Detangling the Medical Insurance Morass

How to save money, understand your bills, find the right doctors — and stay sane

by Jennifer Fallon | Updated 01 Sep 2016 at 5:12 PM

The labyrinth of medical bills can be ruthless no matter how careful you are.

Outside of bankruptcy, it’s estimated that about 56 million adults — about 20 percent of the population — struggle to pay health-related bills. The cost of medical care was rated a top issue in 2015, according to a November Gallup Poll. As of 2013, nearly 2 million people had filed bankruptcy because of unpaid medical bills. This outpaces credit card bills and mortgages as the No.1 leading cause of bankruptcy in the United States.

A new study released by the Kaiser Family Foundation and the New York Times finds that 1 in 5 working-age Americans with health insurance report problems with paying their medical bills. Nearly 60 percent of respondents said they’d drawn on all or nearly all of their savings to cover the cost of medical care, while some 40 percent of people said they had to take a new job or work overtime to pay their health care bills.

The Affordable Care Act has allowed consumers to shop for various insurance options on, but researchers are still unsure about the success average consumers have had in differentiating between the various companies and policies.

There are some helpful resources out there. NerdWallet explains how to spot medical billing errors, how to use online pharmacies, and how to save money at the dentist’s office. Fair Health, a consumer website, helps estimate charges you may receive for certain medical procedures. Health Care Blue Book will allow you to shop for certain procedures to determine a fair price.


Still, trying to get the most from your policy is like herding cats. That is why Pat Palmer, CEO and founder of Medical Billing Advocates of America in Roanoke, Virginia, has made it a professional mission to help people comb through their bills to find errors and demystify the system.

Palmer shares these tips for reducing your bills and choosing a policy.

1: Go straight to the ‘exclusions.’
You’re in the middle of a job search, and you no longer have insurance from your previous employment. You’re looking through the insurance companies on, but you’re not sure what makes one policy better than another. What’s the difference between Blue Cross and United Healthcare, for example? What about state-sponsored health plans?

Palmer says skip the summaries and go straight to the exclusions at the end of the policy.

“Make sure you know what your insurance doesn’t cover,” she told LifeZette. “Take note of what health problems you’ve dealt with and make sure you have access to what you need.”

Also, check the providers and facilities you need to use in your area. What health plans are accepted by the hospitals, clinics, and dentist offices in your area? These questions will help you to choose the best plan for you.

2: Always request in-network services.
If you have a medical procedure coming up — blood work, surgery or anything in between — make sure your doctor’s office or hospital understands you want everything to be done within the network of your insurance provider.

"You may be seeing a doctor who is in your network, but that doctor may order blood work from an out-of-network lab," Palmer said. "If you get X-rays and the radiologist is out of network, you’ll get hit with a large bill. If you need surgery, you need to confirm the anesthesiologist and nurses are all in network."

Palmer said hospitals contract with lots of different people. Unless the patients specify that they only want in-network professionals, the hospitals will likely assign whoever comes up next in their scheduling chart. That means the patient will probably get socked with a huge bill.

Related: Health Care Will Be a Bigger Mess in 2016

If you do get a bill for out-of-network expenses, make sure to contact your provider immediately and let them know that you did not request out-of-network care. Insist that they treat the bill as an in-network expense, and make sure you keep a record showing that you requested in-network care.

3: Get a detailed statement for every medical bill.
For every procedure, you should receive an explanation of benefits document, or EOB. Palmer explained the EOB is more like a summary of expenses from the doctor’s office, without any real detail.

"This tells you nothing," Palmer said. "The first step is get a detailed item of statement from your insurance."

The EOB will likely say something like "office visit." But if you can get a copy of the actual bill from the physician’s office, you’ll see that "office visit" breaks down to something like "new patient visit, level 5."

But you know you’ve been seeing this physician for three years now — so you shouldn’t be registered as a new patient. And levels 4 and 5 indicate a life-threatening illness. Yet, you went in for a routine checkup.

Palmer’s experience has taught her that almost 90 percent of the bills that pass through the law office have been mischarged or overcharged. Consumers will save themselves a lot of money if they can get enough information about their bills.

"You should never pay a medical bill without getting the details on it," Palmer said.

4: Appeal any claim that has been denied.
"Any time you get a denial from an insurance company, you need to appeal it," Palmer said.

Most of the time, a denial indicates the insurance company didn’t receive the correct paperwork or enough background information to validate the medical procedure. But more often than not, those procedures are covered in the policy.

5: Go with an independent provider if possible.
Hospitals are meant to provide health care for patients with severe conditions. Hospitals have higher cost structures to provide the emergency standby capacity, and they have more comprehensive licensing and accreditation requirements. Since hospitals receive no money specifically for the upkeep of the emergency room, their general expenses elsewhere must increase to offset their costs.

So if your physician has access to independent providers within your insurance network, try to have as many procedures performed at those locations instead of in the hospital. It will always be cheaper. If you can get an MRI at an independent facility, do it. If you can get lab work at an independent facility, request it.

In the end, it will probably take you a lot of time to work through the health care system. And it will probably give you more than your share of headaches. But as long as you put in the legwork and collect the right documents, you could save thousands of dollars down the road.

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