12 steps to control costs, minimize debt
Unexpected medical bills can be costly up to $1,000 or more. Sometimes these expenses are unavoidable. Still, there are steps you can take or ask questions of medical providers or your insurance company to avoid paying too much or being hit with costs you can’t afford.
According to the Consumer Financial Protection Bureau, approx $88 billion in outstanding medical bills appeared on consumer credit records in June 2021. This medical debt burden – affects 1 in 5 Americans – is likely even higher because not all medical debt is reported to credit bureaus.
“About 58% of all bills in collections and on people’s credit reports are related to medical bills,” said Berneta Haynes, an Atlanta-based senior attorney at the National Consumer Law Center. “Medical debt affects a wide range of people, but certain groups are more affected than others.”
“Young adults, low-income people, Black and Hispanic communities are more impacted, as are veterans and older adults,” she added.
Learning to deal with medical bills can help you minimize your risk of falling into debt. That’s why CNBC spoke to experts about how to keep healthcare spending under control. Here are some steps I think you should take:
1. Don’t pay until you do your research
Medical bills are full of errors. The numbers vary, but a study by Medical Billing Advocates of America estimates up to 80% of medical bills Contain errors.
Older adults, for example, may have multiple insurance carriers — both Medicare and private insurance — and “that can lead to an increased risk of billing errors and inaccurate bills,” Haynes said.
Also be careful with debt collection notices. By law, debt collectors must send people a letter or email with instructions on how to collect the debt.
“If they don’t, that’s certainly a red flag that they may be dealing with a scammer,” said John McNamara, principal deputy director for markets at the CFPB.
2. Get a detailed invoice
If you receive a bill from a health care provider or insurance company and do not recognize the fee or service, contact the biller to request a detailed list of the services and providers of your care. You may be able to log into an online account and check a digital bill if you no longer receive paper bills.
If a hospital or provider seems hesitant to send an itemized bill, remind them that you are doing so guaranteed by federal law — HIPAAthe Health Insurance Accountability and Portability Act – to get one.
3. Review invoices with an “explanation of benefits”
A “declaration of benefits document” comes from the insurer and may look like an invoice – but it is not. The EOB outlines how much your health care provider will bill your insurer, how much the insurer will pay, and how much you must pay or may have to pay. This amount is typically your copay, deductible, or other balance due.
Contact your doctor if there are discrepancies between the information you provided in the EOB and your individual bill.
4. The new “No Surprises Act” is intended to remedy the situation
Historically, one of the leading causes of large, unexpected medical bills was a case like mine, in which an out-of-network provider became involved in your care – often in a hospital setting – without you realizing it.
About a month after I underwent emergency surgery to repair a sudden, life-threatening brain aneurysm rupture several years ago, I received a “surprise bill” for treatment from an operating room specialist who was not in my insurance company’s network. A friend helped me appeal the charges, making me understand that I had no choice in who was in that room saving my life. Eventually the insurance company paid the fee – but it took time and effort.
Medical debt affects a wide range of people, but certain groups are more affected than others. Young adults, low-income people, Black and Hispanic communities are hit harder, as are veterans and older adults.
Berneta Haynes
senior attorney at the National Consumer Law Center
In 2022, a new law came into force aimed at reducing “surprise bills” for emergency services. Under the Federal law on surprises, Excessive out-of-pocket costs will be capped and emergency services must continue to be covered without prior authorization, regardless of whether a provider or facility is in-network. Although this law faces legal challenges, the Center for Medicare & Medicaid Services (CMS) is still accepting consumer complaints. You can file a complaint Here or call 1-800-985-3059.
5. Check billing codes
If you think you received a bill in error or your insurance didn’t pay the correct amount, check the billing codes on the document. Your individual bill will list the current procedural terminology or CPT codes for medical services or treatments provided.
These CPT codes are used to describe healthcare services and procedures and are used by health insurers and healthcare providers. Make sure the services you received match the CPT code on the invoice. You can often look up what the code stands for on-line.
6. Check if a claim has been filed
You want to make sure the doctor or facility filed a claim under your current health insurance, especially if you recently changed jobs or insurance.
If a healthcare provider is considered “in-network” for your plan, the provider has negotiated a discounted rate with your insurance company, so you typically end up paying less if you use providers in your network than if you contact them contact an external provider – the network provider.
Additionally, if you believe you do not owe the debt, contact the provider directly. “Providers hire debt collectors to do this work for them,” McNamara said. “But that doesn’t mean doctors won’t talk to a former patient if there’s a problem.”
7. File an appeal
If your insurer does not pay the claim or only pays part of the claim and you believe it should be covered, you have the right to appeal.
“Keep good records and a journal of the steps you took, who you spoke to, when, and what they said,” said certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida, and a Member of the Advisory Board of CNBC. “If you do not receive compensation from the provider and you know the bill is incorrect, appeal to your insurance company and contact your state insurance commissioner.”
Although disputing medical bills can be time-consuming and frustrating, don’t be intimidated by the idea of appealing a medical bill. “It’s actually very important not to overthink the formal appeals process,” said Haynes of the National Consumer Law Center. “It really can be as simple as calling your insurance company.”
8. If you owe debt, negotiate a lower bill
If the cost of the care you received was higher than expected, contact the healthcare provider or hospital and ask to negotiate. Speak to the provider that you cannot afford the bill and offer to pay a lower lump sum.
If you’re charged $1,500 for a procedure, but you’ve discovered that the fee in your area is generally $1,000, take a look at your finances. If you can afford to pay $1,000, offer that lump sum to cover the bill.
“It can be surprising how often providers will accept a lower lump sum just to get rid of the debt,” Haynes said.
9. Request a payment plan
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If you can’t afford a lump sum payment, work with your doctor or biller to work out a payment plan. Make sure you agree to monthly payments that you can afford on a regular basis.
“Work directly with the medical biller or provider to set up an interest-free payment plan,” said Bruce McClary, senior vice president of the National Foundation for Credit Counseling. “Speak with a nonprofit credit counselor to understand your options if you’re lost and want a clear understanding of the choices.”
10. Use HSA money
11. Find out about need-based assistance programs
You may be eligible for Medicaid, subsidized insurance, or charitable programs. There are federal requirements for nonprofit hospitals to provide financial assistance programs for low-income patients. The assistance varies depending on the federal state and institution. Ask the provider or facility what they can offer.
12. Avoid paying with credit cards
The average interest rate on credit cards is nearly 25% – and is even higher for some “medical credit cards.”
If you’re paying a large medical bill with a credit card, use a credit card with an introductory offer of 0% interest for at least 12 to 18 months – but be sure to pay off the balance in full before the promotional offer ends.
“You don’t want to incur additional costs from paying off a medical bill, so don’t transfer the debt to a high-interest loan or line of credit,” McClary said.
— CNBC’s Stephanie Dhue contributed to this story.
MORE INFORMATION: Sharon Epperson survived a brain aneurysm. September is Brain Aneurysm Awareness Month. Find out more about this disease at bafound.org.