What To Do with a Surprise Medical Bill

Karen Stockdale
Oct 6, 2021

Reclaim your health with us!  This article discusses surprise medical bills and covers:

  • Why unexpected medical bills happen
  • What to do when you receive a surprise medical bill
  • How to make sure that a medical bill is correct
  • How to collect the information you need to fight a medical bill
  • Financial assistance and payment options for medical bills

Unexpected Medical Bills

Facing an unexpected medical bill?  For the average patient, large medical bills can cause a lot of stress and serious damage to your personal finances.  For most things we buy, we can see the prices ahead of time, and there are no big surprises.  Medical care is one of the few services we receive that leaves us mostly in the dark about what we will owe--until the bills start arriving.  Even then, the bills from insurance companies can be very hard to understand.  For some, it’s tempting to ignore the bills until they make a dent in your credit, but this can negatively impact your credit for years.  More importantly, ignoring them isn’t just unhealthy for your financial profile; it’s unhealthy for your body.  Undue financial stress can aggravate any healing that needs to happen post-procedure or health episode, and it can create new health issues, both physically and mentally.

To make sense of your medical bills, you’ll need a crash course in medical billing and some new terminology.  If it feels too overwhelming to take in all this information alone, ask a trusted family member or friend to help you through the process.  Sometimes two heads are better than one, especially if you are still recovering from an illness. 

We’re here to help. Take a deep breath, and let’s begin!

 Step 1:  Re-familiarize yourself with your health insurance coverage 

Before you tackle understanding the bill, familiarize yourself with your health insurance coverage, such as deductibles, maximum out-of-pocket amounts for the individual and family, prescription coverage, and copays.  Most people review this information once a year and then file it away and forget it--until it’s really needed!    

It’s especially important to know which providers in your area are in-network, or contracted by your insurance company, so you can prioritize choosing those providers for care.  Out-of-network services are paid by insurance companies at a much lower rate, or sometimes not at all.  If the medical service you need is not an emergency, you can easily find out if your physician is in-network before deciding to receive care from them.  Here’s how in two quick steps:

  1. Call your physician’s office and ask for your doctor's tax ID number.  The front desk will likely not know this, so ask to speak with someone in patient accounts or billing to obtain the number.  
  2. Call your insurance carrier at their general line and give them the specific name of your plan (found on the back of your insurance card) and your doctor's tax ID number.  They'll be able to tell you whether or not your doctor is in-network.  

Keep in mind: physicians can be in-network for one insurance plan but out-of-network for another plan offered by the same company.  The name of the insurance company is not enough, so make sure that you have the specific plan number handy.

If you still have questions, call the number on the back of your insurance card and talk to a representative.  Does your employer provide your health insurance?  Great!  Your HR department can often provide information, answer any questions you may have, and provide the contact information for a plan representative you can call. 

Step 2:  Make Sure the Bill is Final

 Before you panic about payment, make sure that the bills you’re receiving are final bills, meaning the bills reflect payment due after insurance has already been processed.  Billing for medical services is done via a coding system that is very complex.  There are actually over 69,000 diagnosis codes and 70,000 procedure codes in the current system!  Codes are assigned based on what your physician recorded in your chart, and this creates the bill.  If something is coded incorrectly, the hospital may receive a denial from your insurance company and then have to reprocess the bill.  If this occurs, you may end up with an incorrect or incomplete bill.  Hospitals have one year to amend or process claims.  So if you’ve ever received an expected bill 10 months after a procedure, now you know why.

As you’re collecting final bills, remember that some healthcare services like radiology or anesthesia may have separate charges from the hospital, emergency room, or clinic.  You can also receive a bill from a specific physician who saw you at one of these facilities.  This happens when a physician at the healthcare facility is out-of-network even though the facility itself is in-network for your insurance company!  Sometimes, hospitals use staffing services, such as ER physician groups that are not direct employees of the hospital.  This group may have completely different associations with insurance companies.  Radiology services or anesthesia services can also be outsourced in this manner.  If this happens to you, an appeal may be in order.

(Note: For more detailed information about Balance Billing, please see here.)

Step 3:  Get Organized! 

We all know the medical system and insurance systems are very complex, and if you’re going to dispute items on your bills, you’ll need to keep very good records of the process.  You can start a spreadsheet on your favorite device, or simply with pen and paper.  Whichever system you choose, you’ll need certain details, and you’ll need them to be very organized for future reference.

  1. List each bill for each service you had.  For example, each ER visit will be billed separately, as will each procedure.  If you have multiple stays or visits, this can get confusing.  You’ll need to know the invoice number for each bill.  Write those down, with the date and type of service, as a summary of your bills. 
  2. Carefully record each phone call you make, with the number you called and who you spoke to, with their extension number if possible.  Write down dates and times, information found out, and any items you need to follow up on or provide.  And remember: being kind to the person on the other end of the line will always get you a better response.
  3. Don’t be afraid to ask for a supervisor if you feel you’re speaking with someone who doesn’t understand your question or isn’t able to help you. 
  4. Make copies of any forms or letters you mail, and keep records of the dates you mailed them.  Similarly, keep any email communications and voicemails saved.
  5. Send all communication to insurance companies, such as appeals, via certified mail and keep the receipts!

Step 4: Figure Out What Your Insurance Paid

After your final bill is in hand, you’ll need to match it up with the EOBs.  An EOB, or Explanation of Benefits, is a document from your insurance company that details which charges were paid and which are your responsibility.  Although these arrive in the mail and look like bills, they are not actually bills.  Rather, they explain what your insurance paid for and should mirror what you are seeing from the medical provider on the actual billing statements.  (link to EOB article)

Carefully tie each EOB from your insurance carrier to the billed services from the hospital or clinic.  Does everything match up?  It should.  Discrepancies or lack of payment by insurance companies are red flags to investigate further.  It’s important to note that each invoice could have multiple EOBs.  File and organize them carefully because you can quickly accumulate a lot of mail!  You’ll want to be able to put your fingers on the correct document when you need it.

Did your insurance not pay what you think it should?  Check to make sure you used in-network services and that any procedures had the necessary pre-authorizations.  If out-of-network services are used, you can appeal these charges if the situation was a medical emergency or if no similar in-network service was available for your area.  (See Appeals Process step-by step)

 Step 5:  Make Sure the Bill is Correct  

Everyone’s heard about emergency room charges for a twenty-dollar aspirin or bandaid, and those aren’t necessarily exaggerations!  Most bills only show a summarized account of the care given, or an overall lumped charge, such as “emergency room visit.”  However, hospitals and other medical care providers are required to provide an itemized bill of each individual charge or service provided if you request it.  You can request an itemized bill by phone through the billing department.  

One caution when looking at the itemized list of services: A lot of it depends on the care setting.  If an expensive level of care is used, such as an emergency room, then the cost of 24-hour nursing, lab, radiology, and other care is bundled into room charges, medications, and other items.  In other words, the staff available at midnight to assess the need for labs, read them, diagnose, and administer the aspirin are bundled into some of those charges. 

Once you have an itemized bill, you also have the right to an explanation of charges that you are unclear about, and you can even dispute those charges through a formal process called a grievance.  A grievance is a formal, written complaint or dispute that is handled through the patient advocate or quality department.  You’ll be given information in writing about the resolution of your dispute, including the investigation and if all or part of the charges are reversed.  During the time that the grievance is being investigated and resolved, you should receive no further collections action.  If the grievance is unsubstantiated, then collections will resume.

Step 6:  I have an accurate bill.  Now what?

Medical bills mostly happen in two ways: either you had no insurance at the time of treatment, or you’re dealing with the out-of-pocket deductibles required before your insurance pays.  Thankfully, there are resources out there to assist with both scenarios.

If you’re uninsured, you may qualify for Medicaid or lower cost insurance through the ACA (Affordable Care Act) Marketplace.  Most hospitals retain an insurance counselor to help you with this, and they can even file for Medicaid benefits for you.  It’s always wise to seek out this counselor, so they can help you better understand your options.  In some cases, Medicaid benefits can retroactively cover care that’s already been received. 

Another way to find out about resources in your area and programs your hospital may offer is through social workers and case managers.  Social workers and case managers don’t see every patient during their stay; they may be screening for patients that need long-term care, hospice, or other services, and handle financial counseling upon request.  You may not even realize they’re available.  You can access help from these professionals even after a hospital discharge by requesting an appointment.  These valuable resources deal with the healthcare system daily and have lots of ideas to help!  They can provide information, point you in the right direction, and sometimes get the process started. 

 Step 7: Negotiate a Payment Plan

Before you go into the billing office armed with your itemized bills, EOBs, and notes, you’ll need to take one more step: assess your financial situation.  One of the first questions the financial assistance person will ask you is, “How much can you afford?”  Be prepared with a list of your income, bills, and monthly expenses.  Be realistic; there are always miscellaneous expenses and everyday things that pop up.  Don’t overextend yourself, but come up with a reasonable number. 

Remember, hospitals are required by law to see patients and provide medical treatment, regardless of the patient’s ability to pay.  Therefore, they’re also in the business of helping you find an arrangement to pay and will have an office for this.  Some hospitals provide financing on-site, and others have arrangements with financial institutions to provide credit, or both. 

Step 8:  Assess Other Financial Options

While you may not have the cash in hand to pay these bills, there are some other financial options available, depending on your situation.  Evaluate these options carefully along with Step 7 (Negotiate a Payment Plan). 

  1. HSA/FSA accounts: Health Savings Accounts and Flexible Spending Accounts are typically offered through an employer.  These accounts differ in several ways, but both offer great options for paying for medical expenses (read mo--with tax benefits as a bonus!  If you have either of these, use this money before considering other payment methods.  
  2. Refinance other debt: Evaluate other debt to see if it can be refinanced or a different payment arrangement can be made.  One example would be student loans, which often offer flexible repayment based upon your ability to pay.  If you have significant medical expenses, your ability may have changed.  You may have other types of debt that offer some flexibility as well.
  3. 401K loans: Lots of companies have 401K loan programs, and medical bills often qualify.  In order to utilize this option, you would essentially borrow money from your account and then pay it back.  Assess this option carefully because you will lose the interest you would have gained on that money during the time you’re paying it back.  However, depending on your situation, it may be your best option to avoid further debt.
  4. IRA early withdrawal: Most of us know that taking retirement money out early incurs some hefty tax penalties.  Most of the time, this is a “last resort” option.  However, if that money is spent on medical bills, you can sometimes avoid those penalties.  Familiarize yourself with the rules or consult a tax professional before you make the move, but this can be a helpful way to avoid hardship.  

Remember, your best course of action for taking care of yourself -- both your health and your finances -- is always to plan ahead.  After you’ve tackled this surprise bill, assess ways to financially prepare for medical treatment in the future.