Common health insurance questions: How does a medical bill get paid?

Health care costs money; you already know that. What you may not know is how your medical bills get paid, and by whom. From a check-up with your doctor to a surgical procedure at the hospital, most medical treatments have a price, even if you have insurance. Understanding how your medical bills are paid is important and can help you better manage out-of-pocket expenses.

Let’s get started.  When you check in at the doctor’s office, they typically ask for your updated insurance card.  This allows them to see what is and is not covered by your health plan, and to obtain the correct contact information to submit a claim, which is health insurance lingo for bill. A claim is created every time you receive health care that has a cost associated – tests, procedures, consultations, check-ups; you name it, there is likely a cost.

What happens to a claim?

1.  The provider (your doctor’s office or hospital) creates a claim for your visit. Each expense is itemized and coded in a way that allows your insurance company to understand what was done and why it was done.

2.  A claims agent at your insurance company reviews the claim. They update the pricing on the claim with the company’s negotiated rates (typically much lower than what you would pay without insurance). They note what portion of the fees the insurance company can pay, based on your policy and how each expense was itemized by your provider. The claim is then sent back to the provider.

3.  Your provider updates their system with the feedback received from the insurance company, and sends you the revised bill. You are responsible to pay any outstanding charges not covered by insurance. These costs are called your out-of-pocket expenses. It is important to review your bill closely to ensure the claim was correctly processed. If you have questions, call your provider or your health insurance company so you understand why some expenses are paid in full and others are not.

4.  If you do not have insurance, the entire bill will be sent directly to you by your provider. Whether you have insurance or not, medical bills can be a shock to your monthly budget, as are most unexpected expenses.  If you, like many of us, cannot pay the entire balance of your health bills at once, talk to your doctor or hospital about coordinating a payment plan. Many providers are willing to arrange for you to pay smaller, more feasible monthly payments for a set amount of time.

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