A survey of 20 million Credit Karma members conducted in summer 2020 found over $45 billion of medical debt in collections. Previous studies on medical debt have found that hospital bills are typically the #1 cause of personal bankruptcy in the U.S. In the wake of a global pandemic that hit Americans particularly hard – in terms of job losses and skyrocketing hospital bills – the issue of medical debts will likely become more prominent in public conversations in the years to come.
How to Better Manage Your Medical Debts
If you’ve received an astonishingly expensive medical bill before or you’re currently agonizing over how to repay outstanding medical debts, there are some strategies you can try without having to consult a lawyer to negotiate the debts for you.
Avoid the ‘Chargemaster’ Rate
The highest prices you see for medical services and health products billed by a hospital are typically established by the Charge Description Master (CDM) or ‘chargemaster,’ which is “a hospital-specific compendium of all the items that a hospital can bill to a payer, patient or facility, including insurance companies.” The chargemaster rate is similar to the MSRP for an automobile: it varies widely depending on the ‘dealer’ (hospital), and you can negotiate the price down with the help of research, time, and patience.
To avoid paying the sticker price for a medical procedure, you should start by asking the doctor or hospital for an itemized version of your bill, which will allow you to review each cost to determine the accuracy of your billing (don’t assume the hospital is always right; medical billing errors are more common than you might think).
Your next step after reviewing your bill should be to contact your hospital’s billing department to explain your financial constraints and request a lower bill or more affordable billing rate, such as the Medicare rate. You may have to speak with several billing representatives to get traction when it comes to negotiating your medical bills, but don’t give up until you’ve exhausted your available options because persistence could end up saving you thousands of dollars in the end.
Get Help From a Medical Bill Advocate
Medical billing is an enormously complex process with many technical terminologies, medical codes that are incomprehensible to the average person, and a maze of staff and departments to contact to reduce your medical debt. If you’re trying your best and still aren’t making much progress, requesting help from a medical bill advocate may be your best bet.
These professionals specialize in deciphering complicated medical billing information and acting as a liaison between you and the hospital’s billing department. However, it’s worth noting that medical bill advocates may charge anywhere from $75-250/hour for their services (or a percentage of the amount they ultimately help you save on medical bills).
Inquire About Financial Assistance Policies
Your hospital may have financial assistance available for qualifying individuals and families, which is generally dependent on your income and other basic financial information. Each hospital varies widely in what type and how much financial assistance they can offer lower-income patients, but don’t assume you’ll be ineligible without first inquiring to see what options exist for your situation.
Some hospitals may not reduce your bill by much, but they could offer generous repayment terms, including extended payoff terms or interest-free payment plans. When deciding how much you can afford to repay each month, be sure to underestimate the availability of your discretionary funds to ensure you maintain some breathing room in your budget in case of other financial emergencies arising during your repayment period.
Medical Credit Cards
There are multiple credit cards out there that exist for the exclusive purpose of helping you minimize the financial burden of repaying medical debts. For instance, CareCredit is a healthcare financing product that offers 0% interest on short-term financing options (6-24 months) for medical debts of $200 or more and larger medical debt repayment plans with APRs ranging from 14.90% to 17.90%.
It’s not ideal for putting medical bills on credit cards because it’s considered less of a priority by credit scoring bureaus (many of them have removed medical debt from their credit score calculation models, so paying for medical bills with a credit card is more likely to hurt your credit score than if you secure a payment plan directly with the hospital instead).
Millions of Americans – insured and uninsured alike – are currently struggling to repay their medical bills. Still, unlike most forms of consumer debts, you’re not out of luck when it comes to negotiating your hospital bills. By doing due diligence, reviewing your itemized medical bill, speaking with your hospital’s billing department (multiple times, if need be), and thoroughly scoping out all of your repayment options, you may be able to reduce the amount owed by several thousands of dollars.