Understanding Your Insurance Bill: A Step-By-Step Guide To Reading And Interpreting Your Statement

Reading an insurance bill can be a confusing and daunting task. In fact, a 2016 public opinion survey by Copatient found that 72% of American consumers are confused by their medical bills. With a myriad of codes, acronyms, and numerical values, it's no surprise that many people struggle to understand their insurance bills. However, it is important to scrutinize your bill to spot costly errors and avoid overpaying. In this guide, we will break down the steps to help you navigate and understand your insurance bill effectively.

Understand the basics of your health insurance policy terms

Understanding the terms of your health insurance policy is important to help you find affordable health insurance and make sense of your medical bills and billing statements. Here are some key terms to help you get started:

Deductible

The amount you pay annually for health services before your insurance company starts paying its share. For example, if your deductible is $1,000, your insurance plan might not cover any expenses until you've paid $1,000 for healthcare within the year. However, plans often cover preventive care doctor's visits even before you've paid your full deductible amount.

High Deductible Health Plan (HDHP)

With a high deductible health plan, you pay a larger deductible than most. You'll be paying more out-of-pocket, and your insurance won't cover much until your deductible has been paid in full. In exchange, your premiums will be lower, and you'll likely qualify for a health savings account to cover pre-tax medical expenses.

Health Savings Account (HSA)

A health savings account allows individuals to put aside pre-tax dollars for medical expenses. You must be covered by a high deductible health plan to take advantage of an HSA. The money you save on insurance can be put into this account.

Premium

The amount you pay the insurance company for having an active insurance plan. Most people pay monthly, but payments might be quarterly or yearly. There are tax credits available to offset these costs for plans purchased on the Affordable Care Act marketplace.

Copayment (Copay)

The flat fee you owe each time you receive certain types of medical care. For example, you may have a $30 copay for each visit to your GP and $60 for a specialist. Copays can vary depending on the type of service.

Coinsurance

The percentage of medical expenses you pay after you've met your deductible for the year. For instance, if your coinsurance is 20% and you've met your deductible, you would pay $20 of a $100 bill, and the insurance company would pay the remaining $80.

Out-of-Pocket Maximum

The most you'll pay each year towards costs, including your deductible, copay, and coinsurance. For 2022, the maximum threshold is $7,050 for singles and $14,100 for family coverage. Once you've met the maximum, your insurance company will pay for the remainder of your essential care for the rest of the year.

Health Maintenance Organization (HMO) Plan

An HMO plan provides health care coverage through a specific network of doctors, hospitals, and providers. They usually cost less than other plans but offer less flexibility. You must use in-network providers, and you may need a referral from your primary care physician to see a specialist.

Point-of-Service (POS) Plan

With a POS plan, you can either coordinate care through a primary care physician or seek medical care from another provider. If you use the plan's network of physicians and hospitals without going through your primary care physician, your medical expenses will be higher, but you'll have a greater number of doctors to choose from.

Preferred Provider Organization (PPO) Plan

A PPO plan offers more freedom to choose your healthcare providers. Your insurer may pay a portion of your bill if you visit a doctor or specialist outside your network, but you'll probably pay more. To keep costs low, stick with in-network providers.

Learn how to identify and dispute erroneous charges

Medical billing processes involve several parties – you, your insurer, and your healthcare provider – so mistakes can and do happen. A medical coder might inaccurately describe your care history with an incorrect code, a medical biller might mistype a value, or a claims adjuster might apply the wrong plan information to your claim. Regardless of the reason behind the error, it is important for you as a patient to monitor your bills and dispute any errors.

• Compare estimates to your final bill: Before your appointment, contact the healthcare provider and ask for the billing code and cost estimate. Then, contact your health insurance provider to confirm if the procedure is covered by your plan and obtain their cost estimate. If your final bill is very different from the estimates, there may be a billing error.
• Create a list of charges: Create a record of all the medical services and supplies you received, along with their corresponding charges. This can help you identify any incorrect charges.
• Check for duplicate charges: If you notice the same charge listed twice, it is likely that a data entry error occurred.
• Beware of upcoding: Upcoding is the illegal act of fraudulently reporting an incorrect diagnosis to profit. A disreputable healthcare provider might use upcoding to receive a larger payment from you or your insurance company. If a procedure description or code seems to include services you did not agree to, it could be a form of upcoding.
• Check identifying information: Ensure your name, address, and other personal information on the bill are correct. Mistakes in identification could lead to insurance coverage discrepancies.
• Contact your healthcare provider's billing office: Speak to your healthcare provider about any bill inaccuracies. If they made an error, they should be able to correct it. Take note of the billing representative, the date, and time of your call.
• Call your insurer: If you cannot resolve the error with your healthcare provider, contact your insurer about the disputed charge. They can work with you to file a formal appeal to dispute the charge. They can also examine your bill for red flags that could indicate fraudulent activity committed by the healthcare provider.
• Contact a credit-reporting agency: Ensure that your disputed bills do not negatively impact your credit score. As you dispute a charge, your healthcare provider might mark the bill as overdue, which can affect your credit score. Your credit agency should be able to address any credit score issues if you are still disputing a charge.
• Contact a medical billing advocate: If you are unable to resolve the issue on your own, you can seek help from a medical billing advocate. For a fee, they can review your bill, work with your provider to correct errors, and negotiate charges on your behalf.

Know how to check for common errors in your bill

Medical billing errors are common, and patients often end up paying the price. It is important to review your bill for accuracy and save money. Here are some common errors to look out for:

• Incorrect patient information: Mistakes in the spelling of your name, insurance ID number, policy number, or group plan number can lead to claim denial.
• Incorrect provider information: Errors in the address, name, or contact information of the provider.
• Incorrect insurance provider information: Wrong policy number, address, etc.
• Mismatched medical codes: Using confusing or conflicting ICD, CPT, or HPCS codes, or attaching the wrong modifiers to these codes.
• Missing codes: Leaving out codes for procedures or diagnoses.
• Duplicate charges: Being charged twice for the same test, procedure, or product.
• Service not received: Being charged for a test or procedure that was not performed.
• Unbundled charges: Charging individually for related services that should be billed under a single code.
• Upcoding: Using incorrect billing codes that generate increased payment for the provider. This is considered fraud if done intentionally.
• Incorrect balance billing: Being charged an incorrect amount after your insurer has paid their share for a procedure or product.
• Mismatched diagnosis/treatment codes: The diagnosis and treatment codes don't match, leading to the insurer rejecting the claim.
• Inflated surgery and recovery times: Being charged for longer surgery or recovery times than you actually had.
• Charges for basic supplies: Being charged separately for basic supplies like gloves or gowns.
• Incorrect room fees: Being charged for a private room when you stayed in a shared room, or being charged for the wrong number of days.

To check for these errors, you can request an itemized bill from your provider and compare it with the explanation of benefits (EOB) from your insurer. The EOB explains how the costs of your medical care will be split between you and your insurer. You can also look up medical billing codes online and compare them with the codes on your bill. If you find any errors, contact your provider's billing department to dispute the charges.

Learn how to get an itemized bill

An itemized bill is a line-by-line breakdown of all charges, listing the individual services, procedures, and supplies used during a patient's treatment. It is a critical tool for patients, insurance companies, and healthcare providers, promoting transparency, enabling claims processing, and supporting dispute resolution.

To get an itemized bill, you usually have to request it. Contact the billing department or office, provide your information, and make the request. Specify that you want a detailed breakdown of all services, procedures, and supplies, along with associated costs. You can also specify your preferred format for receiving the bill (e.g., email, mail, or fax). If you don't receive the itemized bill within a reasonable timeframe, follow up with the billing department. Remember to be polite and patient during the process.

Once you receive the itemized bill, carefully review each line item to ensure you're being charged only for the services and products you received. Compare the charges with standard pricing information and reach out to your insurance company if there are discrepancies. If you find errors or have concerns, contact the hospital or doctor's billing office to flag the issue and work towards a resolution.

Understand the different types of codes used in medical billing

Medical coding is a complex but essential process that ensures healthcare providers get paid for their services. There are several types of codes used in medical billing, each serving a specific purpose. Here is an overview of the different types of codes and how they are used:

• CPT (Current Procedural Terminology) Codes: CPT codes are numeric or alphanumeric codes that describe medical services and procedures performed by healthcare providers. They are used to track and bill for medical, surgical, and diagnostic services. CPT codes are submitted to insurance companies, Medicare, or other payers for reimbursement. CPT codes are divided into three categories:
• Category I: These are the most commonly used codes and cover a wide range of medical procedures and services.
• Category II: These codes are supplemental and used for performance measurement and tracking patient information, such as medical history and test results.
• Category III: These are temporary codes used for emerging or experimental technologies, services, and procedures.
• HCPCS (Healthcare Common Procedure Coding System) Codes: HCPCS codes are based on CPT codes but focus on non-physician services. They cover items and services not included in CPT, such as ambulance rides, medical equipment, prosthetics, and certain drugs. HCPCS has two levels:
• Level I: Mirrors CPT codes and identifies medical services and procedures.
• Level II: Alphanumeric codes that identify non-physician services, such as ambulance rides, medical equipment, and drugs.
• ICD (International Classification of Diseases) Codes: ICD codes are diagnostic codes that create a uniform vocabulary to describe injuries, illnesses, and causes of death. They are used to represent a doctor's diagnosis and the patient's condition. The ICD coding system is maintained by the World Health Organization (WHO) and is regularly updated. The latest version is ICD-11, which replaced ICD-10 as the global standard for diagnostic codes. ICD codes consist of a letter followed by digits, with each letter representing a specific condition or organ system.
• Other Codes: While CPT, HCPCS, and ICD codes are the most common, there are other specialised codes used in medical billing. These include CDT codes for dental procedures, DSM-IV-TR codes for psychiatric illnesses, and NDC codes for identifying medications.

Each type of code plays a crucial role in the medical billing process, ensuring accurate reimbursement and providing valuable data for research, analysis, and healthcare planning.

Frequently asked questions