How to avoid surprise medical bills, and what to do if they occur

If you recently received a surprise medical bill or were denied coverage for treatment your doctor recommended, a national survey says you’re not alone. You also have lots of company if you didn’t challenge those surprise bills and coverage denials, though there is a decent chance you would have succeeded if you had.

The Commonwealth Fund, a well-respected nonprofit health care research organization, recently released the findings of a national survey of working-age individuals who were covered by health insurance for an entire year. The findings revealed that:

• A significant percentage of those surveyed were surprised that some part of their care was not covered by their insurance.

• Most surprise bills were not challenged, though the success rate of those who did challenge was high.

• There was a meaningful incidence of initial coverage denials, many of which were reversed upon appeal.

The survey found that “45% of insured, working age adults reported receiving a medical bill or being charged a copayment in the past year for a service they thought should have been free or covered by insurance.”

How do you minimize the chances of surprise bills? The most obvious answer is to make sure you understand the details of your coverage, particularly as they pertain to any medical conditions you may have.

These details include:

• Which providers are in your insurance plan’s network (as you will pay more for out-of-network providers)

• Annual individual and family deductibles

• Copays and coinsurance amounts for care from in- and out-of-network providers

• Coverage for preventive services

• Per occurrence and other coverage limits.

Another way to minimize expenses is to “shop” for care before you receive it, and make sure you understand in advance what your insurance will cover and what will be your responsibility. Shopping for care is easier than it used to be, as new regulations require more price transparency.

The survey also found that “Less than half of those reporting billing errors said they challenged them. Lack of awareness about their right to challenge a bill was the most common reason, particularly among younger people and those with low income.”

However, “Nearly two of five respondents who challenged their bill said that it was ultimately reduced or eliminated by their insurer.”

If you believe you have been billed in error, contact the physician’s or hospital’s billing department to challenge the amount. Keep in mind that providers generally get paid significantly less for care provided to Medicare and Medicaid beneficiaries than to commercially insured individuals, so there is no “standard” price for any episode of care.

If your position is defensible, the provider may prefer to reduce the charges or set up a payment plan rather than chase after you, particularly now that medical debt under $500 is not permitted by law to be incorporated into your credit score.

If you work out a satisfactory solution with your provider that includes revisions to your original bill, make sure the provider reprocesses the claim with your insurance carrier. If you are unable to reach a satisfactory solution with your provider, your next step is to raise the issue with your insurance carrier, usually through their member services department. These disputes sometimes take time to resolve, so be prepared to follow up on a regular basis and move up the provider’s or carrier’s organizational chain if necessary.

In any case, a good place to start is to request an itemized copy of the bill in question, which will show codes for the care you are being charged for. A Google search usually yields a basic description of what these codes mean and can enable you to determine at a high level whether your bill corresponds with the care you received. In some cases, you may want to engage a third-party health care billing advocate for assistance. 

One thing to keep an eye out for is overbilling in emergency and some other situations where you received care at an out-of-network hospital or ambulatory care facility, or from an out-of-network provider or ambulance service. In these cases, the federal No Surprises Act prevents facilities and providers from “balance billing” patients more than in-network rates.

The Commonwealth Fund survey found that “17% of respondents said that their insurer denied coverage for care that was recommended by their doctor; more than half said that neither they nor their doctor challenged the denial.”

The issue here is that most payers require “prior authorization” for many forms of care. This is understandable given the rising expense of medical care and the number of treatment modalities that may not be supported by evidence-based medicine. But the process has become frustrating for patients and providers.

The good news is that — similar to the situation with surprise billing — the survey showed that initial coverage denials were reversed 50% of the time when challenged.

The prior authorization process should be easier and more transparent in the future. Multiple pending state and federal bills will require payers to be responsive when prior authorization is necessary, to explain the reasons for denials, and to be transparent about the timeliness of their responses and the frequency of their denials. The Improving Seniors’ Timely Access to Care Act is an example of such pending legislation as it pertains to Medicare Advantage plans.

None of this is intended to suggest that providers and third-party payers are intentionally overbilling or withholding necessary care. Providing consistently high-quality care to more than 300 million people in the U.S. at a cost patients and our nation can afford is a challenging undertaking. Based on my 35 years of experience in the health care industry, I believe that the vast majority of providers and third-party payers do their best and act in good faith.

However, our huge and complex health care system can sometimes seem overwhelming to patients, and they should know that the system can be successfully challenged when bills seem out of whack or coverage is denied. Appropriate challenges are not only good for patients, but they also help to ensure that we find the right balance between access, quality and cost, which is essential to creating a model that serves all its constituents in a sustainable manner.

Web Golinkin is the author of “Here Be Dragons: One Man’s Quest to Make Healthcare More Accessible and Affordable.” He co-founded and chaired the Convenient Care Association, a national trade association of organizations that provide consumers with high-quality, convenient and affordable health care in retail-based locations.