If you receive Medicare or Medicaid benefits, your doctors could be billing you improperly.
Worse yet, once your doctor bills you, if you don’t pay, those bills could go to collections and get reported to credit bureaus — which would affect your credit score.
“Doctors are improperly billing people on Medicare for deductibles, co-payments and other costs from which they are supposed to be exempt,” reports the New York Times.
The Obama administration has been working to crack down on improper billing. Federal officials have warned doctors that they could be subject to fines or be dropped from Medicare altogether if they don’t comply with Medicare regulations.
Why Are You Being Billed Improperly?
Why would health care providers send you bills if you don’t owe the money?
Sometimes, improper billing is due to unsavory practices — an attempt to get extra money out of patients. But more often, experts say, it’s just ignorance and failure to comply with proper procedure.
So we did some digging to find out what you can do when you receive a medical bill to ensure you’re not being overcharged.
First, the rules are different depending on whether you’re covered under Medicare, for people 65 or older, or under Medicaid, for people of all ages with limited resources.
If Medicare covers you or a family member, coverage isn’t absolute. You may be responsible for some costs, but you should still scrutinize any bill from your provider.
If Medicaid covers you (and/or your family), any bill you receive from a provider should be a red flag, according to Pat Palmer, CEO of Medical Billing Advocates of America.
“Most of the time,” Palmer told The Penny Hoarder, “it is a charge that should not have been billed to either Medicaid or the patient.”
Palmer’s organization works with consumers to advocate for true and accurate charges on medical bills and helps negotiate a fair and reasonable price for services.
Marija Ringwelski, COO of medical bill auditing service Remedy, told TPH the Medicaid-related claims her company handles usually stem from an administrative error or a coverage issue the patient wasn’t aware of.
The details get pretty complicated, but let’s take a look at these three scenarios: coverage issues, administrative errors, as well as one example of unsavory practices.
1. Medicaid Doesn’t Cover the Service Provided
You might run into a coverage issue if Medicaid has dropped your doctor or doesn’t cover the service you receive.
For example, Ringwelski explained, “The patient has seen the doctor for many years, and all of a sudden they don’t cover Medicaid anymore, and they don’t notify (the patient), and the entire bill goes to the patient.”
When Remedy works with patients in this kind of case, Ringwelski says, “We renegotiate the bill. … We see sometimes they’ll completely write off the entire balance because they feel bad.”
In other cases, a provider will discount the bill, most commonly down to the reduced rate Medicaid would have paid (more on that later).
However, Palmer explained those charges may not be your responsibility at all. Her organization has successfully advocated for several cases when a patient wasn’t made aware that services weren’t covered, and had the charge removed.
That’s because a healthcare provider is required to tell you when Medicaid doesn’t cover a service and confirm that you agree to pay the charges — before providing a service.
When a patient receives a bill for a service they thought was covered, “the majority of the time we get those charges removed from the bill,” Palmer said.
According to Palmer, as a Medicaid patient, you should only be responsible for the cost of a service if it’s cosmetic. Even then, a provider must give you something in writing that explains Medicaid will not cover your service.
If you’re not able to get charges removed from your bill, Ringwelski shared some tips for negotiating the price down:
Do it in writing, not over the phone.
“We found that if it’s in writing, it shows a good faith gesture that you have the intention to pay the discount amount,” she explained.
Your provider may be reluctant to negotiate verbally, afraid that even if they agree to a discounted price, you may still never pay the bill.
“(Have) something in writing that states you have the intention of paying,” Ringwelski said. This tends to be more convincing and successful than a phone call.
Ask about payment plans.
Usually, “If you can’t afford to pay your bill, even if it’s discounted, (the provider) will offer 0% interest payment plans,” but many patients don’t know that’s an option, Ringwelski suggested.
Because your provider might not make it known, “you just have to ask for it,” she said.
Look into financial aid.
“Hospitals do not advertise that they have financial aid charity programs…” Ringwelski said. “They’ll just send you a huge bill if you’re uninsured.”
Several factors could make you eligible for financial aid. They’ll vary by location and provider, but often if you’re unemployed, on Medicaid or uninsured, it’s worth applying. You can get an application from your provider’s billing department.
2. Your Doctor Has Made an Administrative Error
You may receive a bill you don’t owe simply because of an administrative error by your provider’s billing department. For example, they filed a claim too late or didn’t include all the required information or documentation from your visit.
In that case, Ringwelski explained, you shouldn’t be responsible for the bill, so you can file an appeal with Medicaid to clear the error.
Filing an appeal, she explained, is “essentially, writing a letter that states what the problem is.”
Unfortunately, it can take nearly two months for Medicaid to adjust your bill.
“In the meantime,” Ringwelski warned, “the provider can continue billing the patient for the entire balance, but we request (the provider) put a hold on the account.”
She recommends that step for patients, whether you file an appeal yourself or work with an advocate. Ask your provider’s billing department to stop the billing cycle for about two months, so you have time to file the appeal without your bills running overdue.
3. Unsavory Practices (Balance Billing)
The other major issue with Medicare/Medicaid billing — the one provoking the Obama administration’s ire — is called “balance billing.”
Palmer explained this is when providers, unwittingly or not, bill patients for the difference between the reduced rate Medicare or Medicaid pays and the provider’s “retail” price for services.
For example, if a service retails for $200, that’s the price an uninsured patient will pay. For patients under Medicare, the price of that service might be capped at $100, meaning the provider should write off $100.
If Medicare covers $80 of the remaining balance, you would be responsible for $20. However, your doctor might improperly bill you for $120, to collect the full retail price of their service.
They’re not allowed to do that.
“Medicare providers who violate these billing prohibitions are violating their Medicare provider agreement and may be subject to sanctions,” the Obama administration said in a bulletin for doctors, according to the New York Times.
“Balance billing is rampant here in Florida,” David A. Runkle, an AIDS advocate and Medicare beneficiary from Fort Lauderdale, told the New York Times.
Though Runkle’s services are covered by his Medicare benefits, he still receives dozens of bills from medical providers. “I send them back a copy of the law,” he said, “but they keep sending me more bills because they do not understand the law.”
Palmer explained “the law” pretty plainly to TPH: “Pay what Medicare says is your responsibility, not what the provider bills you for.”
The explanation of benefits you receive from Medicare after your provider has submitted a claim notes your responsibility. It will explain what Medicare covers, what the provider writes off and what you owe.
In the example above, your provider would send a claim to Medicare for $200, Medicare would pay the provider $80 and you’d receive an explanation of benefits from Medicare stating you’re responsible for paying $20 to your provider.
If you receive a bill from your provider before receiving an explanation of benefits, you should question the bill.
“The provider cannot bill the patient until after they have submitted to Medicare and received a response,” Palmer explained.
She said her organization has gotten refunds for patients who received and paid a bill from their provider before Medicare responded.
In that case, the provider has essentially double-billed and received payment twice: once from Medicare and once from the patient. They might not refund the patient without a request.
Protect Your Credit
Remember: If you do receive a bill, whether you were supposed to or not, your provider may still send it to collections if unpaid.
Communicate with your provider’s billing department as soon as possible to let them know you’re looking into it, not just ignoring it. This will help you prevent the unpaid bill from becoming a scar on your credit history.
Ringwelski added one more important note for anyone faced with medical bills that are tough to pay.
“Different hospital systems have different policies in how they report your debt to credit bureaus and collection agencies,” she said.
Some healthcare providers have strict policies against reporting your debt to credit bureaus.
They may still send your unpaid bill to collections, but if they don’t report it, it won’t harm your credit.
If you ask, “the billing department will be honest in telling you if they report to collection agencies and, if they do, (whether) they report to credit bureaus,” Ringwelski said.
To keep your debt down, you want to pay all your bills as you can. But if you find yourself faced with a stack of medical bills from several providers and have to choose which to pay first, knowing which ones report to credit bureaus can help you prioritize.
Your Turn: Have you been improperly billed for health care services that Medicare or Medicaid should have covered?
Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).