In your mail today is an envelope from your healthcare coverage provider. Probably a bill from the hospital, you think, when you went after that little tumble down the steps a few weeks ago.
It wasn’t that big a deal. An X-ray, some medication, and they sent you home in an hour. No damage to your body, so there should be no damage to your wallet, either. Right?
You look at the bill.
Whoa.
Hospital bills and senior adults
Hospital and healthcare bills can be scary. Some people are so frightened by the prospect of not being able to pay a hospital bill and going into medical debt that they avoid seeing a doctor entirely.
This fear is not unfounded: according to a survey by the Consumer Financial Protection Bureau (CFPB) Office for Older Americans, more than half of all senior adults report they are unable to pay medical bills despite having healthcare coverage.
Another research study found that medical debt is the number 1 source of business for debt collection agencies, and financial experts say that medical debt is the second biggest reason for filing for personal bankruptcy.
What happens if you don’t pay medical bills?
A medical bill is an invoice charging you for using a healthcare provider’s services. If you are a beneficiary of Original Medicare or have a Medicare Advantage plan, your hospital bill comes to you from the healthcare coverage provider.
The bill document should clearly list all the services and products you used or received during your hospital stay. It will state the amount due to be paid by your insurance provider and the balance owed by you, payable by you.
Usually what happens when you don’t pay a medical bill is that first, you are sent reminder notices in the mail. These will often mention a deadline by which all dues must be cleared.
If the deadline passes and the bill remains unpaid, the healthcare coverage provider may take legal action. Alternatively, they may sell your bill to a debt collections agency, which can report it to a credit bureau.
If the debt amount is under $500, there’s not much need to stress. However, amounts more than $500 will still show up on your credit score and damage your prospects of renting a house, buying a car, or getting a bank loan.
The Consumer Financial Protection Bureau has proposed taking medical debt off credit reports, calling it a “senseless practice of weaponizing the credit reporting system to coerce patients into paying medical bills that they do not owe.”In 2023, New York and Colorado stopped unpaid medical debt from appearing on residents’ credit reports. Virginia and Rhode Island followed suit in 2024, and other states have legislation in the works.
But why is my medical bill so high?
That is a $54 billion question, which is the most recently calculated amount of unpaid medical bills burdening senior adults.
It’s a very legitimate question too. To answer it, we’ll have to first understand how medical billing works.
The medical billing system: How it works (or not)
One of the biggest reasons why senior adults cannot pay their hospital and other medical bills, even if they have more than one healthcare coverage plan, is that the billing system is complex, confusing, and with a high likelihood for errors and inaccurate charges.
When a hospital or clinic puts together a patient invoice, they may have to consider all the different parts of Medicare, any supplemental programs, financial assistance programs, and other benefits.
With Medicare Advantage (Part C) plans, they may also need to take into account the various coverage providers’ individual systems and protocols. Things become even more convoluted when the bill is for senior adults dealing with multiple health issues at the same time.
At this point, there’s a lot of information coming in from a lot of different places and it must all be simplified, standardized, and sorted. To know how that happens, we need to understand medical coding.
What is medical coding?
Medical coding refers to turning doctors’ notes into billable items.
When you go for a medical examination or need a diagnosis, your primary care provider will make lots of notes about the state of your health, any chronic illnesses, acute issues you’re suddenly having, prescription medications, lab test results, vaccines you’ve had, and so on.
These notes, which form your medical history, must be converted into short, standardized codes that can quickly and easily be entered into Electronic Medical Records (EMRs) as well as into billing software.
For instance, your physician may note, “The patient has had a heart attack.” When the notes are turned over to the medical coder, this information may be written as I21.9 (in the ICD-10-CM format). The doctor may further write, “Patient needs an intraoperative transesophageal echocardiogram”, and this may simplified to 93314 (in CPT format).
Standardized codes are short and make it easier to create and maintain medical health records. They also enable information to be shared quickly between care providers. Medical codes are additionally used by insurance providers to assign a monetary value to an illness, disease, or injury.
What is medical billing?
After a doctor’s notes regarding a patient have been properly coded by a certified medical coder, the information is handed over to a medical biller, who generates an itemized bill. This bill is sent to Medicare/Medicaid, or to your Medicare Advantage plan provider.
The medical biller also calculates the balance due to be paid by you after the insurance payouts are met. You will receive an invoice stating that balance, as well as any out-of-pocket costs, such as deductibles, copayments, and coinsurance to be paid by you.
Inaccurate charges and errors in billing
An inaccuracy or mistake could be made at any step in the billing process. Some of most common errors in medical billing happen because of:
- Using the wrong modifier
Modifiers are additional numbers that give extra information for code categories. For instance, the ICD-10-CM category I21 refers to acute myocardial infarctions, or heart attacks. The category has several modifiers, each identifying a specific kind of heart attack. ICD-10-CM codes are used for medical reimbursements, and if a medical biller has the category correct but the modifier wrong, this could drastically affect the value of your bill.
- Overcoding and upcoding
A care provider may tack on extra services that were not actually provided. This is overcoding and classifies as fraud if done deliberately. Or the provider may submit a separate claim for services that are usually coded as a single bundle. This is known as upcoding.
Both practices push your bill up and if your coverage provider declines to pay on the basis that the overcoded or upcoded component is not included in your plan, you will be the one paying for it.
- Using outdated codes
Medical codes are updated regularly on an annual or quarterly basis, to reflect changes and advancements in medical technology, procedures, services, and reimbursement policies. For example, as Remote Patient Monitoring becomes more widespread, medical billing systems will add codes to include more remote services. A new, lower-cost vaccine may do the job of several separate shots, but since older codes were used to make your invoice, you will be billed for three shots instead of one (similar to upcoding, but usually not done deliberately).
Value-based care makes it simpler
Value-based care works on the principles of preventative care and management of chronic diseases. It emphasizes quality of care, rather than quantity of care provided, essentially trying to keep patients out of the hospital for as long as possible.
If you’re not going to a hospital, you’re not getting whacked with a hospital bill, right? Right!
The value-based care practice of coordinated care also lowers your healthcare costs because all parties involved in your care — your primary care physician, specialist, therapist, etc — share information with each other. For example, if your PCP has already prescribed a certain test, the specialist won’t ask you to get it done again; they’ll work with the results from the PCP-prescribed test.
Value-based care also follows the principle of right service at the right time. Preventative care is a proactive approach: it aims to catch potential health conditions before they get too serious. The more advanced an illness or disease, the more expensive its treatment.
Keeping an eye on your health, getting the recommended free screenings, and going for your Medicare Annual Wellness Visit are all value-based care practices that contribute towards catching any potential illness or disease at the earliest, which keeps your ultimate health costs low.
How patients and providers can work together to bring costs down
Good doctors make sure their patients have no cause to stress over medical bills. They make every effort to review invoices sent out to their patients, and keep inaccuracies and errors to a minimum.
Meanwhile, if you have any concerns or questions regarding your medical bill, you can speak to the relevant staff at your healthcare center or your coverage provider. Our Patient Relations Team may be a great help in these situations; you can reach them at 800-941-1106.
Request an itemized bill mark any charges that seem suspect or incorrect, and ask to discuss them — in more than 7 out of 10 cases, patients are able to successfully have billing errors corrected to keep themselves safe from medical debt.