Complicated Medical Bills? 6 Easy Steps to End the Chaos

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

Complicated Medical Bills? 6 Easy Steps to End the Chaos

When you purchase health insurance you expect the policy to pay when it’s supposed to which in most cases it does. Yet time and time again I hear stories of people who purchased health insurance and when they went to use it, ended up paying a lot more for a surgery or an inpatient expense than they had anticipated. Let me shed some light on why that is happening in most cases and offer some simple steps on how to avoid becoming a victim yourself in the future.

Avoid the Free Agents of Health Care

I am going to assume that by now everyone reading this article understands the importance of staying in-network for their medical care, which means only seeking care from physicians who are contracted with your insurance carrier. A physician without a contract with an insurance company is like a basketball player without a contract in the NBA – he is a free agent. He is not bound by a contract with any one insurance carrier or maybe just your insurance carrier and as such he is free to charge you whatever he wants for his services. For the majority of healthcare providers the appeal of a contract with an insurance company means that in exchange for a contract the insurance carrier will drive patient traffic to all physicians who play ball with them and, for the most part, that incentive works.

RAPERS Will Cost You

However there are 5 categories of physicians who notoriously do not enter into contracts with insurance companies – they are Radiologists (the x-ray/imaging guys), Anesthesiologists (the put you to sleep guys), Pathologists (the blood and tissue analysis guys) and the Emergency Room (ER) physician groups. If you’re taking notes then remember the acronym RAPER. The RAPERs offer services that are crucial in the healthcare delivery system and they know it. If you are involved in a severe auto accident on the way home from work I’m fairly certain you want to be seen by an ER physician and if you need surgery, you are not going to want to be awake for it. Unfortunately from time to time these free agents find their way into YOUR healthcare delivery, even though you have purchased health insurance from a carrier who advises you to only deal with their contracted players. So what happens when you get a bill from one of these RAPER free agent guys?

I am convinced that a large number of people paying off medical debt in this country don’t fully understand what they are paying for or why.

Understanding Those Nasty Medical Bills

Let’s say you blow your knee out playing basketball with the guys. You are scheduled for surgery a few weeks later. You call your physicians and the facility ahead of time to ensure they are all “CONTRACTED” (that’s the magic word”) with your health insurance carrier. Everyone assures you that they are. Great! You should only have to pay your deductible and out of pocket limits on your policy and after that the rest will be covered by the insurance company.

A few weeks following surgery you are at home recovering and opening mail. You open a bill from an anesthesiologist for $10,000.00. What?? Oh but wait a minute, this next piece of mail appears to be a check from the insurance company… great! You open it – yep, it’s a check alright but it’s for anesthesiologist services in the amount of $2,000.00. So now you’re mad AND confused. You have an invoice for $10,000.00 a check for $2,000.00 and you don’t have any idea why you even bother to purchase health insurance!

I will tell you how it happened. The guy performing the surgery hired an anesthesiologist to ensure you didn’t feel a thing when he cut you open. The anesthesiologist is not contracted with any insurance company. Regardless, he is in the business of making money so he bills your insurance company for his services at a rate of $10,000 for putting you to sleep for 32 minutes. The insurance company receives the claim and in turn, issues a payment for the CONTRACTED rate for that service, by reimbursing the provider the amount they WOULD have paid if he had a contract with them, which is typically significantly less than his billed rate. So let’s say they reimburse him for their contracted rate for those services of $2,000.00. Now, in a lot of cases the insurance company takes this as an opportunity to teach Mr. Anesthesiologist a lesson and make him regret the fact that he has no contract with them. So to drive home the point, instead of sending that $2,000.00 check directly to him, they will often send it to you, the patient, and tell the anesthesiologist that if he wants his money, he better talk to you.

No one is as motivated to save you money as you are.

6 Steps to Eliminate Medical Debt

So now you have an invoice from the non-contracted provider for $10,000.00 and a check from the carrier for the contracted rate of $2,000.00. Here is what you do.

  1. Call the provider or their billing department – the number is listed on the invoice. Have a pen and paper in front of you. Immediately get the name of the person you are speaking to. WRITE IT DOWN!
  2. Reference the date of your service and the invoice number.
  3. Explain that your insurance is through _____________ (name of carrier here). Confirm whether or not the provider is contracted with your insurance carrier. State “in view of the fact I specifically requested only contracted providers to be involved in my care, I had no control over the decision to involve non-contracted providers in my procedure.
  4. I have just received a check from my insurance carrier for the contracted amount of _____________ (amount here).
  5. Ask “Will you accept that as payment in full?” In 90% of cases the provider will accept the payment and not bill you for the rest, but this next step is crucial!
  6. Obtain the full name of the person you spoke to and the date. Send the carrier’s check in with a brief note or letter, referencing your conversation with ___________ (name of person you spoke to here) and the _____________ (date you spoke to him/her) and that they told you this payment would be accepted as payment in full.

There are a few different variations of reimbursement practices, depending on the carrier but in the end, it shakes out the same. If you have purchased health insurance from your employer or on your own, then you have done so to protect you and your family from the financial burden associated with medical care. Unfortunately at times, through no fault of his own, the consumer gets caught in the middle of unresolved or absent contracts between insurance companies and healthcare providers which can lead to some pretty hefty medical bills.

Remember knowledge is power. Only when you understand the system can you take steps to avoid its pitfalls.