Getting the most from your health insurance

Just because you have insurance doesn't mean it's easy to use. That's especially true if you want to go out of your plan's network of providers, have a flexible spending account, or have a lot of bills. Here are our tips on getting the most from your health insurance plan.

A flexible-spending account (FSA) lets you set aside money tax-free from your paycheck to pay for medical expenses not covered by insurance, such as deductibles and co-payments, as well as dental care, eyeglasses and contact lenses, and some alternative treatments. It's only available if your employer offers it.

How FSAs work

Once a year, usually around December, you tell your employer how much money you want set aside from your paycheck to pay unreimbursed medical expenses for the following benefit period. You're allowed to take an advance against funds you plan to set aside by the end of the year. That means, for example, that if you have a qualified medical expense of $1,000 that's not covered by insurance but only $600 in your FSA, the expense can still be covered against future deposits.

FSAs not only allow you to save for medical expenses that aren't covered by insurance, but they also reduce your taxes. For example, say you have a taxable income of $75,000 a year and taxes claim 20 percent, or $15,000. If you put aside $2,500 in an FSA, your taxable income will be reduced to $72,500 and your taxes will be cut $500, from $15,000 to $14,500.

The higher your tax bracket the greater the benefit. If you lose or quit your job, you lose any unspent FSA funds.

Changes to FSAs due to the health reform law

The Affordable Care Act has limited FSAs in two ways. You can no longer use money in your FSA to pay for over-the-counter drugs unless you get a doctor's prescription first. And the maximum amount you can set aside will be capped at $2,500 in 2013, and rise by the annual general inflation rate each year after that. Currently, the cap is set by your employer, usually up to $5,000. 

Keep careful records

You'll want to track your medical expenses carefully since you have to submit bills, receipts, or the "explanation of benefit" forms from your insurance plan to justify cash payments or charges (on an FSA credit or debit card), which can be a hassle.

It pays to understand up front which expenses are eligible under your FSA and which aren't. Your employer's benefits department or FSA administrator can give you this information.  Many companies also provide it online.

Use it or lose it

You must spend the total amount you set aside every year or lose it. FSA funds don't carry over, and you won't be sent a check for the remaining balance at the end of the year. So carefully estimate how much money you're likely to spend out-of-pocket on health care. Use last year's bills as a guide, if you can. It's better to underestimate than overestimate.

Most health plans negotiate rates with providers in their network. But if you use an out-of-network doctor or hospital, the fees can vary significantly. You could be responsible for a sizable chunk of the bill or, if you're with an HMO, perhaps the entire bill. So make sure you really need to go out of your network, and if you do, first do some research and then some negotiating.

Decide if you need to go out of your network

That can make sense if you're seriously ill and need a hard-to-find specialist. But talk with your insurer first to make sure you really don't have access to a qualified provider or in-network hospital.

Get information about costs

Ask the out-of-network provider how much he or she will charge for the procedure. Or use healthcarebluebook.com, a free resource that provides information on health-care costs, to get an estimate.

Also find out how much of the cost you'll have to cover if you go out of your network. You might have to pay a higher deductible as well as a higher percentage of the cost, or co-insurance. You can get estimated out-of-network rates in your area and the amount typically covered by health insurance plans by using the Consumer Cost Lookup tool from FAIR Heath, a nonprofit organization that keeps a database of provider charges for health-care procedures and services. Then ask your insurer how much it will cover. Insurance generally won't pay for any portion beyond what the company considers "usual and customary." So make sure you know how much that is.

Negotiate

Ask your out-of-network provider to accept your insurance company's payment for services as payment in full. If that doesn't work, make sure the charges compare reasonably to the out-of-network rate from FAIR Health. If they don't, and you don't have a medically urgent need, consider shopping around. You might even be able to receive full in-network coverage if the procedure is medically necessary and your network doesn't have a specialist who can adequately treat you. Ask your doctor to help you make the case to your insurer.

Beware of going out-of-network unintentionally

Your doctor might unwittingly refer you to an out-of-network doctor, or the hospital you end up in might use providers, such as anesthesiologists or radiologists, who don't participate in your plan. To avoid those surprises, always ask if the provider or hospital you're being referred to is included in your network. And before scheduling a procedure, ask your coordinating physician to find specialists in your plan.

If you find that you unknowingly used an out-of-network provider, you can still negotiate. Dispute any charges you think your insurance company should cover, and don't pay until you have exhausted all your options. Let your doctor or hospital billing department know that you'd like to work toward a resolution, and offer to pay the in-network rate or a higher amount that you can still afford.

While you may have no control over increases in premiums, co-payments, and deductibles, there's no reason to pay more than you should because of billing errors. Yet Medical Billing Advocates of America, a national association that checks medical bills for consumers, says 8 out of 10 hospital bills its members scrutinize contain errors. Bills from doctors' offices and labs tend to have fewer mistakes, but they do happen.

Mistakes can result from typos or deliberate overcharges. The National Health Care Anti-Fraud Association, a Washington, D.C.-based group of health insurers and state and federal law-enforcement officials, estimates that at least 3 percent of all health-care spending—or $68 billion—is lost to fraud.

With a little time and perseverance, you may be able uncover overcharges. Here's how to give your medical bills a nip/tuck.

Check before you're charged

If you go to an in-network doctor, you'll likely be charged only a fixed-dollar copayment regardless of the size of the fee the doctor receives from your insurer.

But for services for which you pay co-insurance—a percentage of the fee—price matters. Insurers have a separate contract with each of your providers that determines how much they will pay. So there's no single list of fees you can check. After you schedule a procedure, test, or lab work, phone the providers to ask what they will charge and which CPT codes they will be submitting to your insurer. CPT, short for Common Procedural Terminology, is a set of codes used by health-care providers to bill for procedures and services. Each code is five digits. Hospitals use another set of billing codes, called the Healthcare Common Procedural Coding System, or HCPCS. Usually five numbers long, sometimes with letters attached, they're used for supplies, products, and medical equipment.

Next, call your plan's toll-free number to ask for an estimate of the amount your plan will cover and what you'll be responsible for paying. And as a possible incentive, ask your insurance rep if the company pays a reward to patients who find errors on their medical bills; some do.

If you will be hospitalized, phone the facility's billing department to ask what the room-and-board fee will be and what items that fee doesn't cover, such as gowns or tissues, so you can bring your own. Ask your doctor to get permission for you to bring your regular prescription drugs from home so you won't have to pay steep hospital costs for them. Make sure everyone who will treat you participates in your insurance plan.

Keep track of your treatments

Write down every test, treatment, and medication you receive. If you don't feel well enough to keep your own record, ask a relative or friend to do it. Even a limited list will make it easier to decipher your billing statements.

Review bills as they arrive

The first statement you are likely to get is an explanation of benefits (EOB) from your insurance company or a summary notice from Medicare. Either statement will tell you the total amount being charged for your procedures, the amount your insurer is paying, and the amount you owe in deductibles and copayments.

When medical bills begin to arrive from your doctors and other medical providers such as hospitals or labs, compare them with both your notes and the Medicare or insurance plan statements. If you have a question about an item on a bill, phone the provider's office directly for an explanation. If charges are grouped together in broad categories—for example, all lab tests are lumped under one charge—ask for an itemized bill.

If your treatment included a stay in the hospital, you'll probably get a summary bill, which typically lists most charges under broad categories such as pharmacy, radiology, and surgical supplies. But hospital billing departments must send you a free, detailed bill at your request under the Patient's Bill of Rights adopted by the American Hospital Association.

If you still can't decipher some of the charges on a hospital bill, ask the medical-records department for a copy of your doctors' orders and the nursing notes. They will include all the procedures, treatments, and drugs you were given. Also ask for a copy of the UBO4, which is the detailed bill the hospital sends to insurers. "If you still have questions, call your doctor or the nurse's station at the hospital instead of the hospital's patient advocate," suggests Candace Butcher, chief executive officer of Medical Billing Advocates of America. "They will be able to answer your questions quickly, which can save you additional phone calls."

Look for these errors

• Incorrect data. If your name or insurer's group number is wrong, the amount the plan covered is also likely to be. If you were in the hospital, see how many daily room-and-board charges are included. Many plans do not allow hospitals to charge you for your discharge day, although hospitals frequently do. And refer to your log for the time you were admitted. If you went to an emergency room but weren't admitted until after midnight, you shouldn't be charged for the previous day.
• Duplicate orders. This is particularly important for medications, lab work, or hospital-room fees. Compare the charges with your doctors' notes. Hospitals may bill a patient for a procedure even though a doctor canceled it. Also check the number of lab tests or procedures you had.
• Unbundled fees. If you were charged for several lab tests in a day, for example, call your insurer to see if the charges should have been bundled under one lower fee. And look for the terms "kit," "tray," and "room fees." Each of those terms covers charges for several items, such as gloves, IVs, or sheets. But Butcher says they often find separate charges for those items. "I have a hospital bill in front of me for a delivery-room epidural kit that also includes an IV charge that should have been included in the kit fee," she says. "That alone is a $360 overcharge." Question any medical-sounding word that you don't understand; you may find it should have been bundled with another charge. For example, an "oral administration fee" is really a charge for a nurse to hand you your medications, and it should be included in your room-and-board fee.
• Inaccurate operating-room times. If you had surgery, your anesthesia record will state the time your surgery began and ended. Operating-room use is generally billed at rates that vary from $69 to $270 per minute. You might find, for example, that you were billed 240 minutes for a procedure that took only 180 minutes, a correction that will save you thousands of dollars. Also make sure you were not charged for items that should be included in the operating-room fee, such as gloves, linens, or light covers.
• Upcoding. This practice inflates the patient's diagnosis code to a more serious condition that requires more costly procedures, and can be the result of a simple clerical error or fraud. To spot it, compare the diagnosis on your doctors' orders and nursing notes with the charges on your medical bill.
• Upselling. A charge can be needlessly inflated. For example, a doctor may order a generic drug for you that is readily available, but the hospital provides a more costly brand-name medication without your knowledge or consent, and bills you for it. Since you're not an expert at determining whether or not a drug is a generic and you may not have been in a condition to make that determination, you are not responsible for the increased charge.

If you find a mistake

If you find an error, call your provider, explain the error, and ask someone in the billing department to make the correction. For each call you make, keep a record of the time, the name of the person you spoke with, and what you were told. Those may be the only steps you have to take to get the matter resolved.

If that doesn't work, call an account representative or the fraud department of your insurance company. Next, appeal to your state consumer-protection agency or your state attorney general's office.

If you can't get the problem resolved before the medical bill is due, you should pay the part of the bill not in dispute. Check your credit reports if things are not resolved within 60 days. After that time the unpaid amount may have been reported to the three major credit-reporting agencies and your credit score could be affected. AnnualCreditReport.com has information about ordering your reports.

If you find the disputed bills on your reports as unpaid accounts, write to the credit bureaus to explain the ongoing dispute. The bureaus must review your complaint and correct your report.

Where to find help checking bills

If you don't have the time or are too sick to inspect your medical bills for errors, you can hire an expert to check them for you. Medical-billing advocates either charge an hourly fee, from about $50 to $175, or they work on a contingency basis, earning a commission of 15 percent to 35 percent of the amount they save you. If they take a percentage, you don't pay a dime unless they lower your bill, which makes them highly motivated to do just that.

It's a little tricky to find a medical-billing advocate because you may see them listed several ways online or in your local phone book, including as claims-assistance professionals, medical-claims professionals, or health-care claims advocates. You can find one through Medical Billing Advocates of America. Keep in mind that most of their work will be done by phone, so they do not have to be nearby.