Jane Dotson
Understanding medical insurance billing can be a challenging task, with complex jargon, procedural codes, and insurance adjustments to navigate. However, gaining a basic understanding of the billing process can help patients identify and dispute any erroneous charges and ensure they are not overpaying for treatment. This process involves healthcare providers sending a claim to the patient's insurance company, outlining the services received and their associated costs. The insurance company then reviews the claim and decides whether to approve or reject it. If approved, the insurance company reimburses the healthcare provider, and the patient may be required to pay any remaining balance. Patients can play an active role in this process by familiarising themselves with key billing terms, comparing billing statements with explanations of benefits (EOBs), and verifying the accuracy of services and dates of care.
| Characteristics | Values |
|---|---|
| Medical Billing Terminology | Accounts Receivable (AR), Aging Bucket, Allowed Amount, Applied to Deductible (ATD), Assignment of Benefits (AOB), Authorization, Authorization Number, Bundling, Charge Description Master (CDM), Claim Adjustment Reason Codes (CARCs), Claim Adjustment Group Codes, Claim Scrubbing, CMS-1500 02/12 Form, Coordination of Benefits, CPT Codes |
| Medical Insurance Billing Process | Contact insurer for cost estimates, compare with other providers, receive medical service, provider sends claim to insurance company, receive medical bill, receive Explanation of Benefits (EOB), compare EOB with billing statement, pay remaining balance |
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What You'll Learn
Understanding common medical billing and insurance terms
Medical billing and insurance can be a complex and confusing process, with a lot of jargon and technical terms. Here is a guide to help you understand some of the most common terms:
Accounts Receivable (AR): This is the balance of money due to a healthcare provider for services delivered. It represents the outstanding claims that require attention and need to be followed up on.
Adjudication: This is the process of decision-making regarding a medical claim once it reaches the insurance payer. The payer (insurer) decides whether to accept, deny, or reject the claim.
Applied to Deductible (ATD): This is the amount a patient must pay before their insurance company starts to contribute to the costs. This is usually outlined in the patient's insurance statement.
Assignment of Benefits (AOB): This refers to insurance payments made directly to the healthcare provider for services performed.
Authorization/Authorization Number: This is the process or the number that states that a treatment or service has been approved by the patient's insurance plan.
Benefits: This term describes the extent of coverage provided by an insurance plan. It outlines what portion of the allowed amount is due from the patient, the level of coverage for services from different providers, and the types of services covered.
Bundling or Code Bundling: This occurs when two or more healthcare services are listed under a single billing code.
Charge Description Master (CDM) lists: These are master lists of service costs and billing codes used by medical billing professionals during the claims process. Each hospital maintains its own CDM list, which includes pricing information for various services and procedures.
Claim Adjustment Group Codes/Claim Adjustment Reason Codes (CARCs): These codes explain why a claim was adjusted and describe why a claim was paid differently than it was billed. They include two alpha characters and a numeric or alphanumeric code that indicates the reason for the adjustment.
Claim Scrubbing: This is the process of reviewing and verifying medical claims to ensure they are accurate and error-free before submitting them to insurance companies.
CMS-1500 02/12 Form/HCFA 1500 form: This is a standard form used to submit claims to Medicare, Medicaid, and private insurance companies for reimbursement of outpatient services. It is easily identifiable by its red ink.
COBRA (Consolidated Omnibus Budget Reconciliation Act): This is a federal law that allows individuals to retain their existing health insurance coverage for a specified period in certain situations, such as job loss or retirement. It provides temporary continuation of health coverage at group rates.
Coinsurance: This is a cost-sharing arrangement where the insured person pays a percentage of covered expenses while the insurance company covers the remaining percentage.
Copayment: This is a fixed amount that the patient must pay out-of-pocket for a medical expense or claim.
Cost Share: This refers to the division of healthcare expenses between the insurance provider and the policyholder. It includes deductibles, coinsurance, copayments, and similar charges.
Covered Charges: These are the services that are typically covered under the terms of the insurance contract. However, these charges are often subject to deductibles and coinsurance.
Credentialing: This is the process of verifying a healthcare provider's professional background, educational history, licenses, certifications, and skills to ensure they are qualified to provide care to patients.
Current Procedural Terminology (CPT) Codes: CPT codes are five-digit codes used to describe medical, surgical, or diagnostic procedures performed by healthcare providers. They are required for billing insurance companies and ensure uniformity.
Medically Necessary: This term refers to healthcare services or supplies that are deemed necessary for diagnosing, treating, or managing a medical condition. These services meet the accepted standards of medicine.
Modifier: Modifiers are added to CPT codes to provide additional information, such as the reason why a specific service or procedure was provided.
Superbill: This is an itemized document used by healthcare providers outlining the services provided to a patient. It is submitted to payers for reimbursement.
Tax Identification Number (TIN): The TIN is a nine-digit number issued by the IRS for tax filing purposes. It is used by individuals and businesses, including eye care practices.
Understanding these terms can help patients navigate their medical bills and insurance coverage more effectively. It is always advisable to review your insurance plan, contact your insurer, and seek clarification on any unfamiliar terms to make informed decisions about your healthcare.
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How to read an Explanation of Benefits (EOB) document
An Explanation of Benefits (EOB) is a document provided by your insurance company after you have received healthcare services for which a claim was submitted to your insurance plan. It is not a bill, but it helps you understand how much your health plan covers and what you will need to pay when you receive a bill from your healthcare provider. It is important to read your EOB carefully to ensure that you are being charged for the correct services at the correct cost.
An EOB typically includes your patient information, such as your name, address, member ID, and insurance group number. It also includes a service description, which explains the healthcare services you received, such as a medical visit, lab test, or screening. The EOB lists the cost of your care and how much your insurance company will pay. It is important to note that the EOB only shows what you owe and not if you have already paid for it.
The EOB may also include a section called "Provider Charges", which is the amount your provider bills for your visit. Another section, "Allowed Charges", shows the amount that your provider will be reimbursed, negotiated between the insurance company and the provider. This amount may be different from the Provider Charges. The EOB will also outline the portion of the allowed amount that your insurance covers, known as the "Insurance Payment".
Finally, the EOB will detail the remaining amount you are responsible for paying, including your deductible, copay, and coinsurance. This is usually listed as the "Amount Owed". It is important to review your EOB to understand your financial responsibilities and to ensure that you are being charged correctly for the services you receive. If you have any questions or concerns about your EOB, you can contact your insurance company for clarification.
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Knowing what to do if your bill has an error
Medical billing errors are common, and it is important to know what to do if you spot an error on your bill. Firstly, check that the bill amount is what you were expecting. If the amount seems high, contact the provider to ensure that they billed your insurance correctly. The insurance company can then check the coding and approve the claim. You can also check that the provider's fees are reasonable by comparing them with other local hospital systems, as federal laws require medical providers to publish their fees transparently. If you've been billed for something that isn't documented in your records, contact the provider's billing department. Double billing is common if you received care from multiple providers, so contact the billing department of each provider if you suspect you've been double-billed. Request a list of the costs for each item or service, and check that the amount you are being asked to pay is the same as the "your share" amount on your explanation of benefits. You can also request an itemized bill or statement from the health care provider to compare with the explanation of benefits from your insurer. If there is a mismatch between diagnosis and treatment codes, or if the billing codes are incorrect, your insurer may reject the claim.
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How to prevent unexpected medical bills
Unexpected medical bills can be a huge cause of concern and can burn a hole in your pocket. Here are some ways to prevent unexpected medical bills:
Understand your insurance policy
It is important to thoroughly understand the terms of your insurance policy. Contact your insurance provider if something doesn't seem to add up or if you need more information. If you believe that a claim was denied incorrectly, you have the right to appeal the denial.
Review your medical bills
If you receive a medical bill, review it to ensure that it is accurate. Ask the hospital or healthcare provider for an itemized bill that includes the billing codes of all the care you received. Check the dates of service, the services performed, and the doctors who performed them.
Compare with insurance estimates
Compare the bill with insurance companies' estimates of fair charges for services. If the price you were charged is more than average, you can have your costs lowered.
Understand the No Surprises Act
The No Surprises Act may protect you from surprise medical bills under certain circumstances. If you have coverage through Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, or Tricare, you may already be protected against surprise medical billing. The Act states that insurance companies must reasonably cover any out-of-network services related to emergency and some non-emergency medical care.
Contact the hospital
If you are facing significant medical debt, contact the hospital to see if there is any financial assistance available. Many hospitals offer assistance programs (often known as charity care) to help reduce your bills.
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How to identify and dispute erroneous charges
The process of medical billing in the United States can be confusing, with complex jargon, procedural codes, and insurance adjustments. However, there are ways to identify and dispute erroneous charges. Here are some steps you can take:
Understanding the Billing Process: Familiarize yourself with common medical billing and insurance terms. Know the difference between terms like "allowed amount," "applied to deductible" (ATD), "authorization," and "authorization number." Understanding these terms can help you identify any discrepancies or errors in your bill.
Obtaining Cost Estimates: Before receiving any medical services, contact your insurer to obtain cost estimates for different healthcare providers in your area. Fees can vary significantly for the same services, so it's important to understand the potential costs beforehand.
Reviewing the Bill: Carefully review your bill for any charges that seem incorrect or unexpected. Look for items such as odd procedural codes, bundled services, or charges for services you don't recognize. Compare the bill with your understanding of the services received and the cost estimates you obtained.
Disputing Charges: If you identify erroneous charges, there are several steps you can take to dispute them:
- Contact the Insurance Company: If you have insurance, review your Explanation of Benefits (EOB) to determine if the disputed charge is covered. Contact your insurer's customer service to clarify any discrepancies between the EOB and the actual billing.
- Good Faith Estimate: If you didn't use insurance, providers are typically required to give you a good faith estimate of the costs in advance. If your bill exceeds the estimate by a significant amount (typically $400 or more), you may be eligible to dispute it through a "patient-provider dispute resolution" (PPDR) process.
- File a Complaint: If you believe your provider or insurer isn't following the appropriate rules, you can submit a complaint. This can include situations where you received an out-of-network bill from an in-network facility or if your provider didn't follow the rules around notice and consent.
- Appeal the Bill: If you think your insurer's decision to deny payment for a claim violates the No Surprises Act, you can appeal your bill. Follow the process outlined in your plan's documents and denial notices.
- Contact the Hospital Administration: If all else fails, you can write a letter or email to the hospital's CEO, CFO, or board members to express your concerns about predatory billing practices.
Remember that you have rights as a patient, and you can take action if you identify erroneous or unexpected charges on your medical bill. Don't hesitate to seek clarification, dispute charges, or advocate for yourself if you believe you have been unfairly billed.
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Frequently asked questions
An EOB is a document sent by your health insurance company that lists the date of service, a description of the care, and the amount your provider charged. It is not a bill but tells you what your health plan has paid for the care you received and may also show the balance that you owe.
CPT stands for Current Procedural Terminology. CPT codes are a shorthand way to describe the types of care you received and help make the electronic billing process more efficient.
The allowed amount is the maximum dollar amount an insurance company will allow a provider to collect for an eligible healthcare service. Depending on the patient’s coverage, this amount may be paid by the insurance, the patient, or split between them.
