Understanding Insurance and Medical Billing Terminology Part 1: Medical Bill Basics

Spotting a mistake on a bill is easy: you compare the price listed on the bill to the stated cost of the item or service, and determine whether there is a discrepancy. Unfortunately, this simple process doesn’t always work with healthcare bills, unless you happen to be an expert in medical coding.

Medical bills use terminology that is specific to the industry, along with sets of numerical codes to describe treatments and services. Ironically, this system was developed to reduce confusion and mistakes but studies have shown that 50%-80% of all medical bills contain errors.

Being able to identify these errors and effectively dispute them with a healthcare or insurance provider can result in significant cost reductions. And that’s not all: uncorrected coding errors can cause insurance claims to be denied, affect the reliability of health records, and increase the cost of healthcare insurance.

Medical Billing Basics

Review medical bills as soon as possible. Begin by verifying that your (or the patient’s) name, address, insurance provider, doctor’s name/s and other information is correct. Then check the information listed below:

Charge: this lists the official price of the services/procedures received. If insured, the charges typically do not reflect the actual amount that the person is expected to pay. Costs are typically reduced by the insurance provider’s negotiated rates with healthcare providers.

Date of Service: check to see if the dates listed on the bill align with the days that healthcare services were received. There may be a few discrepancies – for example, a date listed for lab services that falls after the blood test was administered would likely indicate that the results were analyzed or reviewed after blood was drawn – but the dates provided (and the services listed) should make sense.

Description of Service: this is a list of the services/procedures received. Review this with particular care, as you’re most likely to be able to spot any errors here. Check that services/procedures listed on the bill are correct to the best of your knowledge. Look to see if any items are listed more than once – sometimes duplication can occur when different healthcare providers each log the same services, treatments, medications or other items in your medical records. For example, your doctor may make a note when prescribing medication, the hospital pharmacy may log the same prescription when they fill it, and the nurse that administers the medication may record it yet again. Multiple records are usually reconciled before they appear on your bill, but errors do creep in. If you see anything that doesn’t seem right, ask your healthcare provider or the hospital billing department to explain it to you.

Explanation of Benefits: insurance companies send an Explanation of Benefits, or EOB, when they have processed a claim for payment. An EOB is not a bill, but contains much of the same information. Compare the EOB to the medical bill to ensure the information matches. If you think there’s an error, contact the healthcare provider or call the customer service number listed on the EOB.

Payment/Adjustment: These figures indicate an insurance provider’s pre-negotiated discounts which are subtracted from the charge (see above). Discounts are usually only applicable for services provided in-network. The payment column also displays any co-pays that were made, as well previous payments by the insurance company.

Patient Responsibility/Balance: This is the amount that the healthcare provider believes is owed. Add the figures in the Payment/Adjustment column and Patient Responsibility column to see if the total is the same as the figure in the charge column.

Getting Help: Medical Advocacy Services

Reviewing medical bills, particularly for emergency room visits, hospital stays and complicated treatments, requires a lot of time and – often – specialized expertise. Employees and human resources personnel often struggle to resolve insurance claims and reduce medical costs. The stress and wasted time obviously impact productivity. To manage this issue, many businesses now offer medical advocacy services as part of their compensation package.

:DP HealthNow includes a medical advocacy benefit that provides unlimited, free access to healthcare experts who can review bills, help to correct errors, and work with healthcare providers and insurers to solve billing issues. To find out more about this offering, and the advantages of the :DP HealthNow telehealth package, visit DPHealthNow.com.

Part 2 of this post, “Cracking the Medical Billing Code” will be posted soon.