Under the Knife: Cutting Medical Bills

The 30-year-old shopping blogger from Atlanta was looking at paying almost $8,800 out of pocket because her health insurance didn't cover maternity costs. Daunted by hospital fees, she called around and discovered that the facility where she delivered her first child charged roughly twice as much as a recently built Emory University hospital across town. After finding a new gynecologist, who charged $3,200 for all the prenatal visits and delivery, Mehdikarimi persuaded the doctor's finance manager to give her 25% off by arguing she'd be a "low-maintenance second-timer" willing to pay the entire tab months before the birth. Her final step: contacting LabCorp, the giant diagnostic laboratory company, where she finagled a 20% discount on all lab work.

Welcome to the brave new world of health care haggling, where patients have become bolder about their medical bills, and doctors more open to negotiation. And with most large hospitals accepting multiple reimbursement rates for procedures (up to 150 alone for common ones like bypass surgery), there's clearly room to dicker. Experts say that haggling, though not yet routine, is on the rise, and consumers may soon find their doctors following the pricing path of hotels and airlines, with some patients paying "rack" rates while the well insured — and informed bargainers — pay less. Among the many "dirty little secrets" in our health care system, says Mark Rukavina, director of The Access Project, a Boston-based health care nonprofit, is the fact that providers' fees are "absolutely negotiable."

What's driving all this, of course, is both the sharp increase in medical fees and the dramatic pullback American employers have made in covering those costs. Health care spending in the United States now averages $7,000 per person annually, nearly double what it was a decade ago — with a growing percentage being dumped in consumers' laps. Annual premiums for family coverage spiked 78% between 2001 and 2007, and according to a recent study by Mercer, workers at larger companies saw their deductibles — out-of-pocket expense before coverage kicks in — rise 11% in 2007. At John Deere, for example, family deductibles can run as high as $4,300 a year, while they're almost $8,000 for some employees at Owens-Corning. But such cash outlays often represent just the tip of the iceberg. Who hasn't been hit with rising copayments or reimbursement caps on out-of-network services that seem to have been set during the Eisenhower era?

No wonder patients want to haggle. Remarkably, so do their physicians. According to a 2005 HarrisInteractive poll, two-thirds of patients who negotiated with their doctors reported successfully lowering their bill. Those who bargained with a hospital did even better, cutting costs 70% of the time, up from 45% three years earlier. While no one can say for sure how often such back-and-forths are playing out in billing offices around the country, it's clear that health care providers are more open than ever to giving patients a break. For some it's a natural outgrowth of doctors' desire to help people; for others it's a business-retention strategy. And at times it's simply a matter of cutting their losses: According to Lehman Brothers, seven major U.S. hospital chains will swallow a total of $14.6 billion in bad debt this year, up from $12.4 billion in 2007.

But don't expect bargaining to be a breeze. For one thing, doctors don't always have a lot of wiggle room. In some states they can run afoul of the law by charging less than what they've negotiated with the insurer — or simply by trying to waive a patient's copay. You may find them more responsive by, say, offering to pay in cash up front or seeking treatment during off-peak times. We tried those strategies and others as we visited or called more than 20 doctors, asking for help on our bills. We used techniques suggested by experts and spoke to patients who bargained with success. And we discovered that often, all we had to do was ask.

Ask for It Early

We were surprised by how willing offices were to quietly offer discounts, almost immediately after we raised price concerns. Gregg Rock, a Manhattan podiatric surgeon, explained his willingness to hammer out a deal for a surgical removal of a bunion this way: "I'd rather my patients save their money for cabs instead of trekking up and down the stairs of the subway when they're not fully healed." As we were preparing to get a second opinion with orthopedic surgeon David Levine, one of his business staffers held firm on the $350 initial consult fee but said they do sometimes knock a thousand dollars off the surgery, explaining that the doctor wouldn't bill for every code associated with a procedure. When contacted, a spokesperson for Dr. Levine informed us that "proper protocol" wasn't followed when we discussed the discount. She later said that no one in the office remembered offering it.

Discounts are more common in medical specialties that are poorly covered by insurance. In plastic-surgery meccas like Los Angeles, the nip-and-tuck brigade sometimes match each other's quotes or offer consumers "two-fer" deals on multiple procedures. Therapists, too, frequently use a sliding scale. When we approached 10 mental-health professionals, seeking weekly therapy or an initial psychiatric evaluation, all but two said they'd give us a break. Typical was Ethell Geller, a New York therapist, who pared $25 off her $275 weekly fee.