Billing & Invoicing
I wanted to use this issue of the InsuranceProfessor.net newsletter to discuss billing and invoicing, hopefully giving each of you some ammunition in understanding the statements you receive following your care, along with how you can proceed to resolve billing issues.
If there is anything at all that befuddles and annoys folks in the health care delivery system, it is payments. Truly, it is a complex system, and admittedly some portion of such complexity is unavoidable. This essay is not an intricate explanation of the billing and payment system, but is oriented toward resolving issues within your control to help you properly pay your providers, resulting from the many years and experience I have accumulated.
Let me begin by outlining the basic reality of the American health care delivery system. In 2025 the annual total outlay/expenditure for all types of health care nationwide, regardless of payor, was on the order of $5.6 Trillion dollars, averaging out to just under $15,000 per person. Over the past few years the rate of spending on health care has increased in the neighborhood of 7-7.5% per year and is predicted to increase at higher rates during the next few years.
The healthcare delivery system in the US is largely based on a model of privately trained and employed health care workers (ie. providers), payment for whose efforts in large part derive from either government sources (local, state and federal) or private insurance companies, with the smallest portion coming from peoples’ wallets. In brief, the system within the US is not the familiar “supplier to consumer” structure that underpins most of the American economy. Rather, it is a system wherein a third party payor intercedes in the “provider to patient” relationship, often with requirements of their own that can perturb the aforementioned relationship. To complicate matters, overall payments most often involve both an insurance carrier and the patient/member.
A brief note about how much providers get paid. You have probably heard this before from me as we discussed additional coverages. With regards to Medicare, if a provider bills Medicare they will receive whatever Medicare’s reimbursement levels are for the area where the provider is located. Under a Medicare Advantage plan, the provider works within negotiated rates of thcontracts with insurance companies.
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So, let’s fast forward to the actual third party payor system and discuss how you, the patient, should supervise payments for the care you receive. In the health care insurance universe, there are major payment road marks that you will need to know so you can navigate the system and deal with the costs of care. In a highly simplified way, what are these elements::
1) Point of service
2) Post-care provider billing
3) Carrier explanation of benefits
Also, you must be aware of the elements of patient cost responsibility as embodied in a health care insurance plan::
1) Copays — a care specific payment made at the point of service. 100% of the designated copayment must be made, and will also go toward the plan’s out-of-pocket maximum
2) Deductible — a payment amount for designated care types not eligible for a copayment, 100% of which is the patient’s financial responsibility. The amount paid for the deductible also will go toward the plans’ out-of-pocket maximum. (***some plans do not use deductibles)
3) Coinsurance — often, a plan that includes a deductible will require that the patient pay a specified fraction of cost incurred after the deductible has been met. This amount also goes into the out-of-pocket maximum. (***some plans do not use coinsurances)
4) Out-of-pocket Maximum — a plan specific annualized maximum financial obligation required of the plan member, after being met, will satisfy the member’s out-of-pocket payments for the balance of the plan year.
** Under 65 health insurance plans combine drug payments and medical payments into a single category of financial responsibility. Medicare separates medical costs from drug costs into separate categories, each with financial requirements designed into the coverage.
*** Plan application of the elements listed above can vary among coverages, and from year to year.
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In many US-based plans, but not all, copays are used for a specified number of care categories and are assessed at the point where an insured receives that care, for example a doctor’s office or other care facility. A copay is a defined cost (ie. out-of-pocket) which is paid by the insured, after which the carrier pays all other costs. For example, for a primary care office visit, a copay may be $0 – $20, for example, which is paid at the time of a visit. The provider then submits a claim (ie. invoice) to the insurance company for the balance of the contracted amount for that care service.
Other types of care categories typical in many health plans are for specialist visits, diagnostics, minor outpatient services, facilities charges etc.
Following a care episode, it is not uncommon for a provider to send an invoice to the insured detailing charges within as little as 10-30 days. A fictional example is shown below. What can we make of this?
What To Do When You Receive A Provider Invoice??
First of all take note of the provider and the Date of Service, to make certain the invoice is valid. These are common identifiers needed to cross reference with the insurance carrier with regards to a claim. Control numbers (ie. invoice or customer number) are for the providers own accounting and will have no relevance to your insurance carrier.
Then we see the provider gross charge for the care. As most of you know, this is the providers’ own billed amount for the care, but never what the provider actually will accept in payment. (amounts shown in the example are modest)
This early invoice might also include a Discount or Adjustment amount, which is probably nothing more than whatever the provider’s billing office has built into their computer system, representing what they think the insurance plan will discount the provider’s billing to match the stipulations of the contract. This may also turn out to be irrelevant to the carrier’s payments.
Another column will show payments, or may even be called Insurance Payment. If there is an amount shown here, it may be fair for you to assume that this is an amount received by the provider from the insurance to pay for the care you received (ie. The claim submitted by the provider). If there is no amount shown here, the provider, at the date of the invoice, has not received any payment from the insurance carrier.
If a Patient Payment is listed make certain that corresponds to any Point of Service payment you made to the provider. (ie. a copayment)
And finally, on the far right will be the arithmetic result of this math for that line. In general, this is almost never the amount you owe, this is only the calculation for the provider’s billing office/software.
What Do I Do With This Invoice?
Now before moving on to the carrier’s report, let’s makes sure we ask a couple of questions about the provider’s invoice::
a. Do we care about the gross amount show for the provider’s care? Well, it can be an interesting bit of trivia, but it is not relevant to what you may owe;
b. Under many plans, everything done in a doctor’s office is subject only to the copay that plan has stipulated for you to pay. In some cases, other procedures, sometimes labs for examples, may incur other charges, but then those charges will likely be billed by the third party, not the provider’s office;
c. Did the provider actually submit the claim to the insurance company? Does this invoice tell you anything that would suggest they have? Well … actually in most cases the invoice from the provider does not tell that, but is nonetheless a very important piece of information;
d. Is the Discount Amount accurate? Well, much like the gross billing, it is interesting but may not represent that actual discount assessed by the insurance carrier based on the contract the provider has with the carrier. You have no idea what the source of this discount number is, and frankly at this stage if of not real value to you;
e. Has the provider coded the care provided to you properly? These codes tell the carrier what care was provided to you and are assigned by the provider in their accounting software, and as time goes on, by the AI mechanism of that software. Obviously, you have no idea if the provider has coded their claims properly or not but that could end being a reason a provider does not get paid in a timely fashion by the carrier. Below we will see where this might come up;
e. So….what should I do with this provider’s invoice? In a word, at this early point, “nothing.” Hang on to it and wait for the carrier’s report on these charges, which is called the Explanation of Benefits. The EoB should be along within about 30 days, assuming the provider has properly submitted their claim to the carrier.
So, What Should You Do Now??
When the provider submits an invoice to the carrier, the carrier will process the Claim in due course of business, comparing the claims which have been submitted with the provider’s contract, the codes assigned to that care by the provider and the cost assigned to those codes matching all the aforementioned descriptions.
If everything matches, which does happen much of the time, the provider will be paid immediately. If the various parameters don’t match, the claim settlement will be delayed and reprocessed based on other data. In many cases, the provider is notified of an issue, but sometimes various carriers can be slow to notify the provider of the billing issue, which obviously can cause delay. It is not unheard of for providers or their billing offices to make repeated coding mistakes, which unfortunately delays their reimbursements;
Roughly at this point the carrier will provide you with an electronic or written Explanation of Benefits. The EoB coincides with the carrier payment to the provider, providing exact details on how the claim was handled and reimbursed to the provider. It will also list your payment responsibilities under your plan;
This EoB will summarize all claims, and what was authorized to be paid, and what you may owe. If you see any discrepancies in the EoB (ie. no accounting is made for a copay you made at the doctor’s office), you can contact the carrier to correct mistakes;
Otherwise, the EoB, is your first authoritative representation about what you owe to satisfy the invoice for the doctor. From this EoB, you can make payment to the provider IF the EoB and the provider invoice reconcile costs. This also a good opportunity to compare the amounts the carriers has assigned to various categories (ie. Care Discounts are always a fun read).
So….as most of you know I offer, at no charge, a service to help you reconcile billings you receive from any of these parties. It can be a complicated process, but just keep in mind I will need to see provider invoices and EoBs for the care in question.
Now…..I do not mean to over simplify this process of health care payments. We all intuitively know that is varied and complex and that many diverse parties can play a role. Moreover, this all can be very complicated when a procedure of care involves multiple providers. Nevertheless I will assist as I am able with your help.
Let me summarize by taking you through how I would approach getting to a resolution on a billing issue, or you can adopt this process yourself if you would prefer that course, or we can work on it together.
My first step will be to talk with you about every step of all of the care given and received by you prior to the various billings being sent to you.
I will ask for, and you will need to provide, all paperwork and/or electronic notices you’ve received from all parties involved in the care provided. That means all invoices from providers and EoBs from carriers.
I start by calling the insurance carrier and asking them if they have sent claims to all of the providers for care they provided to you. Key here is the provider and the dates of service — this is how the carrier correlates the claim to any processing of payments. During this process if we discover bad coding being the nut of the problem, we communicate with the provider for them to reformat and resubmit their claim. If we encounter a matter of “arithmetic,” which can happen, I will generally ask the carrier to contact the provider to resolve the matter of dollars and cents.
If claims have not been received by the carrier, we go back to the provider and ask them to submit or resubmit the claims to the carrier. It is not unheard of that a carrier may wait several months before submitting a claim — such a thing can be a symptom of a complex accounting system in use by a provider.
Later on, we will follow up with the carrier to insure that the claims have been received. [By the way — if during any of this process a provider gets antsy and sends the claim/invoices to a collection agency who begins to contact you, this may not be a legal or allowable action for the provider to have taken. Just call and we can discuss what can be legally done]
If and when we can match up all claims and dates of service, we will compare the carrier’s EoBs to make certain they track with the payments made to the provider. I will show you what you must pay to settle up and that should resolve the matter.
Also remember, if there are multiple providers involved in an episode of care, what may seem like a single care event to you, may actually involve 3+ providers. You may even receive invoices from multiple providers that do not register to you at all. Again, I will help you clarify this messiness — the date of service should provide our first clue, but we might also uncover less than honest attempts to get you or your carrier to make payments. It doesn’t happen very often, but it can happen.
If you have any questions about any of this posting, please contact me at 303-912-5490 or AJ@InsuranceProfessor.net
Posted:: 6/5/2