As many as 90% of hospital bills contain errors. Furthermore – these errors are much more likely to be in favor of the hospital than the patient – a Nerdwallet Study found that Medicare claims with errors resulted in overpayment for those services by ~26.4% (anecdotally at ClaimMedic we constantly find errors in hospital bills, but have yet to find an error that resulted in a lower cost to the patient).
That means that any medical bill you receive beyond a simple co-payment almost certainly has errors in it, and those errors almost certainly result in you paying for more than you should – not less.
Below are the 5 most common billing errors to look for when you receive a medical bill, and what to do about them.
Why Errors Occur
Before we dive into the specific errors – it’s important to understand why these errors occur – and who or what causes them (it’s almost never your Doctor – so try to avoid blaming them when negotiating your bill).
When you go into the Hospital, Doctor’s Office, or Clinic – your doctor (and/or nurse) will mark down all of your information on your Electronic Medical Record (EMR). This includes the symptoms you had, tests or services performed, results of any tests, final diagnosis, and your treatment plan.
The medical record is then sent to a medical biller where it is translated into a series of codes used to determine pricing. Pricing for these codes (what you or your insurance company ends up being charged) is done by the provider of service and can vary from provider to provider but hospitals use the Hospital Chargemaster sheet to determine pricing (in short – the Hospital Chargemaster sheet is a comprehensive document listing hospital standard pricing for every code, as well as the prices that insurance companies have ‘negotiated’ with your hospital for treatment). This bill is then sent out the insurance company – and ultimately you – to collect money.
It’s important to note that these medical billers are frequently external companies that are contracted by the hospital (or other healthcare provider) to provide this service. They never see or talk to your doctor or nurse. Instead, they have to review the notes in your EMR to verify your diagnosis and treatment, and assign codes to reflect those services.
Furthermore, some medical billing companies charge a percentage of the total amount charged to the patient. So, when they bill more, they make more.
Finally – medical bill coding is incredibly complex. There are 3 standards: ICD (70,000 different codes – used for diagnostics), CPT (over 10,000 different codes, used for services rendered) , and HCPCS (used for procedures). Furthermore, these codes are both incredibly specific (hundreds of codes that could be used for rheumetoid arthritis) and cover nearly everything that you can think of (e.g. ICD code V91.07X: Burn due to water skis on fire)
So we have a situation where a) the people responsible for billing never actually talk to the people who create a medical record, b) an incredibly complex coding system, and c) an incentive to bill the most amount of money possible.
It’s no wonder that there are errors galor.
Below are the 5 most common billing errors that we see – and what you can do about it.
1. Surprise Out of Network Bills
What is it:
You have insurance and went to the ER of your local in-network hospital. Surprisingly, a couple months later you receive bills from the ER physician and the lab that have been rejected by the insurance company because they are “out of network”.
In an effort to cut costs (and make more money) – hospitals are outsourcing portions of their services (like the emergency room, or laboratory testing) to third parties, many of which are considered out of network by your insurance company. This means that not only are you more likely to be responsible for charges, but those charges may be at full price, non-negotiated “chargemaster” rate (vs the rate that your insurance company has negotiated with the hospital).
What You Can Do:
When reviewing your itemized hospital bill and your Explanation of Benefits (from your insurance company) – make sure to look for instances of “Out of Network”. If this happens when you went to what you thought was an in-network location:
- Some states this is illegal – for instance New Jersey recently passed a law with the goal of extinguishing all surprise out of network bills. New York also has a law on the books that requires insurers to treat this as in-network treatment and pay accordingly.
- Do an internet search for “[your state] surprise out of network medical bill” to see if there any specific provisions about this
- Even if your state doesn’t have specific laws on it, this may not be legal. You went to an in-network hospital for care and expected EVERYONE at the hospital to be in-network. Even if you signed something before going into the ER room, the implication is that you wouldn’t be seen by a healthcare professional until signing – and given that this was an emergency (you went to the ER after all) you signed whatever was necessary to receive treatment. Write a letter to the hospital pointing this out.
- Call the out of network provider (hospital) directly to discuss the issue. Ask them to accept the in network rate for the services they rendered since you, in good faith, believed all treatment received at an in-network facility would be paid.
- If the medical provider is unwilling to adjust the amount owed, call your insurance company and ask for repricing of the out-of-network payment. Many companies will make an additional payment so that you are not penalized for going to an in network hospital.
2. Balance Billing
What is it:
Balance billing is the practice of healthcare providers “billing a patient for the difference between what the patient’s health insurance chooses to reimburse and what the provider chooses to charge” (Wikipedia page here).
For In-Network Providers – this occurs when insurers pay the rate they’ve negotiated with a hospital or medical provider and that provider charges you the difference between that payment and the non-negotiated “charge-master” rate that they keep on their books.
This happens quite frequently because it can be blamed on a simple error, the provider just ‘forgot’ to make the contractually agreed upon adjustment to their rates and ‘accidentally’ billed you for the difference in their standard rate. Keep an eye out for this one – correcting this simple but frequent error can save you thousands of dollars.
What you can do about it:
- 6 states have comprehensive protections against balance billing while 15 additional states have some level of protection (see here for a breakdown)
- Google search “[your state] balance billing” to understand what protections there are.
- Remember that even if balance billing isn’t specifically illegal in your state, it’s immoral. The hospital has contracted a set rate with your insurance company, and then are turning around and trying to collect more money from you on top of that rate.
Even if your state doesn’t have protections:
- For in network – balance billing goes against the contract hospitals have with insurers (to provide healthcare services at a specific price to consumers). You can (and should) call up the hospital and point this out.
- For out of network – this is very similar to surprise ER bills (in fact most surprise ER bills for people with insurance are due to balance billing on out of network care) and should be treated the same way.
3. Upcoding (or coding creep)
What is it:
Upcoding is the practice of replacing one procedure with another, more complex one on your bill in order to charge higher rates. As mentioned earlier in this post, all medical procedures have a specific code attached to them that tells the billing company how much to bill and the insurance company how much to pay.
However, there can be multiple codes for similar services depending on complexity, time and size of the affected area. For example CPT code 14000 is closure of 10 sq cm or less while CPT code 14001 is for 10.1 sq cm to 30 sq cm. Coding at the higher level can mean a difference of hundreds to thousands of dollars.
What you can do about it:
- Request a copy of your itemized bill and review the bill for items that you believe to be in error
- Request a copy of your medical record and compare those to the itemized bill. If you feel like your condition was exaggerated – either because your medical record states something more serious than you had OR because the code in your itemized bill if for something more serious than notes in your medical record – talk to your healthcare provider about it.
- You have a right to ask questions and have those questions answered.
- If your provider does not cooperate with your requests call your insurance company and discuss the issue with them. They can request records and do their own review of the charges on your behalf.
4. Misuse of Modifier 59
What is it:
Modifier 59 is “used to identify procedures/services that are not normally reported together, but are appropriate under the circumstances” (see source here). Used appropriately – it usually is done to show that two or more procedures were done on the same visit to different parts of the body. For instance, it could be used to indicate two separate IVs administered to someone for 2 separate reasons.
However, this modifier is often used inappropriately to increase billing revenue. Many codes are ‘bundled’ – that is one assumes the other, and Modifier 59 is used to ‘unbundle’ that and charge for distinct items that shouldn’t be charged for. For instance – checking blood pressure and oxygen levels is part of administering anesthesia. Because of this, the price for an anesthesia code includes checking O2 and blood pressure. Adding another code with a Modifier 59 for these two items is in essence double billing.
Overuse of Modifier 59 is a widespread problem. The government projects that Modifier 59 is used in $770M worth of errors per year.
What you can do about it:
- Review your Explanation of Benefits (EOB) from your insurance company and your itemized bill from your healthcare provider for the procedure codes that were billed and paid.
- If any code billed includes the ‘59’ modifier at the end of it the code, pay extra attention to the billing code to make sure that they were indeed for separate procedures. You may want to call your doctor to have them explain to you what happened just to be sure.
- Pay attention to the denial codes on your EOB. If it states that the “service is denied because it was included with another service rendered” you cannot be billed for that denied service.
- It’s important to note that overuse of modifier 59 is a common reason that insurance companies deny claims. Lazy (or unscrupulous) hospital billing departments may then turn around and try to bill the patient for the entire amount, rather than fixing the modifier 59 abuse and resubmitting to the insurance company. If this is the case – you’ll want to force the hospital to fix these modifiers and then have them resubmit the bill to the insurance company (since it can take up to one year before an unpaid bill goes on your credit report, you have time to get this done)
5. Additional Charges on Your Bill for Services Not Provided
What is It:
You bill may mistakenly contain codes (and their charges) for services not provided. This often occurs because the medical billing coder is forced to make a number of assumptions about procedures without full information. For instance, we recently looked at a bill that included thousands of dollars in charges for staples during a surgical procedure. The only problem is that stapling was never done during the procedure. However, because stapling is the common practice for closing up an incision in a surgical procedure, the charge was added by the medical coder.
What to do about it:
Examine your itemized bill line by line to make sure that you actually received any treatment that is being charged. If you see any questionable charges, request a copy of your medical record and verify the diagnostic or treatment wasn’t given. If you still believe that the treatment was in error – reach out to your hospital billing department and point out the discrepancy.
Medical billing errors are extremely common and cause millions of dollars in overcharges per year. Given that 9 in 10 medical bills contain errors, it’s important for you to be diligent in reviewing all of your medical costs and getting any errors taken off your bill.
For more information about understanding your medical bill – Khan Academy and the Brookings Institute published a free video course titled Understanding Your Medical Bill.