6 Tips to Better Understand Your Medical Bills

Between finding doctors who accept your health insurance, scheduling appointments, and figuring out copays, doctors’ appointments can be a big hassle. And when your bill arrives, you might be baffled by the various billing codes, insurance adjustments, and coinsurance percentages. Whether you’ve got medical bills for a regular doctor’s appointment, an outpatient procedure, a surgery, or a hospital stay, we’ve got you covered with these tips for understanding and dealing with medical bills.

1. LEARN THE LINGO.

Once you learn what a few key phrases mean, you’ll have a much better grasp of your medical bill. Most bills list a date of service, the full price, service codes, the insurance adjustment amount, the amount that your insurance has already paid, and your final balance. The date of service is simply when your appointment occurred (if you had a multi-day hospital stay, the date listed might be when you were admitted to the hospital).

To make medical billing easier, every medical procedure has a corresponding code, called a Current Procedural Terminology (CPT) code. The American Medical Association developed these codes more than four decades ago, and they are standardized across the country.

Somewhere on your bill will probably be an exorbitant charge; this is the sticker price of the procedure before any deductions and insurance adjustments have been applied. You’ll also see an adjustment—the discounted amount that your insurance company has negotiated with the doctor or hospital, plus any copay you already paid at the appointment—and a final balance, which is the amount that you’re responsible for paying.

2. LOOK FOR ERRORS.

Insurance companies and patients overpay millions of dollars every year due to medical billing errors. Estimates vary, but anywhere from 50 to 80 percent of medical bills overcharge patients due to clerical errors. Errors may include everything from typos in your name, an incorrect (or outdated) policy number, duplicate billing, unbundling, or incorrect medical billing codes. For example, double (and even triple) billing is not uncommon for surgery bills because the charge for the operating room may include charges for certain supplies, but the supplies may also be listed (erroneously) as separate charges. Not all errors are accidental, though. Upcoding—when a doctor or hospital intentionally uses a billing code for a more expensive procedure or prescription—leads to billions of dollars of medical fraud.

Insurance companies may also automatically deny a claim (i.e. refuse to pay) if information about your case, such as the diagnosis, symptoms, and the doctor’s reasons for prescribing a certain medication, is missing. If this happens, call your doctor or hospital to get them to resubmit the claim—with all the information—to your insurance company.

3. ASK FOR AN ITEMIZED BILL.

Medical bills, especially hospital bills, can include charges for multiple procedures and services. Because most bills only show a brief summary of what the services were, call your hospital’s billing department to ask for an itemized statement that lists all your charges. Carefully review the itemized bill, making sure that it doesn’t list any tests, supplies, or medications that you didn’t receive. If you spot something weird, contact your hospital’s billing department.

4. COMPARE YOUR EOB TO YOUR BILL.

Some health insurance companies will periodically (usually after your insurance company pays your doctor) mail you an Explanation of Benefits (EOB). Like a medical bill, this record lists your dates of service and prices, but it’s not a bill. Rather, an EOB is an insurance statement that lists your claims and coverage, spelling out the amounts that your insurance company paid your doctor. The American Academy of Family Physicians recommends that patients carefully review every EOB statement they receive. To catch errors, compare your EOB to your actual bill, making sure that dates, amounts, and billing codes match. Also look out for any duplicate charges, and if you see a discrepancy, call your insurance company.

5. NEGOTIATE TO LOWER YOUR BILL.

Andrew Cohen of The Access Project, a non-profit health services organization, tells CBS MoneyWatch that most medical bills can be negotiated. He suggests that patients offer to pay a certain amount of the bill upfront, a tactic that may work if a hospital would rather have some money immediately than risk getting nothing (or sending the bill to a collection agency). Speaking to the right people is essential for negotiating any discounts, though. “Go up the chain of command, calling the billing manager or the vice president of finance and so on, building a relationship with each person by telling your story,” Cohen explains.

You should also check Healthcare Bluebook, a company that helps healthcare consumers find fair prices (based on average costs in their area) and save on out-of-pocket costs. If the hospital refuses to budge and you still have a huge outstanding bill, consider hiring a medical billing advocate to find errors and unnecessary charges (some hospitals have charged patients for items such as bed linens and Kleenex) on your bill. Most medical billing advocates charge between 20 to 30 percent of the savings they get for you.

6. IF YOU CAN’T PAY, SEEK HELP.

Although it might be tempting to avoid dealing with a cumbersome medical bill, procrastination is not a wise choice. If you don’t pay your bill, your doctor’s office or hospital will eventually send it to a collection agency, which could negatively impact your credit. Dr. Tony Dale, who specializes in medical bill negotiation and settlement, tells Forbes that most hospitals offer financial assistance to patients who can’t pay their bills. But acting promptly is key: “You cannot bury your head in the sand and try to work something out six to nine months after the bills are due. You must apply for help within 90 days of incurring the bill.” You’ll need to contact your doctor’s office or hospital to find out the specific steps to take, but you may need to apply for Medicaid or establish an interest-free monthly payment plan.