My guest post today is from Matthew Bahr, a healthcare finance specialist.
I’ve posted about surprise medical bills before. Sadly, they are becoming more common as healthcare costs continue to rise and provider networks shrink.
Consumer Reports estimates about one third of patients with health insurance receive these unexpectedly high medical bills.
Thank you, Matthew, for sharing your tips and expertise with my readers! FN
Although we know healthcare costs a lot of money, it still stings when we see that bill.
You might think because you’re insured, your insurance will cover most or many of the costs. But then you get the bill and realize you owe much more than you were expecting.
I’ve learned over the years that patients do much better if they know what to expect before they get the actual bill. However, depending on who provides your care and where you live, you may not have access to this type of information.
Trying to find out the costs of procedures before they occur is tough. Most hospitals and clinics simply don’t practice price transparency.
So instead of telling you everything you should be doing to prevent a big bill, I’m going to tell you three things you should NOT be doing.
1. Don’t go to an out-of-network provider
There is a special term in the medical billing world: balance billing.
Balance billing is defined as the practice of billing a patient for the difference between what the provider charges and what the patient’s health insurance reimburses.
I’ll explain by using a scenario where balance billing could occur. I prefer to use realistic examples because it makes these confusing terms easier to understand.
Let’s say you are in your 40s and are playing outside with your kids. A whiffle ball game begins and as you are rounding first base, you hear something pop in your knee and down you go. You end up in the ER with a torn ligament in your knee and need surgery.
You are referred to an orthopedic surgeon for the ligament repair, but when you receive your bill for the consult, you notice it seems a lot higher than you expected. After some investigating, you learn the surgeon you saw was out of network—not under contract—with your insurance.
You were balance billed.
Balance billing works like this: Using the example above, let’s say the surgeon charged you $300 for the office visit. Your insurance company pays $100 of that $300 charge. The surgeon then balance bills you the remaining $200, which is now your responsibility to pay.
If the orthopedic surgeon had been in-network (contracted), you would NOT be balance billed. Using the same example above, the surgeon still charges $300, the insurance reimburses the contracted rate of $100, and the remaining $200 is now a contractual adjustment. You are not responsible for that $200.
Most insurance companies offer some out-of-network benefits with higher co-pays, co-insurance and out-of-pocket limits. But even with out-of-network benefits, you may still be balance billed.
If you have no out-of-network benefits, your insurance company may pay nothing.
Know your provider network. Know your insurance benefits. Read the fine print!
2. Don’t have services that are not preauthorized
Just because your insurance gets billed for a service, even from an in-network provider, that doesn’t mean they will pay for it. The treatment or procedure may be a non-covered benefit, or it may require a preauthorization.
For non-covered benefits, your provider should tell you whether or not your insurance will pay for it. But not all providers are the same. Some may come back and say it was your responsibility to know that information.
A quick example is genetic testing. More doctors are ordering genetic testing, but it’s not always covered by insurance companies. A good rule of thumb for patients is to always question any new, experimental, and/or expensive treatment. Find out before you have the services done whether or not your insurance will cover it.
Regarding preauthorizations, they are basically your insurance company giving its blessing for you to have the procedure. Most surgeries, especially those where you’ll be staying overnight in the hospital, will require preauthorization from your insurance company. Imaging studies, such as MRIs, CT scans, and PET scans also commonly require preauthorization.
What happens sometimes is that a patient is scheduled for a surgery or procedure before the insurance company has a chance to authorize it. In these scenarios, the patient will often be asked to sign a waiver that basically says that the patient—you—has agreed to accept any and all financial responsibility.
Using another real-world example, you see an orthopedic surgeon on Monday afternoon and they tell you that you need a hip replacement. You’re in a lot of pain, but due to another patient cancelling, they have an opening on Tuesday morning and are able to squeeze you in. Awesome.
When you arrive the next morning for the procedure, the check-in desk tells you “Oh, by the way, your insurance hasn’t approved the procedure yet. But if you sign this form, we can still proceed.”
If for some reason your insurance company denies the authorization, those charges will be your responsibility. That could be a lot of money.
Preauthorizations can be waived for emergency services. Otherwise, always ask these questions BEFORE having the services done (or even scheduled):
- Does this require preauthorization?
- Who is responsible for obtaining authorization? The doctor? A nurse or billing specialist?
- How long will it take to obtain authorization?
- Who will notify me when the service is authorized?
When in doubt, contact your insurance company yourself to double check.
When authorization has been obtained, ask for a copy for your records.
3. Don’t be a self-pay patient
The reason why self-pay patients have such large medical bills is because they end up being responsible for the full amount of the charges. There is no payment from an insurance company, and there is no contractual adjustment.
Understanding why these charges are so high in the first place is a whole other article, but just know right off the bat that if you are a self-pay patient, you will pay more money. A lot more money.
If you are a self-pay patient with no plans of obtaining insurance coverage anytime soon, try to negotiate costs prior to having services done.
- Speak to the financial decision maker at the hospital or clinic. Self-pay patients usually meet with a Patient Financial Services team. They provide estimates for your services.
- Inquire about financial assistance. If it’s a non-profit facility, they will have forms you can fill out to see if you qualify for financial assistance. You will probably be asked to provide recent tax records and other financial information.
- Be ready to pay a large amount BEFORE any services are performed. I have been that guy at the hopsital who makes the call on how big of a discount you could receive as a self-pay patient. It is easier to provide a discount if the patient has shown they are willing to pay more up front.
- Be prepared to negotiate AFTER the services are performed. Healthcare costs are difficult to determine beforehand because we don’t know what’s going to happen until it happens. Complications and additional charges will increase your out-of-pocket responsibility, and you will need to renegotiate.
Key takeaways regarding surprise medical bills
Healthcare finance is a complex topic. It gets really muddy once you factor in the fact that you’re often trying to figure this stuff out when you or a loved one are sick.
Sometimes it’s just not possible to get all the facts and know all the answers beforehand, but reading and understanding your insurance policy before you need it is a good place to start.
- What is your provider network? Which hospital provides emergency services?
- What are your covered benefits?
- Which procedures (if any) require preauthorization?
Stay in-network, ask questions, and understand your financial responsibility BEFORE medical procedures happen.
I hope this article points you in the right direction to avoid unexpectedly high medical bills.
I’m always working on new material and welcome any questions or comments you may have. Please feel free to check me out on social media. Follow me on Facebook or visit my blog, ThePatientFinancialAdvisor.com. If you are interested in what I could do to help you or a loved one, check out my Services.
It’s been my pleasure writing for you!
About Matthew Bahr
Matthew has spent more than 10 years working in healthcare finance assisting patients and their families in navigating our complex healthcare system. He is a Certified Healthcare Access Associate (CHAA) through the National Association of Healthcare Access Management (NAHAM). He is also a member of the Transplant Financial Coordinators Association. Matthew is the founder of ThePatientFinancialAdvisor.com, a site that educates and advises those struggling with our healthcare system.