Raise your hand if you’ve ever had trouble reading a medical bill. If so, you’re not alone — not by a long shot.
In a 2016 survey of 355 patients, more than 60% of those who’d received medical bills in the past year said those bills were “confusing” or “very confusing.” Although nobody expects medical bills to be light reading, the myriad specialized terms, confusing acronyms, and even medical billing codes littering the page mean that most medical bills might as well be written in a foreign language.
To be fair, there’s a reason for this. Medical billing systems are typically set up to facilitate payments between providers and insurance companies — not average Americans. With chronic billing errors plaguing the U.S. healthcare system, it’s not a shock that so many Americans face indecipherable surprise medical bills.
And because medical bills are so hard to understand, one-third of Americans end up paying bills they might not owe — and that’s if they can afford to do so. Many more Americans spend months disputing confusing charges and then see their credit scores take a hit when unpaid balances head to collections.
It’s time we stopped this cycle, and knowledge truly is power. Health plan participants should be able to quickly understand the exact charges on any medical bill they receive, what those charges mean, and whether they’re actually responsible for them.
The Basics of Medical Bills
When teaching employees how to scrutinize medical bills to identify common errors and avoid overpaying, you need to start with the basics. Begin with what is — and what is not — a bill.First, go over the difference between an explanation of benefits and a bill. They might look the same to an untrained eye, but they’re pretty easy to distinguish once you understand a few key differences. For instance, a medical bill will always come directly from the doctor, clinic, or hospital you received care from; an explanation of benefits will come from your insurance provider.
What is an explanation of benefits? In short, it’s a statement that breaks down how an insurance provider paid a claim. It includes details like policy and claim numbers, the name of the healthcare provider, the type of service received, the cost of the service, and how much of the billed amount the insurance company paid. If it’s still unclear, look for a “not a bill” stamp, which will confirm that the statement is an explanation of benefits.
Now, imagine that you receive a surprise medical bill in the mail. You’ve determined that it is indeed a bill rather than an explanation of benefits. Most likely, you’ll see a summary bill that simply states how much you purportedly owe. Initial statements sometimes fail to factor in payments from your insurance company or government programs like Medicare, which might make it look like you owe more than you do.
Someone who’s not confident reading medical bills might take that bill at face value and pay it off. But because you now know that about half of all medical bills contain errors of some kind, you decide to request an itemized bill. An itemized bill is precisely what it sounds like: a detailed list of charges that correspond to the medical services, supplies, or procedures you received at the time of care — plus the dollar amount associated with each one. And if you received treatment from multiple providers (e.g., specialists who aren’t employed by the hospital you visited), you’ll also need to request separate itemized bills from them.
This is an important step to take because it’s the best way to confirm that someone is being charged only for the services they received. If a provider mistakenly charged a patient twice for the same service, for example, they might not be able to tell from a summary bill alone.
Breaking Down Medical Bills
With an itemized bill in hand, it’s much easier to review the information with a critical eye. Here’s a breakdown of what each line of a medical bill means:
- Personal information:Recipients should always check the spelling of their name, address, and any other personal information on the medical bill. If this information is incorrect, it could have caused the claim to be denied — and the patient to be sent a bill.
- Statement date:This is the date the provider printed the medical bill. If anything on the bill seems out of date, be sure to check this line.
- Account number:Each person who receives care somewhere has an account number unique to them. When someone contacts a provider’s billing office with any questions about a bill or balance, this will be the first thing they request. And when anyone wants to pay a bill online, they’ll need this number to do that.
- Service date: Medical bills are typically organized into rows and columns. One of the first columns on a medical bill is a list of the service dates (i.e., when the medical services were provided).
- Description: The next column over will be the description. This is typically a short phrase that details the services or supplies received.
- Charges:The next column involves the charges (i.e., the price of the services or supplies received). Keep in mind that these prices reflect the cost before any insurance is factored in.
- Billed charges:This is the total amount charged to the patient and their insurance company.
- Adjustment:If the provider has agreed not to charge a patient a portion of the , this amount will go under adjustments. An adjustment is like a discount that an insurance company has negotiated on the patient’s behalf.
- Insurance payments:This is the amount that the insurance company has already paid.
- Patient payments:This is the amount the patient is responsible for paying.
- Balance due:This is the amount currently owed to the provider.
- Payable to: This indicates where payments should be addressed.
Being able to read medical bills can help save your employees thousands of dollars each year, but even the most educated consumers of care eventually have to pay their bills. When those charges come due, you can help them manage some of the associated financial stress by offering a benefit like Paytient that plugs a variety of holes in your employer-sponsored health plan.