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PERSONAL FINANCE / KATHY M. KRISTOF

Parents-to-Be Can Cut Costs If They Plan Ahead

February 26, 1995|KATHY M. KRISTOF

Babies. Millions of them. Everywhere you look. In every office, shopping mall, theater and restaurant in the country there are babies--and people expecting babies.

And each one runs up a variety of medical expenses to get here.

Over the past five years, there have been more babies born than in any time since the 1960s. This year, government officials estimate that more than 4 million new Americans will enter the world.

So how do you have a baby on a budget? First there's the doctor, whose prenatal and delivery fees typically range from about $1,500 to $2,500 for an uncomplicated pregnancy.

Then there are the hospital charges--usually in the neighborhood of $3,000 to $5,000. Anesthesia, lab and pharmacy fees used in the delivery can amount to thousands more.

On average, the cost of prenatal care and a normal delivery runs $6,200 nationwide, according to a 1993 survey by the Alan Guttmacher Institute in New York. Cesarean deliveries run about $3,000 more. Exact expenditures can vary widely, however.

The good news is parents-to-be have numerous opportunities to manage their out-of-pocket costs, if they're willing to plan ahead and do some homework.

The biggest factor determining your out-of-pocket medical expenses during and after pregnancy is your health plan, says Mark W. Agnew, principal at Buck Consultants in San Francisco.

If you are a member of a Health Maintenance Organization--about 20% of the insured population is--your medical expenses are likely to be modest, because most HMOs cover both prenatal and delivery expenses with minimal co-payments, according to the Group Health Assn. of America.

Those who are covered by indemnity plans, which give patients more choice over which doctor and hospital to use, are likely to pay hundreds--even thousands--more.

Why? First, you must satisfy your plan's deductible. Then, typically, your co-payment will be 20% of the covered costs. (If all $6,200 of the average expenditures were covered, for example, the typical indemnity plan member would pay $1,240 in co-payments.) Finally, many people find that certain procedures simply aren't covered.

A good example of an oft uninsured expenditure is so-called "well baby" care at the hospital, which can run $300 to $600, says Agnew. It isn't covered because traditional health insurance plans compensate you for medical expenses when you're ill or injured, he adds. They don't pay for check-ups.

You can save thousands by transferring into the HMO option prior to the pregnancy--if you're happy with the plan's doctors and hospitals, says Agnew. But, you'll be sorry if you end up going out of the system for care. Typically, if you skirt the HMO system, you pay the full tab yourself.

What happens if you're sold on a particular doctor, who happens to be more expensive or who uses a high-priced hospital for deliveries? Haggle.

Blasphemy, you say? Rest assured, your doctor's billing department is cutting discount deals with insurers every day. They'll work with you too.

One common way to get a cut-rate, with the blessing of an insurer, is working out a so-called "prompt pay" discount, says Cherek. Exactly what that means varies from doctor to doctor, but generally it boils down to a 5% to 10% discount for those who pay as they go.

If you're not insured, the opportunities to cut the bill are stunning and simple: Pay cash up-front and you may be able to shave the bill by 30% or more.

St. Joseph's Medical Center in Burbank, for example, normally would charge $3,040 for a one-day maternity stay for both mother and baby, says Lucinda McClay, a St. Joseph's financial counselor. But, if the parents weren't insured and were willing to pay in full a month prior to delivery, the cost is slashed to $2,050, she says. That's a $990, or 32.5%, discount.

At Verdugo Hills Hospital in Glendale the price cutting is even more dramatic. A normal delivery costs between $3,000 and $5,000, depending on the length of labor and services provided, says Ward Quon, director of the hospital's business office. But, the cash rate--when paid in advance--is $1,850.

Doctors "retail" rates are often 50% higher than their insurance reimbursement rates, so they often offer discounts to cash customers, too.

These deals make sense for doctors and hospitals because the cost of collecting delinquent bills is high, says Cherek. As a result, nearly every doctor and hospital in the country offers one.

But cash rates are not advertised. You have to ask for one. Also make sure you know whether up-front payments will be considered payment in full, even if actual expenditures exceed estimated costs.

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