How to Read Your Medical Bill

The “insurance payment” or “plan payment” shows what portion of the charges your insurance company has paid. If no payments appear here, your plan may not yet have paid what it owes — check with your insurer before paying the amount listed as due.

Understand the codes

Every medical procedure has a corresponding five-digit code. These numerical systems, called Current Procedural Terminology (CPT) for insurance and the Healthcare Common Procedure Coding System (HCPCS) for Medicare, determine how much your provider will be paid.

There are “thousands upon thousands of billing codes, and they’re very complicated, too,” says Teresa Brown, senior director of hospital accounts at Medliminal, a company that reviews medical bills to help employers, insurers and other clients reduce health care costs. Mistakes range from simple typos to billing offices misreading or misinterpreting doctors' notes or hospital discharge summaries.

“If the description of something is unclear or a charge seems excessive, you can type the code into Google to get a good idea of what it is,” Palmer says. Online cost-comparison tools from FAIR Health and Healthcare Bluebook will give you an estimate of typical charges in your area for specific codes.

Compare with your EOB or MSN

Every medical procedure or visit will show up on an explanation of benefits (EOB) from your insurance company or a Medicare Summary Notice (MSN). These list the services performed, what the doctor or hospital charged, what your insurance company or Medicare paid, and what you owe. Make sure the dates and codes on that statement match the bills you receive from medical providers.

Check for common errors

Here are some of the most frequent billing mistakes.

• Incorrect quantities or duplicate charges. If a coder mistakenly adds a 0 to a number, you could be charged for 100 pills instead of 10, potentially adding hundreds of dollars to your invoice. Also, make sure a service or procedure isn’t listed more times than it was performed. Duplicate charges are surprisingly common, Palmer says.
• A treatment, medication or procedure you didn’t receive. If you were scheduled for a test or procedure but it was canceled, it could still end up on your bill because no one struck it from your chart. 
• Inflated surgery and recovery times. Hospitals charge by the minute for operating-room time, so it's a good idea to check that they are billing you only for how long you were there. “You can always ask for your medical record to see what time the surgery actually started and stopped,” Palmer says. The same goes for the time you spent in recovery.
• Charges for basic supplies. Patients sometimes discover fees for gloves, gowns or other routine items listed separately on their bill. Brown says one claim Medliminal reviewed “charged for a mucus-recovery system, which ended up being a box of tissues.”
• Room fees. If the bill includes a hospital stay, check that you were charged for the right kind of room (shared or private) and the right number of days. If you were formally admitted after midnight, make sure your charges start on that day. Also, most insurance companies don’t allow hospitals to charge room fees for the day you’re discharged. 

Be on the lookout, too, for billing irregularities that could be signs of fraud. These can include upcoding (listing the CPT code for a more expensive procedure or service than was performed) and unbundling (charging individually for related services typically billed under a single code — for example, incision and stitching for a surgery). If you suspect billing fraud, contact your insurer's anti-fraud office.

AARP’s Money Map can help you take control of unplanned expenses and get you on back on track to financial stability.