Managing Health Insurance Costs

Twyla and Robert House have excellent health-insurance coverage. But after Robert was hospitalized twice within eight months, they ended up owing more than $6,500 in out-of-pocket medical expenses. The Little River, S.C., couple dutifully paid a portion of the balance each month until they whittled it to about $2,000. At that point, Robert offered to pay off his bill in a lump sum if the hospitals would give him a discount.

"We had an extra $1,300 in savings," says Twyla. "Robert told them, 'This is how much I have, and if you want your money, or at least a big chunk of it, you’ll cut me a deal."’ The gambit worked. The hospitals agreed to deduct more than $650.

Your out-of-pocket share of a hospital bill can be a budget buster, and now health insurers are passing along more of the costs. For example, many are raising deductibles, and some are switching from co-payments (such as $20 per doctor’s visit or per prescription) to a co-insurance system that makes policyholders liable for a percentage of the total bill. Over the past five years, 70 percent of Cigna insurance policies have shifted from co-payments to co-insurance.

By comparison-shopping and negotiating the best price — the same tactics you would use for any other major purchase — you can trim your bills. "You have to wonder why some people don’t give the same time, effort and attention to their health-care costs as they do to other major financial decisions," says Tom Bridenstine, the managed-care ombudsman with the Virginia Bureau of Insurance, who helps consumers with health-insurance issues.

Evaluating healthcare services based on price doesn’t mean you’ll sacrifice quality. And you’ll find plenty of help from employers and insurers, who also benefit from lower costs. The following tactics will help you save hundreds, if not thousands, of dollars on your medical expenses.

Ways to save

1. Ask for a price break. Each hospital has its own rules about negotiating bills, but it doesn’t hurt to ask. The same goes for doctors and other health providers.

2. Pick the appropriate facility. Where you go to receive care can make a huge difference in your costs. Emergency-room visits tend to cost $300 to $1,000, compared with $150 at an urgent-care center, $65 to $75 at a doctor’s office, and $35 to $45 at a convenience-care clinic. With a 20 percent co-insurance charge, that trip to the emergency room could cost you $200 vs. just $7 for a visit to a convenience-care clinic. For nonemergencies, it pays to call your insurer’s 24-hour advice hotline for guidance on where to go for care. Make sure the facility and provider are in your health plan’s network.

3. Use online tools to compare costs. Insurers are making it easier to compare hospitals and providers based on quality and cost. And pricier doesn’t always mean better.

"Hospitals with low complication rates and high survival rates tend to have lower costs," says Jeffrey Kang, Cigna’s chief medical officer. Companies such as Cigna and Aetna have integrated Web tools that let customers search by ailment (such as diabetes or wrist pain), then find appropriate local doctors, including an assessment of their fees and quality of service.

4. Compare prices for tests at hospitals as well as free-standing imaging centers, which tend to charge a lot less.

"One MRI facility may charge $500 for a scan, and a block away, another charges $1,500 for the same service," says Kang. "But the quality of care is pretty much the same." And it’s easy to calculate the cost of routine care. For example, MinuteClinic, located in CVS Pharmacy stores, charges $69 for treating strep throat and $59 for a child’s summer-camp physical (see the rate list for common treatments at www.minuteclinic.com).

5. Save on prescription drugs. You can save big money by switching to generic drugs, which tend to cost 30 percent to 60 percent less than brand-name equivalents, according to UnitedHealthcare. Or you may be able to switch to a "therapeutic alternative," a similar drug that costs less.

Most insurers now have Web tools showing the cost of all drugs — brand names and generics — that provide similar results, including the total price, as well as the amount you’ll pay under your health plan.

If your insurer’s site doesn’t have those tools, visit DestinationRx’s Web site ( www.drx.com) and use the Medicine Cabinet feature to compare prices for similar drugs and specific pharmacies in your area, as well as online and mail-order pharmacies that tend to be cheaper.

6. Take advantage of free services. Insurers save money when you stay healthy, and many provide free preventive care, such as annual mammograms and Pap tests for women in certain age groups, plus screenings for colorectal and prostate cancer.

7. Make the most of discounts. Many insurers offer discounts on services to promote healthy lifestyles, such as gym memberships, smoking-cessation and weight-loss programs, chiropractic service and acupuncture.

8. Sign up for employer incentives. To save money on medical costs, employers may offer premium discounts, contributions to health savings accounts and cash incentives to employees who sign up for a wellness program or health assessment. Some also offer perks to people with, say, asthma, lower-back pain or diabetes for enrolling in a disease-management program, says Steve Kaczmarek, an actuary with Milliman, a consulting firm in healthcare and employee benefits.

9. Review your bill. Bridenstine says people with high-deductible policies who pay the full amount for many healthcare services out-of-pocket (until they satisfy their deductible) are often charged the more-expensive, uninsured rate rather than the rate that the insurer negotiates with providers. Then, verify that all of your eligible out-of-pocket payments are credited to your deductible. Finally, check whether you must meet separate deductibles for in-network and out-of-network services.