Decoding the Medical Bill Mystery: How It Happens

A woman on a couch reviews a medical bill from her provider while holding her forehead.
Getting a medical bill in the mail after a doctor’s appointment is confusing. Most Americans struggle to understand what the charges are for or why they got the bill in the first place.

Going to the doctor isn’t anyone’s favorite activity. Since it’s a necessary step in staying healthy, most of us tend to at least go a few times a year. Paying whatever in office medical fees you owe after your appointment seems like it is the end of the process. Unfortunately that is not the case. You will eventually receive an Explanation of Benefits in the mail from your insurance provider.

Many people think this is the last time they will hear from the provider or insurance company about the appointment. There is no reason to believe there will be any additional financial obligation for this appointment, right?

Wrong. One day, which is likely to come months after you’ve forgotten about this visit, you receive mail from an unknown business or medical company or perhaps a provider. Although you’re convinced it is probably junk mail, you decided to open it just to be sure.  And then… SURPRISE! You’ve just won yourself a brand new, shiny medical bill. Sound familiar? 

Chances are that this has happened to you, or someone you know. If you’ve had any medical procedure or appointment outside of anything considered “standard” for your level of care, the mystery bill is an all-too-common occurrence for so many Americans. 

How and why does this happen?

We did some digging and compiled all the research we could find. We’re breaking it down in a three part series to try and debunk this mystery. As you’ll soon find out, the answer to our questions is, unfortunately, is just as simple as it is complicated. 

Medical billing is broken

A provider calculates a patient's mystery medical bill since the bill wasn't completely covered by insurance.
Medical providers are often forced to manually calculate charges when they have no software system in place.

It is pretty safe to assume that, in general, people are inclined to pay their bills. But oftentimes with medical billing the first real interaction with a “true” bill comes in the form of a brightly colored envelope from a collection agency. This is due largely in part to the overwhelming confusion about what you actually owe upon completion of your medical treatment. 

Consumers are left trying to discern what was covered, what was not covered, where or who the bill is coming from – ultimately creating dissatisfaction and furthering distrust of our system. 

Medical providers are left with revenue loss and increasingly high administration costs – ultimately creating ineffective operational procedures and losing patients from unsatisfactory experiences.  

Lack of price transparency complicates medical billing

How does something so essential to our well-being also come with such monumental repercussions? How did this become so complicated? The answer comes down to a lack of one simple thing – price transparency

Without a truly intuitive software program that can provide accurate insurance information ahead of an appointment, this is typically how the billing process works: 

  1. Patient checks into appointment. 
  2. Admin teams confirm eligibility, general coverage, and take a co-pay if necessary. 
  3. Patient completes appointment with provider. 
  4. Appointment info is sent to administrative/billing staff. 
  5. Claim for appointment is processed with insurance. Timeframe on the processing can vary depending on staff resources.  
  6. Insurance makes their assessment of a claim and how much they will cover based on the patient’s benefits. 
  7. In the likely event the insurance company won’t cover the entire claim, the remaining balance is sent back to the provider. 
  8. The provider sends the patient the bill for the balance. 

In essence, in order for the provider to know the most accurate cost of a visit, treatment, or procedure, the provider has to wait until Step 7 to find out.  

There is limited price transparency from insurance companies to the provider to the patient

What makes this chaotic cycle of events even worse? 

It doesn’t matter if it was a scheduled procedure or an emergency situation. It also, as it turns out, doesn’t really matter whether you’re in-network or out of it. 

In order to have accountability with anything in life, there needs to be a system or a process in place. It would be safe to assume that with a multi-billion dollar industry that is our healthcare, there would be a precedent for national tracking billing issues; unfortunately, for consumers, there is not. 

A recent survey from Consumer Reports discovered that out of 1,000 insured adults who received a medical bill in the past two years, two out of three said they had at least one billing issue, such as a higher-than expected charge, unclear statements, and bills arriving months late.

It’s not just a procedural problem, it’s a system wide problem. There shouldn’t have to be such an ironclad gatekeeper of our healthcare options.  Thanks to the bottleneck situation created by our current model, medical providers and their administrative staff have to add more things to their already overflowing “to-do” list creating an unfortunate scenario for billing mistakes – stay tuned for Part II in our series, Decoding the Medical Bill Mystery: Why It Happens.

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