While many of us have slashed our grocery, clothing, entertainment, and other spending over the past year, there may be one more expense we can cut: out-of-pocket medical costs.
Whether or not you have health insurance, you've probably seen your health-care expenses shoot up over the past several years. In a recent Consumer Reports survey, readers with insurance told us their costs for premiums alone went up 38 percent between 2006 and 2008.
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 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. What's more, overcharges also bring you closer to the lifetime spending cap imposed by most insurance plans. Caps typically range from $500,000 to $1 million an individual.
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.
If you've ever tried to decode a health insurance statement, you may already know that 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 for a possible bit of incentive, ask your insurance rep if the company pays a reward to patients who find errors on their 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 prescriptions 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.
Create a log of 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.
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 co-payments.
When bills begin to arrive from your doctors, compare the list of procedures with your notes. If you have a question about an item on a bill, phone that 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, including 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, CEO of Medical Billing Advocates of America. "They will be able to answer your questions quickly, which can save you additional phone calls."
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.
This is particularly important for medications, lab work, or hospital-room fees. Compare the charges with your doctors' notes. Hospitals may bill a patent for a procedure even though a doctor canceled it. Also check the number of lab tests or procedures you had.
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.
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.
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 bill.
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 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 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. You can find information about ordering your reports at www.annualcreditreport.com.
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.
If you don't have the time or are too sick to inspect your 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, which has 65 across the country. Keep in mind that most of their work will be done by phone, so they do not have to be nearby.
Stay away from medical credit cards. They are advertised directly to consumers by some issuers or promoted by medical professionals as a way for you to cover pricey or elective procedures.
But the interest rates for the cards can reach exorbitant heights-as much as 27.99 percent. That's the rate Chase HealthAdvance's zero-interest plan charges if you miss a payment or don't pay off the debt in the promotional period. By contrast, the average fixed-rate credit card was charging 10.7 percent in June, according to Bankrate.com.
The cards and financing are promoted to doctors, dentists, and even veterinarians as a way to get paid promptly. Hospitals have started offering their own co-branded credit cards. But using these cards has an additional drawback: You can lose the power to bargain for discounts or even obtain charity care.
This article appeared in Consumer Reports Money Adviser.