How To Avoid Overpaying For Medical Services

Plus, what to do if the insurance company denied your claim

Did you know? Medical billing errors cost Americans millions of dollars annually in the form of overpayments. The American Medical Association estimated that 7.1 percent of the paid health insurance claims in 2013 contained an error. And a 2014 study by consumer advocacy agency NerdWallet, found that medical debt is the largest category of consumer debt in the United States. In fact, an estimated 51 million people, or one in six Americans, will have a medical bill turned over to a debt collection agency.

picture of man fighting his medical bills

That might be you. And if you don’t already have medical debt, there’s a good chance that you overpaid on a medical bill in the past and never even noticed. That’s why it has become critically important to learn how to read, interpret and compare your health care billing statements.

Most people don’t notice billing errors or even know to look for them. Nor are they aware that if a claim has been denied, they have the right to appeal.

Your insurance company is required by the Affordable Care Act (ACA) to provide you with information on the appeals process, yet despite this, many people don’t know it’s an option, nor do they know how to get started. And the insurance company benefits from assuming most people won’t bother with an appeal.

The good news is, there are steps you can take to ensure you never overpay for health care services again. It just takes a little time and effort, and a willingness to be an advocate for yourself.

About this guide

This guide provides you with tips and tools for being proactive when it comes to understanding your medical bills, as well as steps to take in the event that you need to appeal a claim denial.

This guide focuses on two key documents you may receive following receiving a health care service: an Explanation of Benefits (EOB) statement from your insurance company and billing statement from your health care provider. While these two documents are a standard, common part of the medical billing process, it’s important to note that not every insurance company sends an EOB and not every health care provider sends a billing statement. Further, both insurance companies and health care providers may send other documents in addition to or instead of those discussed in this guide.

This guide uses the terms health care services, treatment and medical services interchangeably. Medical provider and health care provider are used similarly.

Finally, the tips in this guide were created for those dealing with private insurance companies, not with Medicare or Medicaid.

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This legal guide is intended for general informational purposes only and should be used only as a starting point for addressing your legal issues. This legal guide is not legal advice, and does not create an attorney-client relationship between you and Robinson & Henry, P.C., or you and any lawyer. It is not a substitute for an assessment with a lawyer licensed to practice in your jurisdiction about your specific legal issue, and you should not rely on this legal guide.

Tip 1: Contact your insurance company before receiving medical services.

Part of being an advocate for yourself is being proactive, so if it’s at all possible (there are, of course, situations in which getting advance approval isn’t practical or possible), you should contact your insurance company before receiving health care services to confirm that your provider(s) are in-network and that the proposed services are covered by your policy.

In some cases, your insurance company requires you to obtain prior approval or prior authorization for a medical service before the service is performed, generally because the insurance company wants you to prove there is a medical necessity for the treatment or procedure.

In addition to being a requirement in some cases, taking this step will help you calculate how much you could end up paying out-of-pocket for planned treatments and procedures and, while not all medical providers or insurance companies are keen to offer quotes, a growing number do offer calculators on their websites to help estimate potential costs.

It’s a good idea to call your insurance company before scheduling an appointment for the proposed service (examples of services that typically require prior authorization include surgical procedures, radiology services and home care services). While your medical provider may call and request prior authorization on your behalf, it doesn’t hurt to also give them a call yourself as well since, ultimately, you’re the one who will be financially responsible if you move forward without prior authorization and the claim is denied.

If your prior authorization request is denied, you can appeal the decision. For more information about the appeals process see the section on health insurance claim denials at the end of this guide and/or contact an attorney with experience in this area for an assessment.

Tip 2: Read and Understand your Explanation of Benefits Statement

Following a visit to a health care provider, your insurance company sends you an Explanation of Benefits statement (EOB) to let you know they have processed a claim from your insurance provider. This is the document that has “this is not a bill” stamped on it, which may have you wondering: well, what is this document if it’s not a bill? If you’re like many people, you glance over it, see that it’s not a bill and file it away (or even toss it in the recycling bin) without another thought.

Bonus tip: Some insurance companies allow you to access an electronic copy of your EOB statement online, usually within a few days of your appointment.

While you’re not required to take any action in response to your EOB, this little document is pretty important. You should always review it carefully, or at least put it in a safe place where you can easily access it and review it alongside any bill(s) your health care provider sends you.

An EOB provides information about the health care services you received, how much your insurance company has paid for those services and any charges that are not paid for by your insurance. So, while an EOB is not a bill, it is a key of sorts to any bill your medical provider might send for those health care services.

Each insurance company’s EOB looks a little different, but they all contain the same basic information, including:

  • Your personal information, like name, address, patient name (if different from your own; for example, your child who is covered under your plan) and your policy or group number.
  • The name of the doctor or hospital who treated you and the date you were treated.
  • A claim number and the date the claim was processed.
  • A description of the health care services provided. This might be in the form of a five-digit number listed under a column labeled “CPT Code” which is a universal coding system for medical billing (CPT stands for Current Procedural Terminology). This code dictates the payment allowances.
  • You might also see a “reason code,” which explains why the insurance company did not approve some or all of the claim.
  • The fee your doctor billed the insurance company.
  • The dollar amount the insurance company approved for the health care services you received.
  • How much your insurance company paid your doctor for the visit.
  • How much you might owe your doctor for this visit (hint: this is often labeled as “patient responsibility”).
  • A notes section, usually found at the bottom of the claim detail, which typically includes a description of the service and/or billing code (CPT), explanations of charges that are not covered by the insurance plan and any additional information regarding the claim.

If you need help understanding any of the information on your EOB, you can call the insurance company’s customer service line (the number should be included on the EOB).

When Reading Your EOB, Look Out For:

  • Inaccurate personal details. Make sure your name is spelled right, your address is listed correctly and your policy or group number is correct. While a typo or spelling error can be easily cleared up with a phone call to your medical provider and/or insurance company, these errors could be the reason for a denied claim.
  • Inaccurate provider details. Similarly, confirm that your medical provider’s information is correct as well as the date of services.
  • Inaccurate list of services. Confirm that you actually received all of the services listed on the statement and make sure you haven’t been charged twice for the same service. If you can’t decipher the service code or description for any of the line items, call your insurance company’s customer service number and ask.

You should save your EOB for one year after receiving it, so even if everything looks good to you, file it somewhere safe but easy to find in case you want/need to review it again.

Tip 3: Read and Understand your Medical Provider’s Billing Statement

Following a visit to the doctor, you’ll usually receive a billing statement from your doctor’s office. Some health care providers send a billing statement even if you don’t owe them anything. You may also get more than one billing statement for your health care services; for example, if you had blood drawn and the blood was sent to a lab for testing you might also receive a bill from the lab.

Like with the EOB, each medical provider’s billing statement looks a little different, though they all contain the same basic information, including:

  • An account summary. This usually includes (but is not limited to) your address, account number (assigned by the medical provider), your name (if the plan is in your name), the patient’s name (this might also just be your name if the health care services were for you, or it could be a dependent, like a spouse or a child), your insurance company’s name, the statement date and the due date for any balance owed.
  • A description of services. This includes:
    • the date of your health care service(s);
    • a description of the service(s) and/or a CPT billing code(s);
    • the total charges for each service;
    • the amount of any adjustments the medical provider has made to the cost of the services;
    • how much the insurance company has paid and
    • how much you owe.
  • Instructions for how to pay any balance owed.
  • Information about financial assistance options for paying your balance.

When reading your medical billing statement, look out for the same errors as you would with an EOB; keep an eye out for things like mistakes in how your personal information was entered, two charges for the same service or unbundled services, which is when the doctor’s office or hospital lists itemized charges for services that should be grouped together and charged as one amount, which is usually less than the cost of charging each separately.


Tip 4: Compare your EOB and Medical Bill

If you receive a bill from your medical provider and especially if there is a balance due on that bill, you should always compare your EOB to your bill before sending payment. This task is critical; it’s your best chance at discovering any mistakes or overcharges.

When your medical provider bills your insurance company, the claim usually gets passed back and forth as the two parties negotiate the network rate, or allowed amount, for the services provided (this is the total amount that doctors get paid for their services when they bill insurance). This back and forth can result in line items changing and being recoded, which can result in errors and discrepancies between the two statements.

First things first, if the medical bill you received doesn’t include an itemized list of services, call your medical provider’s billing department (their number should be on the statement) and request one.

Next, check for common errors by comparing these items on the two statements:

  • Your personal information. Make sure it’s the same on both statements.
  • Your medical provider’s information. Confirm that the place of service is the same on both statements and, if a location code is included, confirm those match too.
  • Service descriptions. Don’t worry too much about all the codes, just start by comparing medical terms on both statements. If something doesn’t look right to you, if you’re not sure if something matches or if you see codes or descriptions for services you didn’t receive, call your insurance company and/or medical provider and ask for clarification or a review.
  • Dollar amounts. Double – triple – check that the dollar amounts on your bill match those on your EOB (you’ll find those amounts under the amount billed or amount charged section).

If trying to interpret your EOB and medical billing statement is like reading Greek (and you don’t speak or read Greek), then you might want to seek out the assistance of a medical billing advocate. These individuals can help you understand these documents and answer questions you have. While they usually charge for their services, it can be a worthwhile investment since they often end up helping you save more than the cost of their services.

What to do if you need to appeal a health insurance claim denial

If all your careful review of your insurance and medical provider’s paperwork reveals that your insurance company has declined to cover a health care service you believe they should cover, or if your request for prior authorization was denied, then you may want to file an appeal.

The ACA has created national standards for this process to allow anyone who has been denied treatment the opportunity to appeal that decision to the health insurance company and, if necessary, to have a third-party reviewer examine the claim.

The appeal process might seem daunting or like a hassle, but it’s worth it when your health and finances are on the line.

Here’s what to do if you decide to file an appeal.

1. Figure out why the claim was denied.

Start with the obvious: if you found a typographical or other clerical error on your EOB or billing statement, call your insurance company (if the error was on the EOB) or your medical provider (if it was on your billing statement) and ask them to correct it. If the error was the insurance company’s, a phone call should fix the problem. If it was the medical provider’s, ask them to resubmit the claim after correcting the error.

If the reason for the denial is not so obvious, call the insurance company and ask for an explanation. You have a right to know why they denied your claim and they have an obligation to provide you with an explanation. Take notes during your conversation and write down the reason they provide in the language they use, as well as the date and time of the conversation and the name of the person you talked to.

5 Reasons Health Insurance Companies Deny Claims
  1. Clerical errors such as typos, misspellings or incorrect service coding.
  2. The insurance company has determined the treatment is considered experimental, cosmetic, investigational or not medically necessary for your condition.
  3. The service provider is out-of-network.
  4. The service or treatment is not offered under your health plan.
  5. The service or treatment required prior authorization.

2. Collect evidence.

Exactly what you need will depend on the specifics of your case, but here are a few examples:

  • Proof that your situation required emergency medical attention and the only available option for treatment was an out-of-network provider. This proof could include your medical records and letters from the doctor(s) who treated you.
  • If you were denied because the treatment was deemed experimental or not medically necessary, do some research on a website like to find medical studies that speak to the effectiveness of the treatment or procedure. The scientific evidence provided by a medical study can be hugely beneficial to your appeal.
  • A letter from your doctor explaining why you need the treatment and why he/she believes it will be effective.

By now this should go without saying, but: don’t throw anything away. Save any documents you receive in the mail that are related to your claim. Keep track of any conversations you have with the insurance company, again, taking care to note the name of the person you spoke to and the date and time of the conversation.

3. Enlist help.

Don’t go it alone. The appeal process requires patience and persistence, as well as an understanding of the different levels of appeals and deadlines. You’ll of course want to enlist the help of your medical provider(s), but you should also consider hiring an attorney with experience in health insurance claim denials, like those in Robinson & Henry’s disability practice.

An attorney with experience in this area has a thorough understanding of the appeals process, including deadlines and the types of evidence that can be most effective. He/she can also draw on past experience and knowledge of other cases similar to yours in order to implement effective arguments that may help win your case.

Start by calling 303-688-0944 to schedule an assessment; while we’re based out of Castle Rock, Colorado, we can handle cases from anywhere in Colorado.

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