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Three Common Reasons for Surprise Medical Bills

[fa icon="calendar"] Aug 7, 2020 9:53:00 AM / by Donna Smith, BCPA

Donna Smith, BCPA

Examination of financial condition Stethoscope on pile of U.S. twenty-dollar bills isolated on white background-1

When you hear the phrase, “surprise medical bills,” it usually means that medical treatment you thought was in-network was actually out-of-network.  As a result, your bill is significantly higher than you anticipated – thus, the ugly surprise.

Here are three common reasons you might receive surprise bills and what you can do to help prevent them.

 1.   Not Confirming In-Network Providers

You assumed your provider was in-network because when you asked them if they take your insurance, they said, “Yes, we do.”   That only means they will process your bill through your insurance provider. It doesn’t mean they are in-network.

Or your provider might mistakenly say they are in-network or, “We think we are in-network.” Thinking they are in-network is not good enough. You want as much certainty as possible, because if what they tell you is incorrect, you will be responsible for the additional fees. Your insurer will say they didn’t give you bad information so it’s not their fault. The provider will say it’s your responsibility to confirm network participation.

How can you prevent this from happening? Call your insurance company.

Ask your insurance representative, “Is this provider in-network?” If they say, “Look on our website,” politely, but firmly, insist the representative give you that information because:

  • Websites don’t always have the most current data (despite what the insurance company may tell you).
  • If you see the provider listed online as in-network, only to learn later that they are out-of-network, the insurance company can claim it was your fault because you looked at the website incorrectly. Or they have a disclaimer in minuscule print on their website saying the information may not be the most current.

If the answer is “yes,” ask when the provider’s contract expires. You need that date because providers move out of network if they don't renew their contract before it expires. That’s particularly concerning if you are receiving on-going treatments. For example, your treatments in December may be in-network, but if your provider’s contract expires on January 1st and is not renewed, your treatments beginning in January will be out-of-network. Since billing is often at least one month after treatment, you could easily be billed for multiple treatments at higher out-of-network rates.


 2.  Hidden Out-of-Network Costs

If you are thinking about using an out-of-network provider, understand how much that will actually cost you.  Most plan summaries clearly show that you will pay a higher deductible and co-insurance (the percentage you pay) or co-payment (the flat dollar amount you pay) for out-of-network services. But there are two additional differences that can be very costly.

  • Providers’ Contractual Agreements: In-network providers have an agreement with your insurance company to accept as payment in full rates that the insurance company have deemed “reasonable and customary” (usually a percentage of the average charge in your area for that service). These amounts are almost always significantly less than the provider’s original billed amounts.
             For example, a doctor charges $1,000 for a procedure, but has agreed to accept the insurance company’s reasonable and customary payment of $300. Once payment from you and your insurance company totals $300, the bill is considered paid in full. No one is billed for the remaining $700.
              Not so with an out-of-network provider. In that same situation you would be charged the remaining $700. Why? Because out-of-network providers have no contractual requirement to accept the insurance company’s reasonable and customary payments as payment in full. You pay the difference, not the insurance company.
  • Annual Out-of-Pocket Maximums: In most plans, out-of-network payments (deductibles and out-of-network fees to the provider) don’t count towards your annual out-of-pocket maximum. Therefore, you are essentially penalized twice. First, with higher out-of-pocket costs, and second, your payments don’t count towards your annual out-of-pocket maximum.

 3.  Not Documenting Conversations

Most people either don’t document calls or take such abbreviated notes that they don’t provide the information needed to challenge a medical bill. Document all of your calls with insurance companies, providers, and anyone else associated with your bill, like a third party billing company.

Write down:

  • Date and time of your call
  • Name of person your spoke with  
  • Answers to your questions – you don’t need to write every word, but get the main points
  • Any additional information they provide that helps explain how the bill is calculated

It can be hard to understand everything a representative is telling you. To be certain you’ve heard the information correctly, use what is called “active listening” techniques. By that I mean, say to the representative, “What I heard you say is…..”,  then repeat what you have in your notes. Then ask, “Is that correct?” Don’t feel rushed when you’re having this conversation. Take the time you need to understand what you’re being told, and write it down. This detailed information will help you if you have to appeal the bill or insurance claim.

One final point: Language in your insurance plan document is one of the most important factors in determining how much you should pay versus the insurance company. Plan documents are not exciting to read, but it’s important you refer to them when you think your benefit is wrong. If you need help understanding your plan document or filing a formal appeal with the insurance company, consider hiring a healthcare advocate specializing in insurance billing issues.

Topics: Insurance

Donna Smith, BCPA

Written by Donna Smith, BCPA

I use my 30 years experience managing health insurance plans and advocating for employees of small and large employers to help people navigate through a complex insurance system and get the benefits they are entitled to receive. You can find me at

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