How To Negotiate Surgery Costs Before or After Your Procedure
While many employers provide healthcare coverage as a primary employee benefit, few realize they have the capability to negotiate lower costs for expensive procedures like major surgeries. This is one of the main disadvantages of traditional healthcare models: those responsible for medical costs usually have little say in how much they pay.
In response, some innovative approaches to reimbursement have grown in popularity as they enable employers to negotiate prices for employees’ expensive medical services. If you’re interested in learning more about the costs of surgeries and transplants, this article has you covered.
Transparency: More Than Just Your Hospital Gown
Research from the Kaiser Family Foundation confirms what we already know: that most hospitals charge grossly inflated rates for medical procedures.
Data indicates that in most instances, healthcare providers bill privately insured patients for amounts ranging from 141% to 259% of what Medicare pays for the same services at the same facilities. It comes as no surprise that a lack of billing transparency is one of the leading factors in the healthcare industry’s continually skyrocketing prices.
Unlike the vast majority of commercial products available to consumers, healthcare providers do not provide open access to pricing for would-be clients. Instead, patients and employers often have no idea what they can expect to pay for medical services until they receive a bill.
Moreover, many players in the healthcare industry—such as healthcare providers and private health insurance—are profit-driven. This gives them little incentive to ensure fair pricing practices when they reap the luxurious benefits of unreasonably priced patient charges.
Lower Payment Integrity = Higher Costs
A lack of payment integrity has also reinforced this upward trend in healthcare costs. For example, billing errors are so common that they affect roughly 80% of all medical bills and 100% of inpatient claims. This means patients frequently overpay without ever realizing it. For expensive procedures like surgery, such oversights can be exceedingly costly when patients are overcharged for individual components like anesthesia.
Underpinning all of these vaguely unethical factors—opaque pricing, lax billing practices, expensive errors—lie the pre-negotiated contracts private insurance companies have with providers that determine the prices they pay for medical services. Thus, when health insurance companies receive a bill from a provider, they pay it—no questions asked—because of the contracts between the two parties.
The Ultimate Shell Game
Despite these pre-determined pricing contracts, insurance companies regularly offset any bumps in healthcare prices by increasing premiums, deductibles, or other fees. This gives insurance companies little incentive to negotiate with healthcare providers for lower prices because they will profit either way: if not from negotiated discounts, then from passing on price increases as extra fees.
Insurance companies then expect reimbursement from the patient and their employer for medical bills. Relying on traditional insurance plans to cover major surgery costs leaves patients and employers responsible for paying exorbitant medical charges and with little agency to do much about it.
How To Negotiate Surgery Costs
Self-funded healthcare models offer an alternative to traditional private health insurance. Traditional plans charge employers costly premiums and deductibles for membership in an annual plan. With self-funded plans, the employer pays out-of-pocket for medical services as they occur.
Knowing how to negotiate surgery costs can open the door to other cost containment solutions that can significantly drive down other related charges. While technically, employers could negotiate surgery prices, most C-suite executives already handle a wide variety of difficult tasks and may lack the time or resources to take on another project. For effective negotiation, it’s preferable to have someone in your corner with the right expertise to handle the legwork and ensure the lowest prices.
Surgery costs can be negotiated before or after services are performed. Though typically better to negotiate costs before surgery, this isn’t always possible as some surgeries cannot be scheduled in advance. For example, if an employee is in an accident and requires emergency surgery, the costs would have to be negotiated post hoc.
- Negotiating before surgery. If the surgery is scheduled in advance, the prices can be negotiated using knowledge of the actual costs to perform the surgery. Imagine, for example, that a hospital charges $27,000 for kidney removal. If the negotiator knows the actual cost to perform this procedure is $12,000 and Medicare pays $16,800 for similar services, they can use that knowledge to negotiate a more reasonable price for the surgery before completion.In addition, knowledge of estimated prices from multiple providers can further expand negotiation options. It may be easier to negotiate a lower price from a provider that charges less on average than others.
- Negotiating after surgery. In contrast to negotiating before surgery, which aims to obtain the best pricing prior to medical services, negotiating after surgery is all about reducing financial burden. While patients cannot take advantage of reduced charges from select providers, they can still benefit from claim reviews that mitigate expensive billing errors. This process can add significant savings to post-surgery price negotiations.
Although employers can take on some of these tasks themselves, it’s best to partner with an expert who has the knowledge and the bandwidth to identify the most effective cost containment solutions.
How 6 Degrees Health Negotiates Lower Healthcare Costs
The experts at 6 Degrees Health are driven by a mission to help bring healthcare costs under control and increase transparency in an industry hindered by intentionally intricate processes and virtually choked by jargon and billing codes. For over a decade, we’ve used our expertise and proprietary technology to help employers reduce their healthcare spend by up to 40%.
With cost containment solutions like reference-based pricing, clean claim reviews, and transplant & specialty contract negotiation, we offer a powerful alternative to traditional health insurance that helps employers combat rising healthcare costs without sacrificing the level of care they provide for employees.
Our reference-based pricing model is a data-driven approach that identifies benchmarks for medical costs and empowers our experts to negotiate reasonable prices from a position of knowledge. Similarly, our transplant & specialty solution offers a flat fee structure with no upfront costs and bundled rates.
Want to learn more about how to negotiate surgery costs? Speak to a representative today to find out how our reference-based pricing model can help you realize true cost savings in healthcare.
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As a service-first cost containment company, 6 Degrees Health is here to help employers and employees navigate a historically opaque healthcare system to pay only what is fair.