How to Make Sure Your Clients Aren’t Paying More Than They Should for Healthcare in Retirement
NASA and Lockheed Martin engineering teams collaborated in 1999 to get the Orbiter satellite to enter Mars’ orbit. For their calculations, one used the metric system and the other chose the English system. As a result, the Orbiter went off course and was lost in space. The cost: $125 million.1 And it was all caused by a simple error.
Likewise, errors can happen on your clients’ medical bills and insurance statements. Teams from medical providers and health insurers use complex coding systems to figure out what people should pay. If these teams make a mistake, clients could end up overpaying. The American Medical Association found that 7.1% of bills have at least one error.2 Other groups that review bills on patients' behalf found error rates closer to 80%.2 Most clients aren’t even aware those errors could exist. Let’s find out how clients can find those errors so they can avoid overpaying for their healthcare.
The American Medical Association found that 7.1% of bills have at least one error. Other groups that review bills on patients' behalf found error rates closer to 80%.
Source: It's Time to Get a Second Opinion Before Paying That Medical Bill, NBC News, 3/27/16. Most recent data available
What We’re Going to Cover:
- Why clients get so many medical bills
- Hidden errors
- How to detect the errors
First, Why Do Clients Get So Many Medical Bills?
Thanks to medical advancements, most clients are living longer and healthier lives than previous generations. But those advancements come at a price. And clients are paying for it, especially after they turn 65. Fidelity estimates that clients will need $280,000 to cover their health care expenses in retirement.3 After they turn 65, 92% of them will be managing at least one chronic condition and 77% will be managing two or more chronic conditions.4
On top of that, people are typically managing at least 14 prescriptions. By age 85, that number jumps to 18 prescriptions.5 Visits to the doctor become a regular event, involving general practitioners, specialists, and pharmacists. The result is a pile of medical bills and statements from your client’s health insurance providers or Medicare. And they’re not easy to understand.
Clients’ Need for Healthcare Rises as They Age
Source: *Healthy Aging, National Council on Aging, 1/14. Most recent data available used. **Integrated Media Kit 2017, The Consultant Pharmacist, 2017
Those Statements Are Confusing
It’s hard to tell which ones are bills and which ones are statements. For example, some say, “This is not a bill,” So clients think maybe they can just toss it in the trash. But those documents show amounts your clients are responsible for, so they might think they should pay for something. They also receive bills that really do need to be paid. But deciphering those bills can be tricky because they’re loaded with codes and descriptions clients might not understand. They might just figure it’s best to just pay it. But by “just paying it,” they might be overpaying.
Second, There Could Be Hidden Errors in Those Bills
The complexity of medical bills has exploded. When clients go for medical treatment of any kind, doctors keep track of everything they do, like taking their blood pressure, checking their breathing, giving them a shot. These tasks get translated into billing codes. And there are thousands of them. New ones are being created all the time as treatments keep getting added and get more specific.
Coding is so complex, it’s become an entire industry. In 2008, there were 70,000 members in the American Academy of Professional Coders. In 2017, there were 170,000.6 Some of these coders work for insurance companies and some work for medical providers. Coders who work for medical providers strive to use codes that bring in as much revenue as possible. Coders who work for insurance companies use codes that reduce payments or deny claims as overreaching. Medical providers and insurance companies can even use different coding systems. The bottom line: all these coders are humans that can make mistakes. But clients aren’t coding experts, so is it really possible for them to detect those errors?
The Number of Medical Coders is Exploding
Every medical treatment you receive gets a code. The amounts that you're billed are based on those codes. The number of codes keeps growing, along with the coders who create them. As codes become more complex and numerous, there's more potential for errors.
Source: Those Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much, The New York Times, 3/29/17. Most recent data available.
Third, How Clients Can Find Those Pesky Errors
The last thing clients want to do is overpay because of coding errors. To look for possible errors, clients can start by looking at their explanation of benefits (EOB) statement from their insurance company or, if they’re covered by Medicare, their medical summary notice (MSN). These are statements—not bills—but clients shouldn't toss them. They’re the key documents they’ll use to detect errors. Clients should store all of them in one easy-to-find place. (Get a diagram that can help you understand how EOB statements and medical bills sync up by downloading the client piece below)
Find the Column That Says Something Like “Date And Description of Services”
Clients should review the dates and descriptions to make sure they actually received the treatments listed. Then look for any descriptions of treatments that they didn’t receive. If they find something that doesn’t seem right, they should call their insurance provider. Their number and website will be on the statements. They can also ask the provider to explain any codes that they don’t understand.
Next, clients should review bills they receive from medical providers, e.g. doctors, hospitals, specialists, etc. Check to see if the dates, descriptions, codes, and amounts on the bills match the info on the insurance statements. If they don’t match, clients should call their medical provider. They may have coded their bill incorrectly and can fix it. If their medical provider won’t fix and reissue their bill, they can call their insurance provider and tell them their concern.
AARP Offers Decoders to Help Clients Understand Medicare Statements
If clients are still having a tough time, AARP can help them understand Medicare MSN statements. If they’re insured by Medicare, they’ll be receiving one of these every quarter when they receive medical treatment. These statements contain information similar to EOB statements. AARP created decoders for Medicare Part A and Part B that can help them make sense of the sections on these statements. If they try the decoders, and still have questions about their MSNs, they can call 800-MEDICARE (800-633-4227).
If they’ve been billed for a treatment that they think should be covered by Medicare, they should call Medicare first and try to resolve it over the phone. If they’re still not satisfied, Medicare has an appeal process. It’s a bit tedious, but it can be worth it.
Clients Can Also Get Help From Billing Advocates
If they’d rather not dig into all the details of bills and EOB statements, they can hire a professional billing advocate. Sometimes, health insurers provide access to billing advocates. But often they’ll need to pay for them themselves. Billing advocasts can cost up to $250 per hour, or some charge a percentage of the amount saved.7 Clients can find billing advocates at Alliance of Claims Assistance Professionals or Medliminal.
Is It Really Worth All the Work?
If clients are going to dispute a bill or statement, it’s going to take work. They’ll need to do their homework and have their facts straight. It can also be frustrating to navigate complex bureaucracies. But doing nothing could mean they’re responsible for paying a big bill that they shouldn’t have to pay. And if they don’t pay it, they could have creditors coming after them.
To Summarize, We’ve Covered:
- Why clients get so many bills
- Hidden Errors
- How to detect the errors
Mistakes Are Going to Happen. Don’t Let Them Cost Clients Money.
Whenever humans and complex systems exist, mistakes are possible. NASA found that out the hard way. If mistakes happen on clients’ medical bills or insurance statements, they might overpay. But now you know how to teach them how to find those errors. The few minutes it takes to check for accuracy could be well worth it.
- View or download the easy-to-understand client piece below
- View or email a client version of this web page to clients
- Gather a few of your most recent medical bills and EOB statements. Compare the amounts on your medical bills to your statements. By becoming familiar with these types of forms, you’ll be better equipped educate clients on this topic. And who knows, you may find some errors on your bills.
1Metric mishap caused loss of NASA orbiter, CNN, 9/30/1999. Most recent data available.
2It's Time to Get a Second Opinion Before Paying That Medical Bill, NBC News, 3/27/16. Most recent data available.
3A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement, Fidelity® Analysis Shows, Fidelity, 4/19/18
4Healthy Aging, National Council on Aging, 1/14. Most recent data available used.
5The Consultant Pharmacist, “Integrated Media Kit 2017,” 2017
6Those Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much, The New York Times, 3/29/17. Most recent data available.
7Don’t Overpay Because Your Doctor Screwed Up Your Bill, GOBankingRates, 12/12/15. Most recent data available
Links from this article to a non-Hartford Funds site are provided for users' convenience only. Hartford Funds does not control or review these sites nor does the provision of any link imply an endorsement or association of such non-Hartford sites. Hartford Funds is not responsible for and makes no representation or warranty regarding the contents, completeness or accuracy or security of any materials on such sites. If you decide to access such non-Hartford Funds sites, you do so at your own risk.
The material is provided for educational purposes only.