It pays to understand how health insurance and billing work—so you can skirt sneaky medical care charges you hadn't bargained for.

By Jennifer Chesak
April 14, 2021
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Some surprises are wonderful, like finding cash in the back pocket of a pair of jeans you haven't worn for a while. But opening a medical bill that makes your stomach drop—that's a surprise you could do without.

"Medical bills of all types are a notorious source of stress," says Heather George, chief revenue officer at Patientco—a health care payment technology company that facilitates billing. "And everyone can relate firsthand to the anxieties caused by a bill that they were not anticipating."

Surprise medical bills plague patients for a number of reasons. But with a little homework, you can prevent one from landing in your mail.

1. Avoid surprise medical billing

One of the biggest culprits of an unexpected health care price tag is something actually called surprise medical billing, also known as balance billing. Let's say you need a surgery. So, to save the most money, you choose a surgeon and a hospital that are part of your insurance company's network. In-network providers or facilities have negotiated a discounted rate with your insurance company for providing care to the company's insured members. But a hiccup can happen.

"Unbeknownst to the patient," says health care attorney Leslie Howard, Esq, the founder and managing partner of Cohen Howard, "they may be treated by doctors, such as a radiologist and/or an anesthesiologist, that end up not being part of their insurance company's network. This could result in the patient being liable for whatever their insurance does not reimburse."

The good news is that the No Surprises Act goes into effect January 1, 2022. When it comes to those surprise out-of-network services, providers will no longer be able to bill you for more than your in-network cost-sharing. And health plans must treat those surprise out-of-network services as if they were part of network coverage. The No Surprises Act is a federal law. But many states already have protections in place against surprise medical billing. You can check your state's laws here.

Even with these laws, you still need to do your homework to choose in-network physicians and facilities. Research which hospitals in your area are part of your insurance plan's network. Knowing ahead of time can come in handy if you require a trip to the emergency room. You can check your insurance plan's website, or call the company directly to ask about a provider or hospital. Alternatively, you can call a provider or hospital and ask if they participate in your plan's network. And if you're at the doctor and need to go elsewhere for labs or imaging, ask the clinic to refer you to a facility that is part of your network coverage.

2. Know your health insurance coverage

Unexpected medical bills can also arise if you're not aware of how your insurance plan works. Read your plan's paperwork thoroughly, and learn about your cost-sharing responsibilities to avoid any surprises.

"The recent move toward high-deductible health plans could mean that consumers may be unclear about the impact on their coverage, network, and costs," says Erin Gadhavi, senior vice president of strategy and initiatives at CareCredit.

The IRS considers an insurance plan to be a high-deductible health plan (HDHP) if the deductible is $1,400 for an individual or $2,800 for a family. High deductible plans typically offer cheaper premiums, and that's why they can be appealing. But if you do get sick or face a medical emergency, the bills can pile up fast and come as a shock.

The deductible is the amount you'll pay each year for medical services before your insurance company starts covering the cost. However, many plans will pay for preventive services, like a yearly checkup and specific screenings, before you meet your deductible. Learn what those services are, and take advantage of them for your health and well-being because they could save you money in the long run.

"If you have a HDHP," Gadhavi adds, "see if you're eligible for a flexible spending account or health savings account that can help supplement the payment of these costs. Accounts like these can help you set aside money for qualifying out-of-pocket fees and medical expenses."

Keep in mind that once you meet your deductible, you'll still pay coinsurance for medical services. Coinsurance is usually a percentage, such as 20%. In that example, your insurance company will kick in 80%, and you'll be responsible for 20% of fees. Many insurance plans also have copays. The copay is a fee, $30 for example, you pay every time you visit the doctor. The copay is often more for an emergency room visit than for a clinic visit.

3. Plan ahead for hospital or surgery center services

If you are having a scheduled procedure, rather than dealing with an emergency medical situation, you've got time on your side. "To avoid surprise bills," Howard says, "consumers should be requesting from their provider's office the cost of a procedure prior to services being rendered and then contacting their insurance company to request how much the provider will be reimbursed."

"If you know you'll be staying overnight in the hospital, what you pack may also save you money. Ask if the hospital will allow you to bring your own prescription drugs," says Adria Gross, the founder of MedWise Insurance Advocacy. Pharmacy fees can drive up medical bills fast.

4. Review your bill carefully

If you receive a medical bill that has you doing a double take, do some investigation work. Nearly 80% of medical bills contain errors, according to Becker's Hospital Review. First, review your bill to make sure charges haven't been accidentally entered twice, and check for anything else that seems amiss. Most medical bill errors often come down to accidental billing code issues. Billing codes are used to describe services and procedures and classify diseases.

The health care industry uses three systems, making the billing process tricky. The American Medical Association (AMA) developed the Current Procedural Codes (CPT). If you see a five-digit code on your bill, search it (using any search engine) by entering "CPT" and the number. You will likely find what it is. The World Health Organization (WHO) developed the International Classification of Diseases (ICD). You can easily search ICD-10 codes. Medicare uses the Healthcare Common Procedure Coding System (HCPCS), which you can download from the Center for Medicare and Medicaid Services.

Check the codes on your bill, and if anything seems odd, contact your health care provider and ask about whether the code is correct based on the services you received. If it's not, the clinic or hospital may need to resubmit the claim to the insurance provider. Hopefully you will receive a fresh bill, with a more palatable balance due that allows you to hang on to that surprise cash you found in your jeans.