Avoid Medical Bill Sticker Shock

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Just in time for health insurance open enrollment, we identify seven costly surprises and show you how to avoid them

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Before Lisa Beach, an assistant vice president for an Austin, Texas, credit union, had surgery for severe back pain two years ago, she did everything she could think of to make sure she wouldnt have to pay a lot out of pocket.

I wanted to know the names of anyone who would have any kind of involvement in my surgery, she says. Then she ran the names by her insurance company, Aetna, to make sure the care would be covered.

In spite of her diligence, she received a $1,050 bill for services provided by an out-of-network doctor who, it turns out, wasnt even in the hospital during her surgery. That doctor had simply provided specialized equipment used during the operation.

Aetna refused Beachs appeal, she says, so she went straight to the equipment provider. They agreed to drop the bill to $700but only if she paid that day. She handed over the last $522 in herflexible spending accountbut still gets bills for the remaining $178.

I thought I did everything right, only to find out some information wasnt disclosed to me, Beach says.

Beachs experience is all too common. A 2015 Consumer Reports survey of 2,200 Americans found that most with private insurance dont know where to turn with complaints about their health insurance, and almost a third had received a medical bill for which they had to foot more of the cost than they had expected. Many of those people ended up paying the bill in full.

These problems are happening much more frequently, says Blake Hutson, who heads Consumer Reports health insurance advocacy efforts. Were expected to pay a larger and larger share of our health care costs, and getting hit with harsh penalties if, even unknowingly, we see providers outside of our network, Hutson says.

Thats true not just for people who buy insurance on their own through state or federal marketplaces but for those covered through their jobs. Even people on Medicare face shocks if they dont understand the details of their planssomething that happens easily.

How can you troubleshoot the increasingly tricky health insurance system? Weve pinpointed seven situations that can cause medical bill sticker shockand have advice on how to handle each.

Problem:You ended up seeing an out-of-network provider. Your insurance company has a list of doctors youre supposed to get all of your care from, and the anesthesiologist wasnt one of them. Though that scenario often happens with anesthesiologists, the provider could also be an assistant surgeon or someone you never even met in person, such as the radiologist who reads an MRI or a pathologist who analyzes the results of a biopsy.

How to prevent this shocker:If youre preparing for a nonemergency proceduresuch as a joint replacementorhaving a babyask the person who handles your surgeons billing for a complete list of the anesthesiologists, assistant surgeons, and everyone else who could conceivably be part of your medical team. Call your insurance company to determine whether all of those people are in your plans network. Make sure you tell them the exact name of the plan thats on your insurance card, because insurers often have multiple plans, each with a different network of providers. If anyone on your list is not, ask the surgeon whether he or she can use network providers instead. If thats not possible, contact the non-network providers to determine how much you will have to cover so that youre not in for a surprise later. Or consider finding another surgeon who will use only in-network providers.

If it happens to you anyway:Tell the providers and your insurer that you didnt realize the procedure would involve doctors outside of your network. Some physicians may accept the insurance payment and forgive the balance, or the insurer and non-network doctor may negotiate a fee, leaving you with a smaller balance. If you have a plan that you bought on your own through a state or federal marketplace, contact your state health insurance department. Some states have rules for such plans, limiting how much you have to pay for out-of-network care.

Problem:Youre a victim of balance billing, another way that going out-of-network can cost you. In that situation, your insurer allows you to use out-of-network providers but pays only the discounted rate that theyve negotiated with in-network providers, leaving you with the balance. And that cost can be substantial, because the fees insurers set with in-network providers can be hundreds or even thousands of dollars less than what doctors charge directly.

How to prevent this shocker:See providers in your plans network whenever possible. Call doctors and your insurance companybefore your visit or procedureto make sure that they are still in the network. (The insurers online directory could be out of date.) If you decide to go out of network, call your insurer to confirm what your share will be. Most plans, by the way, have exceptions for problems that cant be handled by an in-network provider. Talk with your insurer if you think that applies to your situation.

If it happens to you anyway:If you saw a doctor in your plans network, dont pay the bill. Instead, tell the provider and your insurer that theyve made a mistake. If the doctor was out of your network, explain your situation to the doctor. You might be able to get him or her to forgive the bill, negotiate a lower fee, or offer a payment plan that makes the bill more manageable.

Tell us what did you do about it by adding a comment below.

Problem:This particularly nasty version of balance billing happens if the hospital you went to or the doctors who saw you in the ER are out of network. After all, in an emergency you may not have time to find an in-network provider. The Affordable Care Act has partially, but not fully, addressed the problem: It now requires insurance to cover ER carebut only at the rate paid to in-network providers. So if your ER doc is out of network, which they often are, you may be responsible for the difference.

How to prevent this shocker:If you live close to several hospitals, call your insurer nowbefore you actually need an ERto find out which are in your network and employ network ER physicians. Then, in an emergency, try to go to one of those (in your own car, if its safe; ambulances often arent covered). Reserve ERs for true emergencies. If your regular doctor could handle the problem, go there instead.Urgent care centerscan also be options, but check with your insurer to make sure youll be covered.

If it happens to you anyway:Contact the insurer and the doctor and explain that you didnt have a choice because you needed emergency care. In some cases, the non-network doctor will accept the insurance payment, or the insurer and the doctor will negotiate an acceptable fee. In addition, call your states insurance department to see whether it has passed a law that prevents balance billing in the ER. If it has, dont pay the bill, and lodge a complaint with the insurer. (Seehow to file a complainte in your state.)

Problem:Your health plan probably has ahigh deductiblethat you havent yet met. High-deductible plans can seem attractive because they often have low monthly premiums. And more Americans now have that kind of coverage because insurers and employers are trying to shift a greater portion of health care costs to consumers. But many people who sign up for high-deductible plans dont realize exactly how much they have to pay before insurance kicks in. The law currently caps total out-of-pocket spending at $6,850 for individuals and $13,700 for families.

How to prevent this shocker:The next time you sign up for insurance, whether through work or on your own from a federal or state marketplace, think hard about whether you really want a high-deductible plan. (For the factors to consider and more advice on how to pick the right health plan for you and your family, see Shop Smart for the Right Health Insurance Plan This Year.

If it happens to you anyway:Call the insurer and ask whether you have reached your deductible, or check your insurers website for a tool that helps you track your expenses. If youve met the deductible, let the doctor and insurance company know. If not, check to make sure youre being billed at the lower negotiated rate, not the out-of-network rate.

Problem:You may haveMedicare Advantage, not traditional Medicare. With traditional Medicare, you can usually visit any doctor and hospital you like as long as they accept Medicaresomething almost all health care providers do. But when first enrolling in Medicare, you may have signed up for a Medicare Advantage plan thinking it was the same as traditional Medicare, perhaps in response to a pitch you received in the mail or on the phone. Medicare Advantage planswhich are run by private insurance companies such as Aetna or Cigna, not by the federal governmentoffer some advantages. But they do require people to use a specified network of providers. So if you signed up for Medicare Advantage and then see a provider outside of your network, you could be stuck with the bill.

How to prevent this shocker:If youre not sure whether you have Medicare Advantage or traditional Medicare, check your insurance card. It probably wont say Medicare Advantage but might list a plan name, such as Secure Horizons. If youre still not sure, call and ask which one you have. If you have Medicare Advantage, stick with network providers if possible. If youre not satisfied with your Medicare Advantage plan, you can switch plans or enroll in traditional Medicare during the annual enrollment period. For 2016 coverage, that period runs from Nov. 1, 2015, to Jan. 31, 2016. Read more aboutMedicare Advangate vs. Traditional Medicare.

If it happens to you anyway:Find out whether your plan allows exceptions for visits to non-network providers and whether you qualify for the exception in this case. Contact the non-network provider and ask whether it is willing to accept the insurance payment and forgive the balance. Many are willing to do that, at least once.

Problem:You may be the victim of a fraudulent practice known as upcoding. Every service performed by a health care provider has a code attached to it thats used for billing private or public insurers (Medicare and Medicaid). Upcoding occurs when the provider submits a billing code for a higher-paying service than what actually took place. For example, if your child has an earache, your doctor can often ease the pain by simply removing built-up earwax. But some doctors have been known to bill the procedure as outpatient surgery, allowing them to get paid at a higher rate.

How to prevent this shocker:Its hard to prevent, unless you ask your doctor how he or she will be coding your visit or procedurewhich is neither practical nor, usually, necessary. But if you have a history of that kind of problem with your health care provider, consider asking to put the office staff on notice that youre watching.

If it happens to you anyway:Check theExplanation of Benefits(EOB) form that you should get from your insurer after every doctor visit. If the charges on it seem unreasonably high, ask the doctors billing department to explain why a certain code was used. It could be an honest mistake, or there may be a valid reason for the code. For example, the doctor removed a mole during an office visita procedure you consider simple but may have been more complicated than you thoughtand a provider can legitimately bill for it at a higher rate. If youre not satisfied with the doctors explanation and suspect fraud, contact your insurance company, Medicare, or Medicaid, or your state insurance department. And check past bills for a pattern of upcoding. Illegal upcoding costs consumers millions of dollars in increased premiums and misspent tax dollars for Medicare and Medicaid payments.

Problem:Your plan could have updated its formularythe list of drugs that your insurer routinely coversand your medication is no longer on it. Most private health plans can adjust their formularies at any time; Medicare can do that only during the open enrollment period. Plans update their lists for many reasons: They negotiated a better deal with the drug company, new research shows the medication isnt as safe or effective as thought, or a generic (and cheaper) version of the drug hit the market that is just as safe and effective.

How to prevent this shocker:Before choosing a health plan, check its formulary to see which drugs are covered. Thats essential if you have a chronic condition, such as diabetes or rheumatoid arthritis, that requires you to regularly take medications. Youll get the lowest out-of-pocket costs when you buy the coverage plans preferred generic drugs, usually called Tier 1. A drug that isnt listed on the formulary will often have the highest out-of-pocket cost and, in some cases, may not be covered at all. If youre dissatisfied with your plans formulary, look for a better one at health insurance sign-up time. In addition, when your doctor writes a prescription, ask how much it costs and whether its covered by your insurance. And always ask whether a low-cost generic is available.

If it happens to you anyway:If you find that the drugs price is much higher than you expected when you pick up your prescription, ask your doctor or pharmacist whether a similar drug covered by your plan will work. It may be as simple as switching to a generic. If no other drug is appropriate, ask for an exception from your insurer. You should also shop around. Consumer Reports secret shoppers have found that doing so can save you hundreds of dollars. Costco, in particular, often has low drug prices, even for nonmembers. Last, try negotiating with the pharmacist. Our shoppers found that they could get discounts by asking, Is this the lowest possible price you can offer? (Read more about how to handlesudden spikes in your prescription drug costs.)

Consumer Reports is working to protect consumers from surprise medical bills in several ways:

• In New York, we helped pass a landmark law to prevent balance billing in hospital emergency rooms, and were working on similar laws in states throughout the nation. You can join our efforts to stop surprise medical bills, share your billing story, and find out whats going on in your state by going .

• In California, we worked with the California Department of Insurance and the University of California, San Francisco on a tool that helps consumers there see what they might pay for health care and compare providers on quality. Try theCalifornia Healthcare Compare tool.

Editors Note:This article also appeared in theNovember 2015 issue ofConsumer Reportsmagazine.

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Getting good, affordable healthcare shouldnt be so hard. Ive helped consumers navigate the systemexposing scams, reining in hype, and identifying what really worksfor more than 20 years, focusing especially on doctors, hospitals, and health insurance companies.

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