Demystifying Insurance Billing: A Step-By-Step Guide To Navigating The Claims Process

Understanding insurance billing can be a challenging task, and it's not surprising that many people find themselves confused by their medical bills. In fact, according to a 2016 survey, around 72% of American consumers reported being perplexed by their medical bills. This complexity often stems from a variety of factors, including procedural codes, medical jargon, and insurance adjustments. However, by familiarising oneself with the basic structure of insurance billing, individuals can take control of their financial responsibilities and make more informed decisions about their healthcare.

Understanding the Explanation of Benefits (EOB)

An Explanation of Benefits (EOB) is a statement from your health insurance plan that describes what costs it will cover for medical care or products you have received. It is generated when your provider submits a claim for the services you received. It is not a bill, but it is important to understand it as it shows how your bill is broken down between the medical service provider(s), your insurance, and you.

The EOB will include a summary of your account information, including your name, the date(s) of service, and the claim number. It will also list the claim details, including the dates the service was provided and a description of the service. It will show what the doctor or hospital charged, what your insurance covered and did not cover, and what your insurance agreed to pay. It will also show the amount you must pay, if any.

The EOB will also include information on any deductibles, copays, or coinsurance that may apply. A deductible is the amount you pay for healthcare services before your insurance starts to pay anything. A copay is a fixed amount you pay for a healthcare service covered by your insurance, usually due before the service is provided. Copays differ for different services in the same plan, and emergency care copays are higher than other copay amounts. Coinsurance is the amount you are required to pay towards the claim, in addition to any copayments or deductibles.

The EOB is a useful tool for showing you the value of your health insurance plan. It allows you to see the cost of the services you received and the savings your plan helped you achieve. It can also help you understand how much money you have left in accounts related to your plan and how close you are to meeting your annual deductible, if applicable.

Knowing the billing codes

Billing codes are used on healthcare claims to identify the patient's diagnosis, the services provided, and the equipment and devices supplied. There are three main types of billing codes: Current Procedural Terminology (CPT), the International Classification of Diseases (ICD), and the Healthcare Common Procedure Coding System (HCPCS).

CPT Codes

CPT codes are used by healthcare providers to describe the services they provide. CPT codes are copyrighted by the American Medical Association (AMA) and are updated annually. CPT codes are typically five-digit numeric codes, although some are four numbers and one letter. CPT codes are used to track and bill medical, surgical, and diagnostic services, and insurers use them to determine reimbursement amounts. CPT codes are critical to streamlining reporting, increasing accuracy and efficiency, and facilitating administrative tasks such as claims processing.

ICD Codes

ICD codes, developed by the World Health Organization (WHO), identify a patient's health condition or diagnosis. The current version is ICD-11, which replaced ICD-10 in 2022. ICD codes are often used in conjunction with CPT codes to ensure that the billed services align with the patient's diagnosis. For example, if a patient is diagnosed with bronchitis and their healthcare provider orders an ankle X-ray, the X-ray may not be reimbursed by insurance as it is not related to the bronchitis diagnosis.

HCPCS Codes

HCPCS codes are used by Medicare and are divided into two levels. Level I HCPCS codes are the same as CPT codes. Level II HCPCS codes are used to identify products, supplies, and services that are not covered under CPT codes, including ambulance services, durable medical equipment, prosthetics, orthotics, and supplies used outside the healthcare provider's office.

Bundled Services

In some cases, multiple services may be bundled under a single CPT code for billing purposes. For example, if a patient breaks their arm and requires an X-ray and a cast, these services may be billed together under one code.

Preventing Billing Errors

It is important for patients to review their medical bills for errors, as coding mistakes can result in denied claims or increased out-of-pocket expenses. Patients should compare their final bill to initial estimates, create a list of charges, and watch out for duplicate charges or fraudulent practices such as "upcoding" or "unbundling." If errors are identified, patients should contact their healthcare provider's billing office and their insurer to correct the mistakes.

How to check for errors

Insurance billing errors are common, and they can be costly. It's important to review your bill for accuracy and to do so promptly. Here are some steps to help you check for errors:

• Understand Your Health Plan: Knowing the basics of your insurance coverage is crucial. Familiarize yourself with deductibles, coverage limits, in-network and out-of-network providers, and other key terms. This will help you identify any discrepancies or unexpected charges.
• Request Detailed Billing Information: Ask your provider's billing department for an itemized bill. Request a list of costs for each medical item or service you're being billed for. Learn how to read a medical bill so you can identify any errors or discrepancies.
• Compare with Explanation of Benefits (EOB): After receiving care, you should get an EOB from your insurer. Compare this with your itemized bill to verify:

• Services or products billed by the provider
• Amount paid by your insurer
• Charges you are responsible for

Check for Common Errors:

• Missing or incorrect patient information (e.g., name spelling, policy number)
• Incorrect or switched numbers (e.g., an extra zero)
• Duplicate charges for the same test or procedure
• Services not received but included in the bill
• Unbundled charges (when certain procedures should be charged under a single code)
• Upcoding or downcoding (when a more or less expensive procedure is billed than what was received)
• Mismatched diagnosis/treatment codes

• Verify Billing Codes: Look up medical billing codes online and compare them to your bill. Understand the different types of codes used, such as CPT (Current Procedural Terminology) or HCPCS (Healthcare Common Procedure Coding System) codes. Ensure the codes match the care you received.
• Review Medical Records: Request a copy of your medical records and compare them to your bill. You shouldn't be billed for anything that isn't documented in your records.
• Check for Double Billing: Double billing is common when care is received from multiple providers. Ensure you aren't charged twice for the same service. Contact the billing department of each provider if you suspect double billing.
• Seek Help: If you need assistance, reach out to a patient advocate or a Consumer Assistance Program in your state. They can help you navigate medical billing issues and resolve any errors.

What to do if you're being overcharged

If you think you're being overcharged on a medical bill, it's important to take action. Here are some steps you can follow:

• Request an itemized bill: Ask your provider or hospital for an itemized bill, which breaks down each service or procedure performed. This will help you identify any duplicate or incorrect charges.
• Dispute inaccuracies: If you find any discrepancies or errors in the itemized bill, dispute them immediately. Common medical billing errors include duplicate charges or incorrect coding.
• Ask to see the contract: If debt collectors are demanding payment for an unfair bill, ask them to provide the contractual agreement that states your obligation to pay. Without a written agreement, you are not legally required to pay.
• Address out-of-network services: If you received care from an out-of-network doctor or facility, you may be charged higher rates. Contact your insurance company to understand your coverage and any potential additional costs.
• Refuse to pay for inappropriate care: If you received unnecessary care or had an avoidable complication, call the hospital or provider and refuse to pay for these services.
• Research the fair market price: Look up what Medicare and commercial insurance companies typically pay for the service you received. Use healthcare price-checking platforms like Healthcare Bluebook and Clear Health Costs to find the best price.
• Contact your insurance company: Review your Explanation of Benefits (EOB) to determine if the service or procedure is covered by your insurance plan. Call your insurer's customer service line if you have any questions or concerns about your coverage.
• File an appeal: If your insurance company denies your claim or refuses to pay for a covered service, consider filing an appeal. You can request an internal appeal or seek an external review from an independent third party.
• Contact your employer's Human Resources department: If you have health insurance through your employer, you can ask your HR department to advocate on your behalf and assist with resolving any billing issues.
• Reach out to the hospital's leadership: If you have exhausted other options and still feel you have been unfairly charged, write to the hospital's CEO and CFO. You can also contact the hospital's board members to bring attention to predatory billing practices.

Remember, it is your right to question and dispute medical bills that you believe are incorrect or unfair. Don't be afraid to advocate for yourself and seek assistance from the relevant parties.

Understanding medical billing terminology

Medical billing terminology can be confusing, but understanding the basic concepts can help patients navigate the billing process and identify any errors or discrepancies. Here are some key terms to know:

• Statement Date: This is the date the healthcare provider printed the bill.
• Account Number: A unique identifier for the patient's account. It is necessary when contacting the provider's billing office or making online payments.
• Service Date: The date(s) on which the patient received medical services.
• Description: A brief explanation of the services or supplies provided.
• Charges: The full price of the services or supplies before insurance adjustments.
• Billed Charges: The total amount charged to the patient or their insurance provider.
• Adjustment: The amount the healthcare provider has agreed not to charge.
• Insurance Payments: The amount paid by the patient's health insurance company.
• Patient Payments: The amount the patient is responsible for paying.
• Balance/Amount Due: The outstanding amount owed to the healthcare provider.
• Payable to: The name of the person or organisation to whom payment should be made.
• Explanation of Benefits (EOB): A document sent by the insurance company to the insured individual, explaining the costs of medical treatments and services, and what portion is covered by insurance and patient payments.
• Coding: The process of translating medical services into standardised codes for insurance claims.
• Deductible: The amount a patient must pay out-of-pocket before their insurance plan covers the costs.
• Co-pay (or Co-payment): A fixed fee that a patient pays at the time of service, which is separate from the deductible.
• In-Network: Healthcare providers who have contracted with an insurance company to provide services to their enrollees.
• Out-of-Network: Healthcare providers who are not contracted with a particular insurance company and may charge different rates.
• Superbill: An itemised form that lists all relevant information, including procedure codes and diagnosis codes, used to create insurance claims.
• Charge Description Master (CDM) Lists: A master list of service costs and billing codes used by medical billing professionals to calculate charges for insurance companies and patients.

Frequently asked questions