Understanding Insurance Billing: Unraveling The Mystery Of Insurance Claims And Payments

Whether or not insurance companies send bills depends on the type of insurance and the nature of the claim. For example, in the case of medical insurance, after a patient visits a doctor, the doctor's office submits a bill (also called a claim) to the insurance company. The insurance company then pays the doctor for those services and might send the patient a report called an Explanation of Benefits (EOB). This is not a bill, but it shows what the insurance company is and isn't paying for, and why. The insurance company will then send a bill to the patient for any remaining balance. In the case of car insurance, the insurance company will usually send the settlement check directly to the victim, who is then responsible for paying off their medical bills.

What to do if you receive a bill from a hospital or doctor

Receiving a bill from a hospital or doctor can be a confusing and worrying experience, but there are steps you can take to resolve the issue. Here is a guide on what to do:

Step 1: Check the Bill

Firstly, carefully check the bill to ensure that it is accurate. Look out for any discrepancies, such as incorrect dates, providers, procedure codes, or charges that you don't recognise. You should also verify that the bill is addressed to you and contains your correct name, insurance information, and billing address. If you are unsure about any items on the bill, contact your provider and ask for a clear explanation.

Step 2: Contact Your Insurance Company

If you have insurance, review your policy and contact your insurance company to clarify what is and isn't covered. Ask them about any specific services or treatments listed on your bill that you are unsure about. It is important to understand your insurance plan's benefits and limitations, including deductibles, co-pays, and co-insurance.

Step 3: Understand Your Rights

Familiarise yourself with relevant laws and your rights as a patient. In the United States, the No Surprises Act (NSA), effective from January 1, 2022, protects individuals from certain unexpected medical bills. This includes surprise billing for emergency services, out-of-network cost-sharing, and certain charges from out-of-network providers working at in-network facilities. If you believe you have received a surprise bill, you can contact the government's No Surprises Help Desk or submit a complaint online.

Step 4: Dispute the Bill if Necessary

If you identify errors or discrepancies in the bill, or if you believe you are protected by the NSA, you may need to dispute the charges. Contact your provider's billing department and clearly explain the issue. You may also need to contact your insurer and involve them in resolving the dispute. Keep detailed records of all communication and documentation related to the bill.

Step 5: Seek Financial Assistance if Needed

If you are unable to pay the bill, there may be financial assistance options available. Nonprofit hospitals are often required by law to offer financial assistance programs, and other providers may be willing to arrange payment plans. Contact your state or local social services to explore potential sources of financial aid. Additionally, consider reaching out to nonprofit organisations that may provide support for medical bills, prescription drugs, or specific medical conditions.

Step 6: Be Wary of Debt Collectors

If you are contacted by debt collectors, know your rights. They are only permitted to contact you about valid debts that you owe. You have the right to ask them to verify the debt and provide information about the collector and the bill. Do not be pressured into paying a bill that you are disputing or that you believe is incorrect.

Remember, it is important to stay organised and proactive when dealing with medical bills. Keep all relevant documentation, communicate with your provider and insurer, and understand your rights and options for financial assistance.

How to understand your medical bills

Medical billing in the United States can be a convoluted process, with many Americans finding their medical bills confusing and expensive. However, there are several steps you can take to better understand your medical bills.

Know the Basics of Your Health Insurance Coverage

Firstly, it is important to understand the basics of your health insurance coverage. This includes knowing your annual deductible, your provider's in-network vs out-of-network status, and your copay or coinsurance. Your deductible is the amount you need to pay before your health insurance plan starts contributing to your medical costs. Your copay or coinsurance is the amount you pay the hospital on top of what your insurance pays.

Understand the Billing Cycle

When you contact a healthcare provider, you will need to pre-register and provide basic information such as identification and insurance information. It is important to ask the healthcare provider about the services and supplies you will receive, and to clarify what will be covered by your insurance. You should then contact your insurance company to confirm that these services are covered by your plan and to get an estimate of how much the services will cost.

Understand the Components of Your Bill

Once you receive a medical bill, you will notice that it consists of multiple components. These include the statement date, your unique account number, the service date(s), a description of the services or supplies received, the charges, billed charges, any adjustments, insurance payments, patient payments, the balance/amount due, and the organisation to which you should address cheque payments.

Understand Procedural Codes

Every medical procedure has a corresponding five-digit code. These numerical systems are called Current Procedural Terminology (CPT) for insurance and the Healthcare Common Procedure Coding System (HCPCS) for Medicare. These codes determine how much your provider will be paid. You can use these codes to look up the service online and get an estimate of typical charges in your area.

Compare with Your Explanation of Benefits (EOB)

Every medical procedure or visit will show up on an EOB from your insurance company or a Medicare Summary Notice (MSN). These list the services performed, what the doctor or hospital charged, what your insurance company or Medicare paid, and what you owe. Make sure the dates and codes on that statement match the bills you receive from medical providers.

Check for Common Errors

Medical billing errors are not uncommon, so it is important to review your itemised bill closely. Common errors include incorrect quantities or duplicate charges, charges for treatments or procedures you didn't receive, inflated surgery and recovery times, charges for basic supplies, and incorrect room fees.

Explanation of Benefits (EOB)

An Explanation of Benefits (EOB) is a statement from your health insurance provider that details the costs of the healthcare services you received. It is not a bill, but it is an important tool that shows you how your bill is broken down between the medical service provider(s), your insurance, and you. It can help ensure you are receiving the full benefit or discount that you are entitled to under your insurance plan.

The EOB is generated when your healthcare provider submits a claim for the services you received. The insurance company sends you EOBs to help make clear:

• The cost of the care you received
• Any money you saved by visiting in-network providers
• Any out-of-pocket medical expenses you’ll be responsible for

The EOB breaks down the following information:

• The services provided
• What the doctor or hospital charged (all charges)
• What your insurance covered and did not cover
• What your insurance agreed to pay
• The amount you must pay (amount you are responsible for)

After receiving the EOB, you may receive a separate bill for the amount you may owe. This bill will include instructions on who to direct the payment to—either a healthcare provider or your health insurance company.

Deductibles

A deductible is the amount of money that the insured person must pay toward an insured loss before their insurance policy starts paying for covered expenses. For example, if you have a health insurance policy with a $1,000 deductible and you receive a medical bill for $2,000, you would be responsible for paying the first $1,000 and your insurance would cover the remaining $1,000.

It's important to note that deductibles only apply to covered expenses. If a particular expense is not covered by the insurance policy, it cannot be applied toward the deductible. Deductibles typically reset at the end of each policy period. For example, if you have a health insurance policy with an annual deductible of $2,000, you will need to pay that amount each year before your insurance starts covering expenses.

Understanding your insurance deductible is important because it can significantly impact your out-of-pocket expenses. Policies with lower deductibles typically have higher premiums, meaning you'll pay more each month for your insurance coverage. On the other hand, choosing a policy with a higher deductible may allow you to save money on your premiums, but you may be responsible for paying more out of pocket if you need to file a claim.

When selecting an insurance policy, it's crucial to consider your personal circumstances and financial situation. For instance, if you have a chronic medical condition that requires frequent doctor visits, you may prefer a health insurance policy with a lower deductible to help manage your out-of-pocket expenses. Conversely, if you lead a healthy lifestyle and rarely need medical care, opting for a policy with a higher deductible could result in cost savings.

Additionally, it's important to be aware of the different types of deductibles that may be included in your insurance policy. Some policies may have separate deductibles for different types of coverage, such as collision and comprehensive coverage in auto insurance. Furthermore, some policies may have a percentage-based deductible, where the deductible amount is calculated as a percentage of the total cost of the claim.

Finally, make sure you understand what expenses are covered by your insurance policy and what expenses are not. In some cases, you may be able to lower your out-of-pocket costs by taking advantage of preventative care services or using in-network providers.

Copayments

A copayment, or copay, is a fixed out-of-pocket amount paid by an insured individual for covered services. It is a standard part of many health insurance plans. Copayments are usually paid at the time of service and are typically $25 or less. For example, an insurance plan with copayments may require the insured to pay $25 per doctor visit or $10 per prescription. Copayments are different from deductibles, which are much larger sums. Deductibles are provisions that require the insured to accumulate a specific amount of medical bills before benefits are provided. For example, if a member's policy contains a $500 deductible, the member must pay $500 out of pocket before the insurance carrier will pay benefits.

Frequently asked questions