Special Report: Why a Hospital Bill Costs What It Costs

Reader’s Digest investigates the shocking ways we overpay up to thousands of dollars on medical expenses, and how you can understand where your money is going.

By Kimberly Hiss from Reader's Digest Magazine | September 2012
Special Report: Why a Hospital Bill Costs What It Costs© Wavebreak Media/Thinkstock

4. Not every doctor is in your network.

Many doctors bill patients independently from the hospital they work in—and they’re not necessarily in your insurance network just because the facility is. Recently, a New York patient whose finger had been severed by a table saw went to an in-network emergency room but got stuck with an $83,000 bill from the out-of-network plastic surgeon who reattached the finger. Another New York patient scheduling heart surgery confirmed that both the hospital and the surgeon would be in-network, which should have left only a co-pay. But a nonparticipating surgeon assisted, resulting in a surprise $7,516 bill from just that physician.

Providers may not know (and are not required to inform patients beforehand) whether they are in-network. “We use the term RAPE,” says Cindy Holtzman of the Georgia-based Medical Refund Service. “It stands for Radiologist, Anesthesiologist, Pathologist, and ER doctor; that’s how we were taught in billing advocacy workshops to remember which specialties are most likely to be phantom billers that could be out-of-network.”

To save money: Ask who’s in. For a scheduled procedure, ask in advance whether any specialists you’ll need, such as the anesthesiologist, are in-network (and request only those who are). “You can’t always arrange it ahead of time, but if possible, do it,” says Metcalf. “It’s too late when you’re lying on the gurney.”

Add admission-form language. At the hospital, attach a statement to your admission paperwork that says you’ll pay for nonparticipating providers only if you’re notified in advance. Best-case scenario, your hospital will honor it outright. If not, you’ll be in a stronger position to dispute potential charges down the road.

Contest the charge. If you get an outrageous out-of-network bill, use out-of-network reimbursement data from sources like FAIR Health to negotiate with your insurance company for better coverage, says Jennifer Jaff, executive director of Advocacy for Patients with Chronic Illness (who herself saved $1,100 on a colonoscopy and endoscopy this way). You can also ask your insurance company to cover an out-of-network physician at your in-network rate, a strategy that Palmer has used successfully.

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  • Your Comments

    • Steve

      Its so expensive here. I had my heart surgery done in one of the finest hospitals in india for just under $10, 000 . Thats including my travel , stay, hospital fees and a vacation:)

      • wordwar

        Try buying a prescription drug made by the top global companies like Merc and Bayer on the global free market – you will be branded a criminal. You have to buy at the inflated USA prices, and if you ask for these policies to be changed, you are branded an anti-American, anti-free-market Communist. What total BS!

    • Anonymous

      It’s cute how the australian thinks he paid nothing for his medical care. Everything is magically FREE! NO ONE pays ANYTHING. Cute. 

      • wordwar

        So, his taxes are slightly higher, but he lives in a country with a fibrant economy, and he never has to worry that he will lose his life savings just because a doctor requires him to sign an industry-wide boiler-plate contract, lies about being in-network, tags out with an out-of-network buddy of his mid-surgery, or doesn’t tell the patient that he considers his office an out-of-network facility that can balance bill $1 million just because he feels his services are worth it.
        At the Australian tax rate most middle class Americans would pay less in total than what they have to pay here in premiums. If the insurance-medical complex in the USA would actually guarantee that I only had to pay premiums to access all the healthcare my family requires (and state laws mandates that I MUST provide such medical care to them), with nothing more to pay out of pocket, then I might consider our system somewhat acceptable. Of course, at the current rate of healthcare and insurance inflation, those premiums could become inaccessible without the Obamacare subsidy.

    • Ozwarp

      Isn’t it about time you people had universal health care? Just looking at some of those figures quoted in your article makes me feel sick. My last four operations I paid the grand sum of zilch, and the very last operation I was in hospital for four days. Where do I live ? Australia

    • Kathyhicks4

      Very helpful, informative and Thank you!

    • Kip

      Kimberly Hiss should get some kind of statue erected in her honor in the Hospital Consumers Hall of Fame.  (If there isn’t such a place, there should be).
      Her article was extremely well researched and, frankly, hair-raising.
      Great investigative reporting.

    • Casey

      This sounds all well and good and there is some good advice, BUT I have tried multiple times to get price quotes without success. When I called the hospital where I was to have surgery to ask about the room rate I was told, ‘It depends on so many factors’;  I argued with, ‘There must be a baseline you work from’  and without exception  was told that it ‘just depends’.  So I had no way of knowing if it was $500/day or $5,000/day. 
      I know there are variables, but surely there must be a baseline to work from. When I did get a price quote on my actual surgery it was a whopping $55,000 short of what I was billed!!!  And what the hospital accepted as payment in full from insurance was about 20% of what was billed.

      I am one of those rare patients who  asked for (and received)  an itemized bill as well as a complete copy of my chart. I scrutinized the bill and compared it with my chart finding thousands of dollars in error. And those are just the ones I found!  It has been nearly a year of phone calls and certified letters (to make sure they couldn’t say they never got them) and not only have they not corrected the bill, but in a few instances, made it even worse. Plus they have yet to answer my questions about  what  particular items are.
      I have learned you must be vigilant with ALL medical bills, not just those from the hospital. I refused a particular lab test at the clinic and told the staff I would not pay if they chose to do it. They ignored me, did the test and billed my insurance. I called my insurance company  and was told that if a bill comes in, they pay. Period.  It mattered not to them that I refused and that it should not have been done in the first place. It took months of phone calls both to the clinic and insurance to get the charges reversed and the insurance reimbursed.

      Use out patient stand-alone surgery centers Ms. Hiss advises. Again, sounds good, but you have to ask very specific questions with very specific parameters with very specific details and make sure you and the billing office are talking apples and apples rather than apples and oranges. Case in point: my husband broke 3 toes on one foot. Goes to the hospital to have pins placed. They charged by the minute for the operating room and recovery as expected. For the removal, the doctor suggests his clinic’s stand-alone surgery center. They say, “Not a problem, we charge a flat fee.”  Great. NOT! They charged for 3 separate visits to the operating room!!! Their rational? It was 3 separate procedures because it involved 3 toes!  He was in the operating room from start to finish a total of 10 minutes and was charged over $5,000! In a cost per minute comparison, the stand-alone was nearly twice  as expensive as the hospital.

      Out patient surgery: ask to leave ASAP. My husband was not monitored in any way, was not checked on once, we were not told it was okay to leave – charged nearly $1000 to lay on their uncomfortable gurney.You are charged by the minute to lay on their gurney when you could just as easily be sleeping in your own bed at home at no cost.Shopping around sounds good, but even if you are lucky enough to get price quotes, it may do you no good as your physician most likely does not have privileges at multiple facilities or if so, not at the one of your choosing. 

      • http://www.worldclasslasik.com/cataracts/cataract-surgery-cost Cataract Surgery

        That sounds awful Casey :(

      • http://www.worldclasslasik.com/cataracts/cataract-surgery-cost Cataract Surgery

        That sounds awful Casey :(

      • http://www.worldclasslasik.com/cataracts/cataract-surgery-cost Cataract Surgery

        That sounds awful Casey :(

    • Anonymous

      What I don’t understand is when I didn’t have insurance, I was charged the full amount minus 10%.  That amount was far more than my insurance company pays them now.  If my bill was $7000.00 and insurance can pay $500.00 why did I have to pay $6300.00?  Why not just charge me the same amount they get from the insurance company and I wouldn’t have to take years to pay it off. 

      • Kay Grace

        I’ve been saying this for years.  Why is it the un-insured have to pay more than is accepted from insurance for the same thing?! It makes no sense.

      • Henniek64

        There is a  ridiculous law that insists that private paying patients (usually low income) have to pay the full rate book price because otherwise the billing is considered fraud. In the meantime insurance companies can negotiate prices at approximate 30% the ratebook prices which much better reflect the actual hospital costs. When Bill Gates goes to the supermarket or the little lady down the corner living on Social Security, they both pay the same price for a loaf of bread and a pound of beef.  Healthcare reform will never be fair untill everyone (Medicare, private insurance and private payers) pays the same amount for the same procedure. What we need is a class action suit on behalf of private payers. Any  bigtime lawyers listening here?