The 5 Best Ways to Avoid a Large Medical Bill

Even though we usually don't expect medical bills, we can still take steps to make them tolerable.

Motley Fool Staff
Lacie Glover, NerdWallet
Jul 20, 2014 at 8:30AM
Health Care

Just the thought of opening a medical bill is enough to make many people anxious, and for good reason. Medical bills are usually unplanned, and there's no telling how much you'll be charged for most services. That's not just a turn of phrase, either. Medical centers can charge whatever they want, and prices for similar services can be wildly different in cities just an hour away from one another, or even in the same city. That's one reason medical debt is the No. 1 contributor to personal bankruptcy in America.

When you're facing a planned medical procedure, you have some time to shop around to get the best price, but there are also things you can do to prepare in case of an emergency. If "shopping around" for medical services sounds a little strange, don't worry. With the recent focus on health-care price transparency in the U.S., this is a new but sorely needed option for consumers. Large medical bills can usually be lowered through negotiation and error checks, but the best place to start is at the beginning -- before the bills even come in. Here's how you can help prevent those big bills before the time comes for medical care.

1. Mind your health
Future medical bills may or may not be preventable, and unless you have a crystal ball it's likely that you won't know for sure which is the case. What's more certain, however, is which behaviors and conditions cost the most to treat and cause the most complications. Nonsmokers with a healthy weight not only tend to have the fewest medical problems, but they also tend to have the fewest complications during procedures. And more complications mean an overall higher bill, especially when it comes to surgeries. With this in mind, the best medicine really is prevention: Get regular checkups, eat healthy, stay active, and avoid tobacco.

2. Shop around and know what's in your area
Whether you know you need something like an MRI or you just want a plan in case of emergency, it's best to know what's available in your area. You may be surprised to learn that the cheapest procedures often come from the higher-rated facilities. If you reside in a large metropolitan area, you'll have lots of options -- there are independent clinics, imaging centers, and hospitals dotting the maps of most big cities. If you live in a rural or small-town community, choices may be limited, but towns within driving distance are also worth checking out.

To save time, you can use a cost comparison tool that uses recently released pricing information. Pay special attention to places like imaging and birthing centers, or other facilities that offer focused services, because they are often cheaper than large hospitals. Also check out the emergency care prices of hospitals close to you, if possible. If there are two hospitals nearby and the average charge for something like an asthma attack or a broken bone are twice as high in one of them, you'll want to know that for quick future decision-making.

3. Use in-network providers
If you're looking for a new doc, make sure that the ones you consider are in your insurance network. A health insurance network is a group of doctors and medical providers that have met your insurance company's quality standards and mutually agreed-upon prices. If you choose a doctor outside your network, your health insurance may cover very little or none of the charges. That's why it's best to start with your network when choosing providers, rather than picking someone based on proximity or a friend's recommendation. You can usually get a complete listing of the doctors in your network by calling your health-insurance customer service line, or simply checking their website. When your doctor is in your network, so, too, are the clinics and hospitals the doctor has privileges at, in most cases.

4. Get prior authorization
Since many drugs and procedures are costly or risky, your insurance plan may require prior authorization before covering them. Prior authorization is usually obtained when your doctor's office sends medical records showing the reason for the service. If that fails, the doctor may send a personal letter explaining his or her professional opinion. If the reasoning for the procedure or drug is sound and its use will improve your health, the insurance company usually agrees to pay for it in the interest of avoiding costlier problems later.

In the case of a procedure, prior authorization is required by some insurance policies when medical necessity or benefit is in question. This is a precaution insurance companies take in the case of a prescription drug, because there may be a cheaper alternative available. The insurance company wants proof that the more expensive version is necessary and that it, and you, aren't overpaying needlessly. Whenever a medical professional wants to order a costly drug or procedure, ask him or her to obtain prior authorization or verify that the service is covered by your insurance in your summary of benefits.

5. Negotiate in advance
So your doctor has told you that you need an imaging or diagnostic procedure, you've found the best-priced facility in your area, and you've made sure it's covered by your insurance. Congratulations -- you're a diligent and savvy consumer! Now, time for extra credit, in the form of even more cash saved. Call up the billing department where the procedure will take place and ask it to verify the price and whether it offers a discount for cash payments or a billing plan, and simply ask for a lower rate. The billing department will often appreciate your awareness and intent to pay before the procedure is even completed, and it may let you in on other ways you can save at the facility.

If that big bill still comes
No matter how prepared or healthy you are, medical surprises happen. If you've done what you can to keep costs low and still find a big bill in the mail, there is still help. With the aid of a medical billing advocate, you may be able to get those charges down to something more affordable. Medical billing advocates find billing errors and negotiate with hospitals and insurance companies on your behalf for lower rates. Check out NerdWallet's Ask an Advisor forum and directory to find a nerd-vetted professional who can help you lower those bills.