July 14, 2020

How to Deal with Surprise Medical Bills


The size of medical bills today can come as a shock to even the most prepared among us. In fact, according to the Kaiser Family Foundation, more than one in four Americans had trouble paying a recent medical bill, expected or not.

The cost of medical debt can be measured in more than just dollars and cents. The same survey showed that nearly one in four Americans have delayed getting medical care out of fear of what it might cost.

Uncertainty and fear are a natural reaction, but the good news is that there are ways you can prepare, negotiate, and respond that can help you avoid having your credit score affected by collections agencies or filing bankruptcy as a result of medical debt.

Susan McGinnis, Vice President of BenEx Insurance, has spent more than 30 years providing medical billing and benefits help to her clients. We asked her to help us understand how to dispute incorrect medical bills, negotiate lower costs, and prepare so you can afford to pay possible future medical bills.

“I know how it is to get a stack of bills from all kinds of different people after you have a medical procedure,” McGinnis said. “It’s shocking to look through and realize so many different people you didn’t even know about were involved in your treatment—and apparently you owe them all money!”

Before Your Medical Care Happens

If you’re anticipating upcoming medical care, start with these steps. If you’re already staring at a bill, skip to the After Your Medical Care section.

Ask for a Predetermination of Benefits

McGinnis said that if you have the chance, its best to talk through the costs associated with everything your health care provider wants to do before you leave the pre-service or pre-surgery appointment.

“We have got to become our own advocates,” she said. “Ask your doctor what these services will cost. Ask them, ‘Who will I be expecting bills from afterwards?’ Always ask the cost before services are rendered. Ask the cost of everything that you do before you do it. Don’t assume your health insurers will cover it. If you have time on your side, ask and find out.”

She said it pays to be specific—ask for a predetermination of benefits, not just what the procedure or service costs in general. Asking for this predetermination will mean the doctor’s office or hospital will run the needed medical services through your specific insurance provider and produce an estimate of what the services required will cost you after insurance has paid their part.

“If you have a predetermination of benefits estimate, you can prepare yourself for what you’ll owe,” she said. “And that will remove any surprises. In addition, you can then take that information and call around to other providers to see if you can lower the costs. Often, you can. Don’t hesitate to call and shop around.”

The predetermination of benefits will also help afterwards when you receive billing statements, she said.

“You’ll have something in writing to refer to that will help determine if your bill is accurate once you receive it,” she said.

What if It’s an Emergency?

“In an emergency situation, you don’t have time to do your homework, obviously,” she said. “But, as soon as you can, call your insurance provider and let them know what’s going on. This lets them watch out for the billing they will receive. They can then explain what you should expect and from whom.”

Asking questions like this when health is on the line might seem strange to some, but McGinnis says that patients who seek out cost information from their healthcare providers put themselves in a much better position.

“If everyone starts asking, doctors and hospitals will change their practices and they will start providing this information,” she said.

Bundled Billing

In addition, McGinnis said looking for medical facilities that provide bundled billing, meaning the provider supplies one bill to patients for all services instead of the patient receiving multiple bills from multiple entities for the same service.

“Bundled billing is often cheaper for the consumer and you’ll get one bill,” she said. “This is what we need to be pushing for as consumers. We need more transparency in our billing. And the more people keep asking questions, then the more something will change.”

After Your Medical Care

Check Your Bills for Errors

According to the Wall Street Journal, it is estimated that 30 – 40% of medical bills contain errors. Some experts have even estimated that as many as 80% of medical bills contain an error of some kind, and most often, the errors will not be in your favor. That’s why it is essential to carefully review both your Explanation of Benefits, or EOB, from your insurance company along with the medical bills themselves.

“If you think you have been billed in error, call and report it to your insurance company,” McGinnis said. “They are your advocate. They work for you. And, they are looking for the same thing you are looking for on that bill—but you’re the expert. You know what services you did or did not receive, and you can be a help to them by reporting possible fraudulent billing.”

McGinnis said that if your bill isn’t right, your insurance company is the best team to handle it for you.

“If something can be done, they will drive that change for you,” she said. “You just have to bring it to light. They will take if from there. But if you aren’t pleased with how they are proceeding, ask to speak to a manager. Don’t stop until you have been heard and you are satisfied that the bill is accurate.”

What is an Explanation of Benefits (EOB)?

Your EOB comes from your insurance company. It explains your insurance benefits as it pertains to a bill. It will usually include the following information:

  • Plan discounts (this refers to a discount negotiated by your insurance company)
  • Amount paid by insurance company
  • Amount you owe the provider

Most explanations of benefits will also include information about your deductible, copay, and coinsurance. If a procedure or treatment is not covered, the EOB should include a short explanation about why it’s not covered. If your statement includes charges for COVID-19 testing or related expenses, like copayments and deductibles, your insurance should be covering the entire amount, as per the Families First Coronavirus Response Act.

“Often the medical provider and the insurance company have a language that us common people may not understand,” McGinnis said. “Don’t be scared to ask questions to your insurance company. They are trying to minimize all this too. And they are there to help you negotiate all of this for you. So, reach out to them and let them try and help. Even if that means they are explaining it to you.”

How to Dispute Medical Billing Errors

If your insurance billed you incorrectly or did not cover a procedure or treatment that is covered under your plan, call a company representative to ask about the charge. Be sure to have your bill in front of you when you make the call, and to note the time of your call, the contents of the conversation and the name of the representatives you speak to in case you need it for future reference.

If the error is with your doctor’s office, ask to speak to a representative of the billing office and calmly explain your position. Again, it’s a good idea to keep a careful record of the conversation for future reference.

How to Negotiate Medical Bills

If the bill is unmanageably high after all errors were corrected, don’t panic! You still have options.

Consider negotiating with the billing office at your doctor’s practice for a lower price on the treatments and procedures rendered. You may want to do this in person, and most practices will allow you to schedule an appointment with a representative of the billing office. Bring all your bills and other supportive documents, such as receipts from the pharmacy and information from your insurance provider.

If you believe a charge for a procedure has been unreasonably inflated, it’s a good idea to research the going rate of coverage through sites like Healthcare Bluebook or your insurer’s Healthcare Cost Estimator.

At the meeting, explain that you are having difficulty with your bill and that you’re looking for a way to lower the costs. Here are some open-ended questions to guide your negotiations:

  • What discounts do you offer for financial hardship?
  • Which of these fees can be waived?
  • Do you have any charity relief plans for patients having difficulty meeting their payments?
  • Can you charge me what Medicare would pay for this service?
  • Can you lower some charges if I pay this off sooner?

Do Medical Bills Affect Your Credit Score?

No matter what method you choose, meeting the situation head on can help you avoid a lot of headaches down the road. Many people let the worry of a big bill spiral into a larger problem before doing anything about it.

Depending on your medical provider, having unpaid medical bills for 30, 90, or 180 days could result in your debt being sold to a collections agency. At that point, the medical debt will begin to leave a mark on your credit report, affecting your credit score and causing a ripple effect in all areas of your personal finances.

By actively taking steps to fix the situation you may be able to avoid the problem snowballing into filing for bankruptcy.

Help Paying Medical Bills After Insurance

Once you have tried all available options for negotiating your bill, you’ll need to choose to pay it now or work on creating a payment plan. Spreading a large bill over several months or years can make it more manageable, but it’s good to think twice about what method you use to pay.

Should I Pay Medical Bills with a Credit Card?

Many people find themselves wondering if paying off medical debt with a credit card is a good idea. While you may be allowed to pay medical bills with a credit card, it is usually a bad idea. Medical debt is different from some other types of debt because it often does not carry interest and you can usually work out some sort of payment plan with your provider to pay it off in installments.

Paying off a large medical bill with a credit card only moves your debt onto the card, which likely has a high interest rate and could get you stuck in a cycle of credit card debt that will be harder to get out of.

If you’d rather not have a huge bill hanging over your head, or your doctor’s office insists on immediate payment, consider other options before credit cards, such as a personal loan.

If you own a home with some equity, you may be able to take some of the pressure off using a HELOC (Home Equity Line of Credit). This will provide you with the funds you need to pay your bill immediately, with a payback plan of more manageable monthly payments.

Going Forward

To avoid an unexpectedly large medical bill in the future, you may want to consider switching your insurance plan to one that provides more robust coverage and less expensive copays and deductibles. Your premiums will likely increase, but the change may be financially worthwhile if you expect to have ongoing medical expenses.

Another long-term option to consider is setting up a Health Savings Account (HSA) at Tulsa Federal Credit Union. The funds you contribute to this account are tax-deductible, grow tax-free and can be withdrawn to cover for qualified medical expenses.