How to avoid surprise medical bills

Surprise medical bills are a problem that affects millions of Americans each year. Surprise billing, also called balance billing, is when you receive a larger-than-expected bill from your health care provider, such as a hospital or your doctor.

A surprise bill isn’t when a doctor or hospital overcharges you. Instead, a surprise bill is when you get a larger-than-expected medical bill because your health insurance company doesn’t cover as much as expected.

Medical billing works this way:

• The provider bills the insurance company.
• The insurer reviews the claims. Insurers and providers have contracts that dictate how much they’re paid for particular services.
• The insurer pays the provider.
• The provider charges the patient for the outstanding portion of the bill.

The insurance company and provider have already agreed upon a price for services for in-network care. However, out-of-network care isn’t so straight-forward. In this case, your insurer hasn’t contracted a payment rate with the provider.

How much you have to pay depends on the type of plan. For instance, the patient who receives out-of-network care may pay higher costs if it’s a preferred provider organization (PPO) plan. That’s because a PPO plan allows out-of-network care, but requires consumers to pay higher out-of-pocket costs. A health maintenance organization (HMO) plan, meanwhile, doesn’t allow out-of-network care. In that case, the patient will likely have to pay all of the costs.

“If a provider is in-network with an insurer, that means that they have agreed to a rate and will not bill the patient beyond it,” said Caitlin Donovan, director of outreach and public affairs at the National Patient Advocate Foundation. “An out-of-network provider isn’t restricted by any such contract and so the only way to avoid these bills is either by staying in in-network or being shielded by the few consumer protection laws that exist.”

Surprise billing is common

Many recent studies highlight the size of the problem. A Kaiser Family Foundation report discovered that almost 20% of inpatient admissions in large employer health plans include an out-of-network provider claim. KFF said anesthesia and pathology claims are more likely to have a surprise bill from in-network hospital visit that includes care provided by an out-of-network provider.

Surprise bills are also common after an emergency room visit. A Health Affairs study said 20% of hospital inpatient admissions that originate in the ER leads to a surprise bill. A Journal of American Medicine study put the percentage at 42.8% for ER visits.

Insure.com conducted a survey of 1,000 people in June 2021 and found that 26% said they’ve received a surprise medical bill. Those who received a surprise medical bill said the most common types of unexpected bills are:

• Hospital — 49%
• Lab tests — 48%
• Physician services — 43%
• Imaging — 29%
• Prescription drugs — 20%
• Ambulance transport — 13%

The top three sources of surprise medical bills have remained the same in each of past three years’ surprise medical billing survey. 

More than half of respondents said the surprise medical bill was $1,000 or less. 

• Less than $500 — 33%
• $500-$1,000 — 27%
• $1,001-$2,000 — 19%
• More than $2,000 — 21%

As you can see, nearly half said they received a surprise medical bill over more than $1,000. Getting that kind of unexpected bill when you’re living paycheck-to-paycheck and don’t have much savings can cause financial problems. That’s worrying Americans. 

KFF found that two-thirds of Americans are either “very worried” (38%) or “somewhat worried” (29%) about being able to afford a surprise medical bill. 

When you might get a surprise bill

So, there’s clearly a problem with people getting unexpected medical bills. Now, let’s take a look at when you might get a surprise bill.

Here are seven scenarios when you could get a surprise bill:

Ways to protect against a surprise bill

The sobering fact is that you can’t completely guard against surprise billing. You can limit your risk, though.

Here are ways to protect yourself against getting a surprise bill:

Make sure the provider is in-network before the appointment

Check with the provider that he or she is part of your plan’s network — even if the doctor has always taken your insurance.

You may have an outpatient procedure that includes multiple health care providers. In that case, check to make sure that everyone involved in the care is part of your insurer’s network.

If you find a provider isn’t in-network, check with your insurance company to see how much you’ll have to pay for those services. You may decide to reschedule your appointment when only in-network providers are available. Alternatively, you could pay higher fees and get the procedure done immediately.

If you don’t call the provider before your appointment, ask at the front desk who’s in-network. At that time, you can also reiterate that you only want in-network health care professionals handling your care.

Claire McAndrew, director of campaigns and partnerships at Families USA, said providers usually make a good faith effort to tell patients about insurance changes. They may send a letter or notify you by email. Some states mandate that communication.

Check that the hospital is in-network

Much like confirming that a provider is in-network, you should make sure that a hospital or other facility is in your network.

Confirm that the health care professionals you’ll see are in-network, too. It’s fairly common for an insurer to consider a hospital in-network, but not all of the providers working there.

Donovan suggested patients speak with a hospital administrator to make sure you’re only seen by in-network providers. This is especially true if your care includes anesthesiologists or radiologists, or if you need lab and tests. Those can be avenues to surprise medical bills.

Don’t rely on the provider directory

You might think you’ll just check your insurer’s online provider directory to see who’s in-network. That could be a mistake. Insurance companies’ provider directories are often wrong. Studies have shown that more than half of provider directory information can be incorrect, including the phone number, address, whether the provider is taking patients and who’s considered in-network.

Instead, McAndrew said patients should call the provider directly. Check to make sure that the providers, including contractors, are in-network.

You can also double-check when you arrive for the appointment to confirm you’re only going to see in-network health care professionals.

Keep detailed records

Maintain thorough health care records. That includes planning and collecting data.

Before the procedure, see if you can get a detailed cost estimate from the hospital or provider.

You’ll want this information if you get a surprise bill later and have to appeal.

Keep track of any bill from a hospital or provider, as well as information from your insurer. Jot down any notes about the experience so you remember them later. For instance, if a hospital official told you all of its health care professionals are in-network. Alternatively, take note if the person alerted you that some providers are out-of-network, but it was an emergency, so you needed medical help immediately.

What to do if you get a surprise bill

What do people do when they receive a surprise medical bill? About one-third of people in our survey who received a surprise bill said they just paid the bill. Here are the results:

• Paid the bill — 31%
• Appealed the bill — 18%
• Contacted the doctor or hospital for help — 21%
• Contacted the health plan for help — 20%
• Ignored/refused to pay bill — 11%

If you get a surprise medical bill and want to dispute it, here’s a step-by-step process:

• Call the provider, whether it’s a hospital or individual provider. “You can ask if they’ll accept a reduced payment or you can offer them the Medicare rate for their services. Ask too about financial assistance or payment plans. Hospitals often have these programs, but you often have to ask,” Donovan said.
• Contact the insurer. See if the company can negotiate a lower rate for you. Explain to the insurance company if you needed emergency care. “Many times insurance plans will help consumers who receive surprise bills by negotiating a solution with the provider,” McAndrew said. Donovan said patients usually receive two internal and one external appeal for a surprise bill.
• Notify your state’s insurance department. The department might be able to get a lower price or may recommend you appeal the decision to the insurer first. State insurance departments have staff devoted to help consumers with billing problems. “Insurance departments may be able to intervene and help resolve the issue or at least reduce the bill by working with the insurance company and the provider,” McAndrew said.

If you’re looking to appeal a bill, the National Patient Advocate Foundation provides help on its site, including template appeal letters.

What to do if you get a surprise bill after emergency care

Emergency rooms are particularly problematic. Contracting doctors often supplement emergency room coverage for hospitals. These contracted physicians might not have a contract with the insurer. So, even though you went to an in-network hospital, the plan considers the provider’s services out-of-network.

If you’re going for emergency care, a subsequent medical bill is the last thing on your mind. In these cases, it’s likely best to address the problem after you get a bill. Insurers will often work with the hospital to reduce the charge.

If you get a surprise medical bill for emergency care, follow the same guidelines as if you got a surprise medical bill for an arranged appointment: contact the provider, insurer and state.

An issue that complicates emergency care is that insurers often don’t have ambulance companies in-network. A Government Accounting Office said about half of ground ambulance transports are considered out-of-network. It’s even higher for air transports.

GAO found that about 69% of ambulance transports were out-of-network in 2017. The median cost of an air ambulance transport was $36,400, GAO said. A patient may have to pay the whole amount if the ambulance is out-of-network.

There’s little that patients can do if there’s an emergency and needs life-saving transport. It’s usually out of a person’s hands.

“Patients can’t always control for ensuring their hospital is in-network during an emergency, frequently because an ambulance can often only take a patient to the closest hospital and will not change even if it is out-of-network,” Donovan said. “If this happens to you, try to document as much as possible that you attempted to go to an in-network facility and that you requested in-network physicians — even write it on your intake papers if you need to. Any documentation may help you during an appeal.”

Limited state laws protect consumers

Surprise medical billing is a problem — and there’s little federal help for consumers. Only a handful of states have stricter measures. Some states cap out-of-network charges. Others demand facilities and providers offer more information about costs. The vast majority of states provide limited to no protection against surprise medical bills.

That’s beginning to change. A handful of hospitals are working to reduce surprise billing by requiring all physicians in the facility have contracts with the same insurers as the hospitals.

Federal and state legislators are exploring ways to reduce the problem. One federal proposal is to require insurers to reimburse providers at a higher rate for out-of-network care. That would result in fewer costs being passed onto the patients.

Until lawmakers fix the issue, consumers will need to protect themselves against the practice of surprise billing. By following the steps offered on this page and communicating with your provider and office staff, you can help limit the changes of a hefty surprise medical bill.

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