Why Most Americans Do Not Understand Their Medical Bills

Source: iStock
Source: iStock

Confusion in the health care industry stretches across all aspects of the patient experience, from medical terminology to health insurance concepts to legal considerations. Perhaps one of the most mind-boggling steps in a patient’s journey comes long after the medical visit, when the dreaded bill arrives in the mail. One-third of privately insured Americans have been hit with a surprise medical bill, according to a 2015 study, and these unexpected charges are rarely reported. One major reason medical charges often go unquestioned is that most people can’t make heads or tails of their bills.

Medical providers typically use various codes on billing statements, such as CPT, HCPCS, or ICD-9 codes. This is simply the information required by insurers, so it is not intended to be patient-friendly. When Elisabeth Rosenthal, who frequently reports on America’s health care woes, called a laboratory billing office seeking an explanation for her bill, she was told that revealing the meaning of the codes would violate patient privacy. Rosenthal explained that she was the patient in question, but it made no difference. The response: “I’m sorry, this is what I’m told, and I don’t want to lose my job.”

In addition to codes, some bills have abbreviations or scientific terms that you would need a medical dictionary to understand. Others provide no information at all, according to Rosenthal’s piece in The New York Times. One patient even claimed she received a $45,000 hospital bill for “miscellaneous.” Mark Hall, a professor of health law at Wake Forest University, told the Times, “Medical bills and explanation of benefits are undecipherable and incomprehensible even for experts to understand, and the law is very forgiving about that.” For now, the focus is on insurers, leaving patients confused and frequently overcharged for their portion of medical expenses.

Source: iStock
Source: iStock

There is no industry standard when it comes to providing patient-targeted explanations on medical bills. The executive director of the American Medical Billing Association acknowledged, “That would certainly be a worthwhile project for our industry.” So why hasn’t it happened yet? Christina LaMontagne, vice president of health at NerdWallet, says “The lack of standardization is a function of history and relates to how many cooks are in the kitchen: doctors, hospital, insurers, billers. Getting them to agree on how to standardize the bill feels like herding cats.” LaMontagne claims that while boomers have accepted the system, millennials will push harder for transparency. But will it simply be a matter of organizing the many players in health care system?

It’s not just billing explanations that don’t make sense, but the prices themselves. With bloated charges running largely unchecked, the health care system has more at stake than organizing a lot of moving pieces. Hospitals mark up prices dramatically, often on small-ticket items like aspirin or an IV fluid bag, claiming the need to recoup losses in other areas. But with health care in America largely shielded from traditional market forces, consumers have little protection from unreasonable or fraudulent charges.

Americans have seen evidence of the pricing problem reported again and again, from Time’s 2013 cover story, “Why Medical Bills Are Killing Us” to Rosenthal’s reporting on inflated hospital charges. Patients have little power to dispute the actual prices, but there are at least some resources available to prevent the all-out mistakes that happen so frequently in medical billing. For example, Consumers Union recently launched an online insurance complaint tool to dispute unexpected or erroneous charges.

A recent study published by ABC News found that up to 90% of hospital bills include errors.

The same study reported that a patient in Illinois was charged $57.50 for a “cough support device” that turned out to be a teddy bear he had assumed was a gift. Hospitals are frequently guilty of clever uses of language on bills, such as “disposable mucus recovery system” for facial tissues and “thermal therapy” for ice cubes in a bag. Some patients have reported being charged more to cover human error, such as an X-ray developing incorrectly. The most common mistake to look out for on your medical bills is double billing, or the practice of billing a patient separately for multiple tests or procedures that were performed concurrently. These services should be billed as one procedure, resulting in a lower total price.

Until the various cats of the industry are properly herded (don’t hold your breath), there are steps patients can take to gather more information. You could try calling your insurer or medical provider for help, though this could prove an uphill battle. Be on the lookout for evidence of double billing, coverage mistakes, or charges for services that were never rendered. Most of the codes you’ll see on your medical bills can be searched online to get some semblance of an explanation. Rosenthal also recommends the following Khan Academy tutorial on “Understanding Your Medical Bill,” created with the help of the Brookings Institution.

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