Understanding Your Bill
Created on Monday, 17 December 2012 15:14
This page is an effort to help you understand your hospital bill and address questions frequently raised by our patients. It is our intent to provide you with an accurate bill to understand the hospital services provided. Please call our Business Office at (805) 737-3300 if we an assist you in any way.
Why are there so many bills?
The hospital will bill the patient, the patient’s insurance or health plan for non-physician services that are provided at the hospital. Services provided by the physician are billed separately by the physician’s billing agent.
What will my insurance pay?
If you have current coverage through an insurance or health-plan, our Patient Accounting Department will gladly bill them and any secondary or supplemental plan you may have. Within a reasonable time (Usually 30-45 days) you should receive an “Explanation of Benefits” from your insurance company, referred to as an EOB.
This form should show you what your plan will pay and if you owe any deductible or CO-payment. With some plans, including Medicare, you may have a supplemental plan that will pay your yearly deductible or CO-payment.
We strongly suggest that you become familiar with your insurance plan and know what covered benefits you have, including possible authorizations. Your insurance agent can be of great help regarding questions about your coverage.
How does my health-plan calculates what I owe?
In many cases, the amount you owe is determined by your health-plan policy rather than the hospital charges. An example of this is as follows:
Hospital Charges $10,000
Plan’s Discounted Rate -$4,900
Amount Paid by Plan $4,410
Amount to be paid by patient. (10% Deductible) $490
Total Paid to Hospital $4,900
Unpaid Hospital Charges $5,100
Considering the health-plan policy, the $490 that you owe is based on 10% of the contracted amount and not the hospital charges.
What payment does the hospital receive?
One of the least understood facts is that about 85% of hospital bills are paid by an insurance company or health-plan that disregards the actual hospital charges, as mentioned previously. Most of these payors have prearranged discounted prices which they have determined or, in some instances, have negotiated in a contract with the hospital. As in the example, the average amount that these payors are actually paying the hospital is about 49 cents for every dollar billed.
In the example, the hospital received $4,410 from the insurance company and $490 from the patient. The $5,100 is what the hospital must absorb and cannot bill either the patient or the secondary insurance. This is the case for 85% of our patients, including Medicare, MediCal, and most preferred provider health-plans and HMO’s.
What if I continue to receive statements?
There are three basic reasons why you may get a bill:
Your insurance has been billed but has delayed payment.
Your insurance has denied payment.
The amount billed is what you are responsible for paying.
Please call our Business Office to see if we have received any response from your insurance company or health-plan. If your insurance has requested additional information from you so that they can process your claim, it is important that you respond promptly to their request.
If your insurance company is delaying payment, your call to them directly can be effective since you are the subscriber and should be considered their valued customer.
The following is a glossary of terms often used at the hospital in the admitting and billing office.
A yearly amount usually owed by the patient or family before other health benefits are paid by the insurance company or healthplan.
This is often a set fee which the insurance company or health-plan requires the patient to pay each time a specific health care service is provided, such as a doctor’s visit or an emergency room visit.
A patient that has a specific diagnosis and is admitted at least overnight.
This term applies to healthcare coverage in which the patient is required to be seen by a primary care physician who authorizes or “manages” all healthcare services for the patient. This could be either an HMO or a Preferred Provider Plan.
A patient that is admitted for observation and testing before determining the specific diagnosis and treatment. An observation patient may stay in the hospital overnight or several days before being discharged or admitted as an inpatient.
A patient that is admitted to the Emergency Department or for Outpatient Surgery or other tests that do not require the patient to stay overnight. On occasion, an outpatient may stay overnight and be discharged the following morning without changing their patient status.
Most insurance companies or health-plans require the patient or healthcare provider to seek approval before having expensive treatment or tests carried out. This pre-approval or pre-authorization usually gives both the patient and the provider the assurance that the service will be paid for by the insurance company or health-plan. If a patient is not given pre-authorization, the provider will still perform the test or treatment; however, the patient is then financially responsible for the medical bill.