Pesky medical bill? Many people don't take a key step to manage that debt, study finds

• Many people don't dispute potential errors on their medical bills because they feel it's ineffective.
• However, calling a health provider to address a financial concern can, for example, help correct, reduce or eliminate one's bill, according to a University of Southern California study.
• Doing nothing and avoiding payment may result in late fees and interest, debt collection, lawsuits, garnishments, and lower credit scores.

Consumers may feel their medical bills are unyielding, inflexible, set in stone. But that's not always true: A new study shows patients can often reap financial benefits by disputing charges that seem erroneous or by negotiating for financial relief.

Of consumers who don't reach out to question a medical bill, 86% said it's because they didn't think it would make a difference — but "the experiences of those who did reach out provide evidence to the contrary," according to a new University of Southern California study.

About 26% of people who called because they disagreed with a charge or couldn't afford to pay it got their medical bill corrected after the outreach, according to the study, published in August. Roughly 15% got a price reduction, 8% got financial assistance and 7% saw their bills canceled outright.

"Of the people who did reach out, most of them got some recourse through self-advocacy," said report co-author Erin Duffy, a research scientist at the USC Schaeffer Center for Health Policy and Economics.

Researchers polled 1,135 U.S. adults from Aug. 14 to Oct. 14, 2023.

About 1 out of 5 respondents reported receiving a medical bill with which they disagreed or could not afford within the prior 12 months. About 62% of them contacted the billing office to address the concern.

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"If you can't afford to pay something, or [if a bill] doesn't seem right or match what your care experience was, you should call and ask questions about that," Duffy said.

Savings can extend into the hundreds or even thousands of dollars, depending on factors like a patient's health insurance and the type of medical visit or procedure, said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville, Florida.

Bills 'go all over the place'

A 2023 Consumer Financial Protection Bureau analysis of medical bills for adults age 65 and older found that patients "face a complex billing system with a high likelihood of errors and inaccurate bills." Often, inaccurate bills result from erroneous insurance claims and occur more frequently among consumers with multiple sources of insurance, the CFPB said.

Common errors included missing or invalid claim data, authorization and precertification issues, missing medical documentation, incorrect billing codes, and untimely filing of claims, the report found. Such mistakes contributed to the "rejection of claims that would otherwise be paid," it said.

"[Bills] go all over the place," said McClanahan, founder of Life Planning Partners and a member of CNBC's Advisor Council. "And there's no transparency or rhyme or reason for how [providers] decide to charge."

Doing nothing and avoiding payment of medical bills is likely not a good course of action: It could have negative financial consequences, such as late fees and interest, debt collection, lawsuits, garnishments, and lower credit scores, according to a separate CFPB resource.

"If something seems egregious, question it," McClanahan said.

How to manage medical bills

Consumers should ask upfront what a medical visit or procedure will cost, or inquire what the estimated cost will be, she said.

Sometimes, consumers will pay "a heck of a lot less" if they pay in cash rather than via insurance, McClanahan said. However, cutting a check could have other consequences like the sum not counting toward one's annual deductible, she added.

If you feel you were overcharged, request an itemized bill from the provider or hospital, and look for errors or duplicate charges, according to PatientRightsAdvocate.org. Research the fair market price for a service and use that information to negotiate, the nonprofit group said.

The phone number for your medical provider's accounting or billing office will be on your billing statement, the CFPB said.

Here are three other questions to consider asking about your itemized bill, according to the regulator:

• Do charges reflect the services you received?
• If you have insurance, do the bills reflect the payment by your insurance and reflect what the provider understood would be covered?
• Do any of the charges indicate a service was "out-of-network" when it wasn't?

When calling a provider about a medical bill, keep a journal about the communication, McClanahan said. Write people's names and what was discussed, and get a commitment of when you'll hear back.