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

Comments 12 Comments

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.) »

Image: yosoyjulito, via Flickr

Pages: 1 2

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • 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.

  • 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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • 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

  • 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.

  • Pingback: Medical bills hurting credit? | Corningglassfest.com()

  • 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?

  • 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.

  • Pingback: Four Medical Bill Myths That Can Cost You Dearly | Credit.com News + Advice()

  • 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

  • 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?

  • 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.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team