Medical Costs: How to Avoid Overpaying for Your Health Care

We all know that medical bills can be expensive. Additionally, as we age, the frequency of those medical visits is likely to increase. The average life expectancy continues to increase, which means you will need continuing medical care during those years. Not only are medical costs rising, but it can be difficult to understand what costs are covered by insurance and what costs you will be required to pay out of pocket. To ensure you obtain the maximum benefit at the lowest cost, follow a few simple steps.

Insurance

While medical insurance may not seem like a necessity depending on your age and stage of life, having a health insurance policy will provide benefits at lower costs than you can typically obtain when paying out of pocket. This is due to the contracted rates established by the insurance provider with the health provider. The health provider is often willing to accept this lower rate to be included in the insurance’s network of providers. When choosing a provider or specialist, such as a dermatologist or surgeon, ensure those providers are within your network. If they are, then they will be bound by the network rates. For example, a clinic may charge $200 for an x-ray and agree to bill the same x-ray at $100 for patients who fall under the contract negotiated by the insurance company. From this amount, the insurance will then cover a portion, and you will be responsible for the remaining balance. In contrast, without insurance, you would pay the full $200.

Prior Authorization

If you are undergoing an expensive surgery or procedure, you may wish to request a prior authorization. The prior authorization request will be submitted by your health provider to the insurance provider indicating the services to be performed. The insurance will then provide a breakdown of the rates at which each service can be billed and the amount for which the patient is responsible. Prior authorizations will provide you with your responsibility so you know the cost of the procedure before being billed.

Explanation of Benefits (EOB)

The EOB contains similar information to the prior authorization except the EOB is received after the service is performed and the insurance claim is filed. By the time you receive the EOB, the insurance will have already paid its portion and the EOB will explain the remaining balance that you must pay. It is not uncommon for health providers to bill patients at the time of service, and the amount billed is all too often inaccurate. The EOB is the document by which all parties must abide. Therefore, always pay careful attention to your EOB and compare the patient’s responsibility (the amount you owe after the insurance pays) with what the doctor billed. Whether you paid in the office at the time of service or the doctor sent you a bill after the fact, you must compare it to the EOB. You will be surprised how often the amounts do not match. What do you do if you pay more than the EOB indicates you are responsible for paying? Immediately contact your health provider and notify them of the amount you paid and the balance due according to the EOB. The insurance provider also provides a copy of the EOB to the health provider, so they should have a copy as well. Theoretically, the health provider should utilize this EOB and automatically refund your overpayment, but this rarely happens. Instead, doctors make the patient responsible for following up on the overcharge and requesting a refund. Once you request a refund, the process is not over. You still need to monitor the refund status to ensure the funds are received. Some offices are able to credit it back to the credit or debit card used at the time of purchase, while other offices will mail a physical check. Occasionally, even after the office indicates the refund was issued, you will need to follow up to actually receive it.

Conclusion

Medical costs can be substantial. The best ways to control your out-of-pocket costs are to obtain health insurance, utilize in-network providers, and carefully compare your medical bills and payments to the EOB you receive from your insurance provider. The EOB allows you to know exactly what costs you are responsible for paying, what costs the insurance provider covers, and what claims have been rejected. As such, the EOB is the best way to ensure you do not overpay for medical care. If you have overpaid, then reach out to the health provider and request a refund for the amount paid that is above the patient’s responsibility in the EOB. Alternatively, if you receive a medical bill for more than the EOB indicates, contact the health provider to correct the bill.