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Decoding Your Medical Bill: Why every detail matters
Decoding Your Medical Bill: Why every detail matters

Here’s a handy guide to reading medical bills and deciphering the endless stream of jargon — and it may save you money.

Updated over a week ago

6-minute read

Have you ever had trouble reading a medical bill? If so, you’re not alone — not by a long shot.

No one expects medical bills to be light reading. But with a myriad of specialized terms, confusing acronyms, and billing codes littering the page — most may as well be written in a foreign language.

In a 2022 survey of more than 2,000 adults, nearly 40% said that medical bills were either “somewhat confusing” or “extremely confusing.” The top frustration of those surveyed was trying to understand just what they were being billed for.

To be fair, there’s a reason for this. Medical billing systems are typically set up to facilitate payments between providers and insurance companies — not patients. And with chronic billing errors plaguing the U.S. healthcare system, it’s no shock that so many Americans face indecipherable surprise medical bills.

One of the most significant complaints with medical bills being hard to understand is that many Americans end up paying bills they might not owe — and that’s if they can afford to do so. Many more spend months disputing confusing charges just to see their credit scores take a hit when unpaid balances head to collections.

In order to stop this cycle — knowledge truly is power. Patients should be able to quickly understand the exact charges on any medical bill they receive, what those charges mean, and whether they’re actually responsible for them.

The basics of medical bills

When scrutinizing medical bills to identify common errors and avoid overpaying, you need to start with the basics. Begin with what is — and what is not — a bill. First, it’s important to recognize the difference between an explanation of benefits (EOB) and a bill. They might look the same to an untrained eye, but they’re pretty easy to distinguish once you understand a few key differences. For instance, a medical bill will always come directly from the doctor, clinic, or hospital you received care from — while an explanation of benefits will come from your insurance provider.

What’s an explanation of benefits? In short, an explanation of benefits is a statement that breaks down how an insurance provider paid a claim. It includes details like policy and claim numbers, the name of the healthcare provider, the type of service received, the cost of the service, and how much of the billed amount the insurance company paid. If it’s still unclear, look for a “not a bill” stamp, which will confirm that the statement is an explanation of benefits.

Now, imagine that you receive a surprise medical bill in the mail. You’ve determined that it is indeed a bill rather than an explanation of benefits. Most likely, you’ll see a summary bill that states how much you purportedly owe. Initial statements sometimes fail to factor in payments from your insurance company or government programs like Medicare, which may make it look like you owe more than you do. Someone who’s not confident reading medical bills might take that bill at face value and pay it off. But because you know that about half of all medical bills contain errors of some kind, you decide to request an itemized bill.

Breaking things down line by line

An itemized bill is precisely what it sounds like: A detailed list of charges that correspond to the medical services, supplies, or procedures you received at the time of care — plus the dollar amount associated with each one. And if you received treatment from multiple providers (e.g., specialists who aren’t employed by the hospital you visited), you’ll also need to request separate itemized bills from them.

This is an important step because it’s the best way to confirm that you’re only being charged for the services you received. If a provider mistakenly charged you twice for the same service, for example, you might not be able to tell from a summary bill alone.

With an itemized bill in hand, it’s much easier to review the information with a critical eye. Here’s a breakdown of what each line of a medical bill means:

  • Personal information: Always check the spelling of your name, address, and any other personal information on the medical bill. If this information is incorrect, it could have caused the insurance claim to be denied and you may have been billed more than you owe.

  • Statement date: This is the date the provider printed the medical bill.

  • Account number: Your account number is unique to you, so if you contact the provider’s billing office with any questions about a bill or balance, this will be the first thing they request. You’ll also need your account number in order to pay bills online.

  • Service date: Medical bills are typically organized into rows and columns. One of the first columns on a medical bill is a list of the service dates (i.e., when the medical services were provided).

  • Description: The next column over will be the description. This is typically a short phrase that details the services or supplies received.

  • Charges: The charges reflect the price of the services or supplies received. Keep in mind that these prices reflect the cost before any insurance is factored in.

  • Billed charges: This is the total amount charged to you and your insurance company.

  • Adjustment: If your provider has agreed not to charge a portion of the billed amount, this amount will go under adjustments. An adjustment is like a discount that an insurance company has negotiated on your behalf.

  • Insurance payments: This is the amount that your insurance company has already paid.

  • Patient payments: This is the amount you’re responsible for paying.

  • Balance due: This is the amount currently owed to the provider.

  • Payable to: This indicates where payments should be addressed.

Tackle your next bill with confidence

A medical bill is much more than just a piece of paper with numbers. It’s important to understand what you’re being charged for and why. But with that knowledge, you can manage some of the financial stress typically associated with medical bills and — hopefully — save money but only paying what you truly owe. So when you receive your next medical bill, take the time to ask questions, investigate the details, and be an informed advocate for your own physical and financial health.

This content is for informational purposes only – it should not be treated as legal, tax, investment, or financial advice. Please consult with your tax or financial advisor for advice specific to your situation.

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