45 Key Takeaways from “Never Pay the First Bill and Other Ways to Fight the Health Care System and Win” by Marshall Allen


45 Key Takeaways from “Never Pay the First Bill and Other Ways to Fight the Health Care System and Win” by Marshall Allen

45 Key Takeaways:

Never Pay the First Bill and Other Ways to Fight the Health Care System and Win 

by Marshall Allen

(2021 Portfolio / Penguin)

  1. We pay for our health care.  Employers?   Rises in insurance plan costs prevent them from paying you more.  Health insurers?  They are middlemen who earn a percentage of what you pay, so their incentive is to have you pay more.  Government?   Medicare is funded from your paycheck and Medicaid is funded by your taxes.  You pay for your own health care—and the medical expenses of others.
  2. Medicine and medical procedures cost far less in other countries because the healthcare industry in the United States is filled with incentives for the players to charge higher prices.  
  3. The health care industry wasted over $765 billion in 2012, according to the National Academy of Medicine.  That’s more than the U.S. Defense Department’s budget.
  4. Obtain an itemized bill for your medical procedure.  Look up the bill’s codes online to verify that’s what really happened (Google current procedural terminology or CPT 5-digit codes, sometimes followed by a hyphen and additional digits; international classification of diseases or ICD-to-PCS codes for procedures).
  5. Beware of “upcoding.”  “Upcoding” is being billed for a higher level of service than you actually received.   When you research the CPT codes on your bill, compare them to what medical services took place.  For example, there are several types of examinations—a 3-minute exam is not the same as a 45-minute exam, and the 45-minute is more expensive—so make certain your CPT code is for the examination you received.  
  6. Ask for your medical records.  If a test or procedure is mentioned in the medical records, you should be charged for it; similarly, if it is NOT mentioned in your medical records, you should NOT be charged for it.  This is especially helpful if your bill includes a code that does not match a treatment you remember.  
  7. On your bill or insurance provider’s explanation of benefits (EOB), treat each code’s “provider billed price” as a suggest price that almost nobody really pays.  If it helps, think of it as a car dealer’s MSRP (manufacturer’s suggested retail price) before offering discounts, deals, and negotiations.  Insurance companies are supposed to negotiate a discount from the provider billed price for their clients; uninsured patients can also negotiate better prices than this “MSRP” price.
  8. Learn to read your insurance company’s EOB from left to right: Provider Billed Price (a big number extra-inflated because they know everyone expects discounts from it); Total Cost  or “Allowed Amount” (the rate negotiated by the insurance provider); Plan Paid (the insurance plan pays this amount to the medical center or doctor); Co-pay or Coinsurance (the amount the insurance company expects you to pay each time you visit this doctor or location, sometimes paid during your office visit); Deductible (the amount of the insurance plan’s total deductible minus what the patient has already paid this fiscal year into the deductible; some plans have $0 deductible, but a $0 can also mean the patient has already paid out the full amount of the deductible for this fiscal year; Your Share (the amount the patient is expected to pay).  It’s tempting to jump to the last column and only look at what the customer has to pay—but if you find errors in the earlier columns, you can reduce the payment, so learn to read the EOB from left to right.
  9. Insurance companies automatically pay many bills.  
    1. If a medical bill says the insurance didn’t pay—it’s possible it was not properly given to the insurance company.  Check with the insurance company.  If they never received it, have the provider submit it “again,” and make sure your insurance processes everything before you pay anything.
    2. Automatic payment means a human doesn’t check details.   Don’t expect your bill or EOB to be accurate.
    3. Fraudsters know insurance companies auto-pay for certain amounts.  Even non-doctors can easily make claims on your insurance plan once they have your insurance information.  Check your bills and EOBs to make certain your plan is not billed for procedures that did not take place—and if a provider seems especially eager to land you as a client, double-check the provider’s qualifications and the accuracy of the codes they use when billing your insurance.
  10. “UCR” stands for “usual, customary, and reasonable price.”  The UCR is the amount someone should reasonably expect to pay in your area for a specific procedure, and, yes, it varies by location.  The UCR is “usual” and that does not mean it’s fair.   Knowing the UCR is helpful because if your billed prices are higher than the UCR, at the very least you can start by asking that the prices be adjusted down to the UCR.  (But do all of your research before asking—you might have a case for a much larger reduction.)
  11. To determine whether the price you were charged is “fair” (if you define “fair” as comparable to what others pay for the same item) look up the code’s expected rate:
    1. On FairHealthConsumer.org
    2. On HealthcareBluebook.com
    3. On the hospital’s Web site (The U.S. government mandated this as of 2021.)
    4. On other local hospitals’ Web sites
    5. On other local medical centers’ Web sites (non-hospitals tend to be less expensive than hospitals)
    6. Your state’s Medicare and Medicaid sites
    7. By calling the hospital and asking for the “cash rate” for people paying without insurance and then asking about the price with certain insurance plans.  Calls to the practitioner, billing department, and other people may yield different answers.
  12. Ask if there is a prompt payment discount for paying in full today or within a certain period of time.  Ask if there is a cash payment discount—and an ATM nearby.  Even doctors’ offices don’t want to pay credit card processing fees.   If the person you ask seems uncertain, ask for someone in billing to discuss “payment plans” and you should reach someone with that decision power.
  13. Know whether you are in a self-funded or fully-funded plan.  Self-funded employers typically hire a third-party insurance company to administer the plan.  It’s important to know who sets the policies—and in a self-funded plan, that’s your employer’s benefits department, not the insurance company.  If you buy insurance without going through your employer, it’s an independent plan.  The federal Department of Labor oversees self-funded plans; state regulators, such as insurance commissioners and departments, oversee fully-insured plans.   
  14. When protesting a bill, do it in writing, and focus on:
    1. Evidence, not emotion
    2. Explain exactly why the bill is incorrect and what you believe the corrected bill should state
    3. Accessing the deciders (or people “above” the deciders) because the call center is scripted to not change policies, and neither are the call center supervisors—you must send written (mailed with deliver confirmation for evidence it was delivered) copies of your protest to the appropriate people in your insurance program and even possibly to the people regulating that program—making sure to list all the recipients on the letter so everyone knows you have contacted all of these and made them aware of the situation.  There’s additional pressure when someone knows their boss or regulators are watching their next moves.
    4. Following up (via phone) and connecting with each possible decision maker.  Make sure they have read your appeal, and calmly restate the evidence so they see why they should honor your request.  
  15. In 2019, about 1 in 6 Americans had medical debt in collections, according to the Urban Institute.  Physicians and medical facilities attempt to collect money due, some for about 90 days, some longer, then they sell your debt to debt collectors.  The debt collectors only pay pennies on the dollar.   So—knowing that the medical practice was willing to sell your debt for “pennies on the dollar,” you can:
  16. Attempt to negotiate a payment to the medical practice (before it is sold to a debt collector) for something less than the original amount but higher than the “pennies on the dollar.”  
  17. When a debt collector contacts you, listen, take notes, and ask for everything in writing so you can confirm the details and discuss your payment properly.  Remember:
    1. Make certain to whom you now owe the debt (the debt collector or the medical practice).   In writing, ask for written verification showing trail of ownership.  If your debt is owned by a debt collector, there’s no reason to protest to the medical facility—aim your negotiations at the debt collector.
    2. Dispute the debt claim within 30 days in writing, and have evidence (delivery confirmation, etc.) of this.  This helps your case be governed by the Fair Debt Collection Practices Act.  If you don’t dispute within 30 days, there’s an assumption of your agreement to the charges.
    3. Make certain the charges only list procedures that actually took place.
    4. Make certain the charges were fair—compare against the UCR, HealthcareBluebook.com or FairHealthconsumer.org, prices at nearby hospitals and medical centers, and the Medicaid/ Medicare rates for your state.  
    5. Understand the debt collector will ask for 100% of what you owed the medical facility, but you can likely negotiate a much lower payment, possibly as low as 15% if you provide a good case.  
    6. Don’t be emotion-led, and don’t let the debt collector play on your emotions.  You didn’t buy an expensive jet airplane you can’t afford; you had a medical emergency, agreed to payments under duress, without the ability to compare fair costs before agreement, and you had an expectation that the charges would be “fair.”  
  18. If you cannot pay your medical debt, consider personal bankruptcy.  This can be expensive, and the book suggests Upsolve can help.  Upsolve’s founder says, “The cruel irony of bankruptcy is that it costs $1,500 in order to tell the court that you have no money.”  Corporations declare bankruptcy; people can, too.  Most personal bankruptcies relate to job loss, divorce, or medical debt.  It will appear on your credit report; however it also clears the debt and gives you a fresh start which can improve your credit rating.
  19. If you feel forced to pay (and can afford it), do so in protest—protest on the payment and in writing as you deliver the payment—and sue for the money back.
    1. Document your protest (payment without protest can imply consent).
    2. Only sue for your money back and court costs, keeping the court’s limits in mind.
    3. Sometimes the threat of a suit will bring the medical professional to the negotiating table.  If not, sue.  Use the evidence you have already collected and show you already presented it to the provider and decision makers.  Keep your case simple to understand, and show you are only asking for what is fair and that you have documented your appeal throughout.
    4. Make certain your entire case is in writing you have submitted.  The judge might not ask you to speak, especially if your writing has explained everything.
  20. If you are asked to rent a machine you might need for long-term care, ask for a price for purchasing it, so you can compare them.  If the insurance company does not allow you to buy it, ask elsewhere.  You can even contact the manufacturer.   Before deciding, compare what the monthly billing will be handled by your insurance versus a one-time purchase without insurance.  Each case is different.  If you aren’t close to meeting your deductible, or renting for a year isn’t going to get you to meet your deductible, you might be better off simply paying for the item, especially if you find it for a lower price than renting for several months.   Check with your CPA to see if it qualifies for an itemized medical deduction, too.
  21. When you sign a consent form for medical treatment, it almost never includes a price.   This makes it an “open price” contract and the price is expected to be “reasonable.”  If you don’t know the prices for a treatment up-front, before signing the consent form, add this phrase, “I consent to appropriate treatment and (including applicable insurance payments) to be responsible for reasonable charges up to two times the Medicare rate.”  If the hospital pushes back, remind them U.S. law requires hospitals to provide emergency treatment to patients who need it, whether or not they sign a financial consent form.  Adding this sentence to your medical forms is not a guarantee that your prices will be lowered—but it’s a point you can make later if you need to contest an over-the-top bill.
  22. Higher prices do not necessarily correlate with better quality medical care.  Two patients in the same room, with the same doctor and the same exact procedure, could face entirely different bills, especially if one is on the government’s Medicare plan, which almost always has the lowest prices, and the other patient is out-of-network or has terribly “negotiated” insurance rates.    
  23. Like most people, doctors routinely act according to their financial best interests.   Studies have shown:
    1. Doctors who have MRI machines order more MRIs for their patients than doctors without MRI machines.  
    2. Some doctors schedule cesarean sections for their own convenience, not for the baby and mother’s health.  
    3. Doctors who take payments from pharmaceutical companies are more likely to prescribe those companies’ drugs.  
  24. The Washington Health Alliance determined more than 600,000 patients underwent a treatment they didn’t need, costing $282 million, in one year; more than one-third of healthcare money goes to unnecessary care.  (“Unnecessary” is not defined.)
  25. Many medical tests, procedures, and medicines are over prescribed.  Why?
    1. Sick or hurt patients are frustrated when someone tells them they are “normal” or to “wait and see.”  Patients want action—even if the test/ procedure/ medicine does not directly help, they feel the doctor is “doing” something.
    2. Doctors sometimes order tests out of fear of missing a problem.  Many tests are ordered to rule out issues.  
  26. Questions to ask before a test, procedure or medicine is accepted:
    1. What will this test/ procedure/ medicine do?
    2. What possible outcomes will there be?
    3. Once we know the outcome, where does that lead us?  What are the next steps?  
    4. How will we know this test/ procedure/ medicine was helpful?  What result do we expect?
    5. Draw a diagram of the path of tests/ procedures/ medicines.  Make certain you understand which test outcomes lead to which additional tests, procedures, and medicines.  If a test doesn’t help narrow and focus the path, ask how having it will help the doctor.
    6. If you have a history with this part of your body, bring your previous records with you to preempt duplicate tests.  If a doctor insists a new test must be taken, understand why.  It helps to be familiar with the test’s range of validity; look this up online ahead of the consultation.  
    7. What happens if I don’t do this test/ procedure/ medicine?  What are the likely outcomes if we “wait and see”?  At what point should I absolutely undergo this test/ procedure/ medicine?
    8. What are the chances this treatment will work?   And what are the downsides and risks?
    9. What will the cost be of that test/ procedure/ medicine?
    10. What is the breakdown, by code, to fully explain all costs involved?
    11. Can I get the test/ procedure/ medicine somewhere else, within a reasonable time period, at a much lower price?  (For examples, the hospital might charge $5 for a 50-mg antihistamine, while you happen to have some in your purse; or the hospital might offer to add “piercing ears” while a baby’s already in surgery—this can be done for free at some mall earring shops and the surgeon might bill thousands of dollars.)
    12. Is there a simpler or less expensive option available?
    13. Look up your medical condition on the United States Preventative Services Task Force site.  What do the volunteer experts recommend as your treatment path?  Is it similar to what your doctor suggested, and, if not, why not?
    14. It also helps to have a friend or family member present who can write down the questions and answers, as patients have enough to worry about and are less likely to challenge their medical providers, especially when feeling vulnerable or given bad news.  
    15. If you feel you are being pressured or coerced into a test/ procedure/ medicine, you can refuse it.  You can leave. You can get a second opinion.  Your medical well-being and peace of mind is more important than worrying you might offend the doctor.  If uncomfortable, simply say, “This news has come as such a shock to me.   I need time to digest it before I am comfortable moving forward.  I will contact you a week from today [or pick a different date if you will need more time].”   
    16. If the second (and third opinion, etc.) agree with the first doctor, you will feel more confident about going down that path.
    17. If the second (or third opinion, etc.) disagrees with the first doctor, explore other options until you are comfortable with your decision.
    18. In any case, you will have met and compared medical professionals and can decide which you feel more comfortable administering the test/ procedure/ medicine or leading you in a different direction.
  27. If you have insurance, try to stay in-plan.  If you go to an in-network hospital with the expectation of being treated by an in-network doctor but for some surprise reason are actually treated by an out-of-network doctor, you might receive a “balance” or “surprise” bill to cover the difference—contest it and, if needed, request mediation.  
  28. If you know you are out-of-network, ask for the cash price, because it might be better than the out-of-network price—in some cases, it’s better than the in-network price, too.
  29. Compare prices at several pharmacies for your most common prescriptions.  Costco did well in comparisons; GoodRX provides coupons for low prices.  If you don’t mind going to different pharmacies for different prescriptions (cherry picking the best drug prices), GoodRX is good for you.  GoodRX does not go through your insurance plan, so you won’t be contributing to your annual deductible.  Good Shepherd is a membership plan; members pay $5 per month for a 90-day supply of about 350 generic pharmaceuticals, and other deals are available.
  30. In some cases, the patient’s co-pay for a prescription is higher than the medicine’s actual price.  A patient might be contracted to pay $10 co-pay per prescription, even if the medicine costs $3.  Consider Walmart and Costco’s prices without insurance and GoodRX coupons, too.
  31. Insurance companies are not as interested in stopping medical insurance fraud as the patient is.  They treat medical facilities and physicians as their clients—and they do not want to disrupt the relationship.  In some cases, even as they accuse a non-licensed person of fraudulent billing as a pretend doctor, they invite the criminal to pay off the fine through future billings—meaning, they encourage the fraud to continue.
  32. Insurance brokers are paid by the insurance companies.  That’s a conflict of interest.  And you lose.  They get a commission on referring you or your company to an insurance company; the more you pay, the higher the commission goes, so there’s incentive for the broker to push you toward a more expensive insurance plan.  They can be paid money or given “bonuses” or “thank-you gifts.”  Ask your insurance brokers how they make their money, so you know who pays them and better understand why the broker might steer you toward a particular plan.   If a broker suggests different plans different years, it’s because the insurance companies incentivize collection of “new” clients.  Insurance brokers earn more by having you change insurance plans.  To avoid being steered by an insurance broker who really works for the insurance companies, ask for a flat-fee broker, one you pay.  
  33. Even if you go to the same doctor for the exact same procedure every year, your price could change.
    1. Your insurance plan may have changed by lowering/raising the deductible, co-pay, and premiums.
    2. Your insurance’s negotiated rate with that doctor for that procedure may have changed.
    3. This doctor may no longer be “in-network” if the doctor or facility did not agree to terms or have had a disagreement.
    4. Your doctor’s office may have raised the provider billed price (MSRP) for the procedure due to inflation, new equipment purchases, or other reasons.
    5. So, check the prices before you make the appointment.
  34. Insurance companies sometimes have hidden deals with medical facilities so that they pay more than the listed price.  In confirmation of this, the BlueCross COO commented that BlueCross saves money for the plan by paying certain providers a contracted flat rate, regardless of whether it’s more or less than the bill.  
  35. Markups happen with medicine, medical supplies, devices, services—everywhere.  If you can skip the middleman and find a more direct source, you may find better prices.  
  36. In medicine, there’s a markup called “the spread” allowed in contracts, even on generic drugs.  The “spread” accounted for31% of all money spent on Medicaid medicines in Kentucky in a typical year before recent reforms.  Ask your insurance broker if “the spread” is baked into your pharmaceutical contract.   Request a pharmaceutical contract without “the spread.”
  37. Some pharmaceutical companies offer rebates.  The rebates supposedly would go to the entities paying for the medicine—usually the health plan.  However, health plans don’t often see the rebates nor the savings from them.  Pharmacy benefit managers have been known to redeem the rebates without disclosing them, or without disclosing the accurate size of the rebates, allowing them to keep most of it themselves.  If you are in the position to select your company’s pharmacy benefits manager, look for one that will not take any spread and will pass along all rebates in full.   
  38. If your company has an especially good negotiated rate for your employees with a provider, let your employees know where and how to get it.  This helps keep plan costs down and shows employees you are protecting their health care dollars.
  39. Let your employees know you audit medical statements, and ask them to help you keep company costs low by inspecting their discharge papers, receipts, and EOBs, too.   Some companies find ways to post their health care savings and then use it to benefit employees and the company in other ways. Just make sure you incentivize good practices, such as preventative health care and patient-led EOB reviews.  
  40. Employers should study their claims data:
    1. If an insurance company denies access to the claims, look for one that doesn’t, and switch. Patients and employers pay for these plans and are the clients.
    2. Examine how much is spent on individual claims.
    3. Look for statistical outliers, such as a provider billing more frequently than others.  Question why this provider is so popular, and make certain everything is legit.
    4. Look for unusually small or large charges.   Both signal the provider might be hiding something.
    5. Look for opportunities to educate the employees, such as frequent use of out-of-network providers when a lower-priced option is available.
  41. When you meet resistance to your investigation into a hospital or other provider’s billing, ask those in a similar situation, such as other small businesses, to also speak up.  The more public your grievance, the more likely it will be recognized by others and heard.  If you cannot get the information you need, try asking a journalist friend to call the source and ask for information for a story they plan to write—which will suddenly get most companies attention and raises their likelihood of playing more fairly.
  42. If someone offers to bill your health insurance for services, make certain:
    1. The codes on the receipts represent the actual services provided to you.
    2. The provider is a licensed practitioner for the provided services.
    3. Review every EOB you receive to make certain you received the listed services on the dates specified.  
    4. Once someone has your insurance information, it is very easy for anyone—even a  personal trainer, sports coach, or person taking survey information—to create an online insurance-billing account and pretend to be a licensed doctor.  They know insurance companies often auto-pay.   You and your employer will get stuck with the bills, so let your employer’s health benefits department know as soon as you suspect fraudulent billing so they can help you fight back.
    5. Insurance companies might not go after fraudsters.  But you can.  Make sure your employees know how the fraud happened, so they will stop going to the fraudster’s business.  Sue the fraudster for any money paid by the company beyond what the company would have paid for accurately billed services for the person’s actual work.  (If the company covers $50 per personal trainer session up to one per week, but all the sessions were billed as $250 medical examinations, sue for the $200 excess in payments.)
    6. Health insurers underreport fraud.  Medicaid is the exception—the government will file criminal charges and recover money.
  43. When you hear of “zero co-pay” advertisements, beware.  Medical practices that lure customers by changing the terms of the insurance plan may use that incentive to cover insurance abuse, such as upcharging for services to recoup their costs.
  44. The book’s title “Never Pay the First Bill” isn’t really accurate.  You should pay—if the codes are correct, the prices are fair, you agreed to the prices, and your insurance paid its correct share.
  45. You can save money in health care.  There are coupons for prescriptions, price comparison opportunities, and ways to set limits.  


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3-Minute Summary of "Never Pay the First Bill and Other Ways to Fight the Health Care System and Win" by Marshall Allen

26 Resources Mentioned in "Never Pay the First Bill and Other Ways to Fight the Health Care System and Win' by Marshall Allen

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