage, and even the participants can deceive themselves about what it boils down to. Women needn't be rocket scientists to figure out they can get a cushy, high-paying hospital job by making big shots happy. In their minds, they're not whores; they're a Director of Community Relations, or whatever.
Doctor and nurse wages are falling (adjusted for inflation and expenses) while hospital CEO pay is going through the roof. This topic rankles me because patients pay a big price for this highway robbery. Many people cannot afford healthcare so they stay at home and suffer or die. Or if they obtain care, a single hospitalization can financially ruin them.
Now for a personal revelation: One of my relatives suffered a devastating birth injury that ultimately stemmed from a very greedy hospital CEO. Had the millions (and millions and millions and millions) paid to him instead been used to improve care and increase staffing, my relative could have escaped that birth injury that will haunt her the rest of her life. An article about that SOB said he is obsessed with winning—apparently at any cost, even to patients, who must suffer so he can win.
One hospital I worked in had so many gorgeous employees I knew they must hire on the basis of beauty—but why? Were all those hot women the best applicants? That is statistically so improbable we can exclude that as a plausible explanation. Perhaps the men who did the hiring reasoned that having so many foxes around gave them more chances to sleep with them—office affairs are common, after all.
- 5 Ways to Avoid Getting Ripped Off at the Doctor's Office
- Getting Lost in the Labyrinth of Medical Bills
- Get Drug Prescriptions Filled for Free
- NC high court to hear case of $14K hospital bill
- Medical Bills: Sticker Shock and Confused Consumers based on Health Care as a "Market Good"? Appendicitis as a Case Study
Excerpt from first article: “Much of the issue stems from the complex and often arcane practice of medical billings in which patients are not necessarily billed for their actual cost of care. Insured patients "are shielded from charges, while the underinsured or uninsured see staggeringly high numbers without understanding what the charges mean, let alone if they are appropriate,'' the authors said.”
- Appendix removal: Huge sticker shock in study: Hospital bills for appendix removal may range from cost of a refrigerator to cost of house
- Snake-bite victim socked with $55K bill
- Do hospitals tell patients about charity care options? Study finds room for improvement: As Affordable Care Act requirements take full effect next year, patients with no insurance or big bills should ask about available help, team says
- U.S. Hospitals Have Little Incentive to Improve Patient Care
- Debt Collector Is Faulted for Tough Tactics in Hospitals
- Medical bills drive many U.S. women into debt, report finds
- W. Va. Woman Fights to Collect $10 Million from Debt Collectors
- When Debt Collectors Call: What You Need to Know
- Debt Re-aging Dangers: Use Caution When Contacted About Old Past-Due Bills
- What to do if a Debt Collector Calls
- What to Do When a Debt Collector Demands a Full Payment
- Debt Collector Allegedly Makes Bogus 911 Suicide Call on Elderly Oregon Woman
- Is Medical Debt Wrecking Your Life? (Help May Be Coming)
- Aetna CEO and 30-Year-Old Bond Over Staggering Cancer Bills
- Scorpion sting leaves Arizona woman with huge bill (the $83,000 bug bite)
- Man threatens to bomb Alpena hospital over billing issue
- Man billed for ambulance that arrived too late
- Maine Doctor Able to Slash Prices in Half After He Stops Accepting Insurance
- The $2.7 Trillion Medical Bill: Colonoscopies Explain Why U.S. Leads the World in Health Expenditures
Comment: More than $3,500 for a colonoscopy? Nuts!
- Pay for Nonprofit Hospital CEOs Varies; Average More Than $500k
- Simple tasks help protect your credit