Money milestones: How to reduce a medical bill you can’t afford

Brian Acton

By

Brian Acton

Brian Acton

Contributing Writer

Brian Acton is a contributing writer at Policygenius who covers personal finance, insurance, and other topics.

Updated July 21, 2021|7 min read

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Medical debt is a major problem for millions. In 2020, collection agencies held $140 billion in medical debt. That number could certainly grow with the pandemic, high job losses, lost health coverage and a struggling economy.

Health insurance isn’t a guaranteed solution, either — health plans don’t cover everything, and many of them require the policyholder to dig deep into their pockets before coverage kicks in.

Unaffordable medical bills can increase your debt, hurt your credit score and even land you in collections. If you’ve received a bill you can’t afford, you have options. Here’s how to reduce the balance owed.

1. Don’t panic, but don't wait

While you need a plan to pay your bill, you shouldn’t panic or pay it immediately if doing so will put you in tough financial straits. There is a 180-day waiting period before medical debt can be reported to the credit bureaus. If it is reported, it will stay on your credit for up to seven years.

That said, you should start working on a plan of attack now. That may include checking your bill for mistakes, negotiating it down or working out a payment plan. It will take time to sort through your bills and make the necessary calls to insurers or medical providers, so be sure to take advantage of the full 180 days.

The worst thing you can do is ignore your bill, hoping it will go away. Your credit can take a major hit if the bill is reported as a late payment or, even worse, an account in collections on your credit report. Getting a late payment or collections account removed from your credit report is difficult and in some cases impossible. It’s better to avoid that scenario entirely.

2. Review your bill for errors

You should carefully review the medical bill and related documents. Bills can contain errors that inflate the amount owed, and there may be certain items that insurance should have covered but didn’t.

You will need a couple of documents to start with, including an explanation of benefits (EOB) from your insurer and a detailed bill from the provider, said Maria Montecillo, healthcare insurance and billing advocate at Medical Cost Advocate. “Patients will also need a detailed, itemized bill from the provider that identifies each charge. This becomes even more important if the bill is for a lengthy hospital stay.”

Check the basic errors

Look for basic errors on your bill. Make sure they got your name, address and other personal information correct. Verify the health insurance information including your insurer, policy number and group number. Check that the dates of service are listed correctly because a single extra day added to your hospital stay could cause your bill to skyrocket.

“It’s important to check if the correct patient was billed — sounds ridiculous but it does happen,” said Montecillo.

Make sure you understand the codes

Now that you’ve verified the basic documents, you will need to review the itemized section of your medical bill that contains all services and supplies along with the date, service codes and the cost. This may take time, but one wrong code can cost you.

You will want to verify dates, codes and services, but verifying codes can be especially difficult. There are several types of medical codes that need to be checked:

  • HCPCS codes are universal codes that each have a specific service or product assigned to them. HCPCS Level I codes are for services and procedures, while HCPCS Level II codes are for non-physician services like ambulance rides or medical supplies.

  • ICD-10 codes are universal codes that each have a specific diagnosis assigned to them. Every line item on your bill should have an ICD-10 code so you know what health condition was being treated. If you were treated for multiple diagnoses, there will be multiple codes.

  • Revenue codes are not universal and could change depending on the medical provider. These codes define the amount of money that should be charged for each service or supply.

There are free online databases of HCPCS codes and ICD-10 codes.

Review for accuracy

Now it’s time to start reviewing the itemized items on your bill for accuracy. Go through each item one by one, identifying the ones you know are accurate and flagging the ones that need a closer look. Use these tips to spot errors:

  • Verify you received the services and supplies listed, which can be difficult if you received many services or were in the hospital for an extended stay. Contact the provider if there’s something you aren’t sure about.

  • Look for instances where you were double (or triple, etc.) charged for a service you only received once.

  • If you received a service or supply more than once, make sure the revenue codes match up and you were charged the same amount.

  • Make sure the ICD-10 codes reference the correct diagnosis. If you see a code that doesn’t correspond with the reason you received treatment, flag it and follow-up.

  • Check if you were billed for medication you brought yourself or picked up from a pharmacy later.

  • Make sure the amounts for each item add up to the total amount owed at the bottom (minus what insurance covered).

Errors on medical bills do happen and if there’s something you’re not sure about, it is worth a follow up.

“If the bill states ‘lab work,’ will need to ask what kind of lab work. I have seen bills where female patients were charged for a PSA test (for males only) or male patients were charged for a Pap smear (for women only). One time a male patient was charged for a breast milk pump,” said Montecillo.

Check what your insurance covered

If you have health insurance, you will need to make sure your insurer paid its fair share of the bill. Always request an EOB even if your insurer didn’t cover any charges or the full cost was applied to your deductible. Verify that the charges on the medical provider’s bill match up with the charges on the EOB. If there is a discrepancy you will want to clear it up with the insurance company before you pay.

In-network and out-of-network services will be treated differently by your insurance plan. You should verify whether the medical provider was in-network and out-of-network and if your insurer covered your costs accordingly.

You’ll even need to verify that the medical provider submitted your bill to the right insurance plan, said Montecillo. “Many employers change insurance every year, and many employers will also change to a different plan within the same insurance company every year,” she said. In actuality, it’s the patient’s responsibility to communicate changes in insurance to the medical providers, she added.

Contact the medical provider or insurer

If you found errors in your bill or you need to verify charges, you can contact the medical provider for answers. The provider’s billing department can help you sort out your bill. This process can take time, so factor in that time within the 180-day grace period.

If you believe your insurer did not cover something they should have, you will need to call the insurance company directly. When you call, make sure you have your EOB and bill handy. Document who you speak to on the phone, along with the date and time of the call. You may need to call a few times to make sure the issue is fixed, and always ask for written documentation that reflects the correction.

3. Negotiate your bill

Even if you managed to reduce your bill by fixing some errors, it could still be out of your range to afford. Medical bills can be negotiated a few different ways based on your income, insurance coverage and ability to pay. Here are your options:

  • Negotiate a discount in exchange for paying your bill all at once

  • Get on an interest-free payment plan that allows you to pay your bill over time

  • Have some or all of your bill forgiven based on financial circumstances

Many hospitals and providers have entire departments set up to handle these inquiries, so don’t feel like you’re asking a huge favor.

“Call the number listed on the bill,” said Montecillo. “Many medical providers use outside billing companies, so it is always good to first contact the phone number listed —the worst they can do is say ‘sorry, there are no discounts at this time.’”

4. Hire a medical billing advocate

Medical billing is complicated and difficult to navigate on your own. You may want to hire some professional help — it will cost you, but it could end up saving you a lot of cash in the long run. Look for patient advocates or medical billing advocates in your area to help you reduce your bill.

Advocates can audit your bill and identify errors or things your insurance provider should have covered. They can also negotiate with the medical provider on your behalf. Some advocates charge a flat hourly rate, while others charge a percentage of the amount they save you on your bill.

5. Use your HSA or FSA

If you have money in a health savings account or flexible spending account, there’s no point in hanging on to those funds for a rainy day. You can submit your bill to your plan administrator and use tax-free funds to pay for eligible medical expenses. Even if you only have a little money in your plan, something is better than nothing. If you don’t have an HSA or an FSA and you’re eligible to open one, now is the time to do so.

HSAs are health savings plans that let you invest funds to grow, and use, tax-free for eligible medical expenses. They can be carried over from year to year, and are only available to those on a high deductible health plan.

Flexible spending accounts are employer sponsored health savings plans that let you deduct money from your paycheck, pre-tax, to use for eligible medical expenses. Your funds must be used by the end of the year or they are lost. Some plans offer limited carryovers, so check with your employer on the details of your plan.

This online database allows you to look up ICD-10 codes, and this one contains HCPCS codes.

Here are some additional tips on reducing your out-of-pocket medical expenses before, during and after treatment.

Here’s how medical debt can affect your credit.

Image: ljubaphoto