The Medical Bill Mystery

By Elisabeth Rosenthal for The New York Times

I CONFESS I filed this column several weeks late in large part because I had hoped first to figure out a medical bill whose serial iterations have been arriving monthly like clockwork for half a year.

As medical bills go, it’s not very big: $225, from a laboratory. But I don’t really want to pay it until I understand what it’s for. It’s not that the bill contains no information — there is lots of it. Test codes: 105, 127, 164, to name a few. CPT codes: 87481, 87491, 87798 and others. It tells me I’m being billed $29.90 for each of nine things, but there is an “adjustment” to one of $14.20.

At first, I left messages on the lab’s billing office voice mail asking for an explanation. A few months ago, when someone finally called back, she said she could not tell me what the codes were for because that would violate patient privacy. After I pointed out that I was the patient in question, she said, politely: “I’m sorry, this is what I’m told, and I don’t want to lose my job.”

I have spent the last two and a half years reporting and writing about medical costs, and during that time I have pored over hundreds of patients’ bills. And while I’ve become pretty adept at medical bill exegesis, I continue to be baffled by how we’ve come to tolerate the Kafkaesque stream of nonexplanations that follow health encounters.

Bills variously use CPT, HCPCS or ICD-9 codes (more about those later). Some have abbreviations and scientific terms that you need a medical dictionary or a graduate degree to comprehend. Some have no information at all. Heather Pearce of Seattle told me how she’d recently received a $45,000 hospital bill with the explanation “miscellaneous.”

Are there no standards or regulations governing medical billing? Even my receipts from the dry cleaner say things like “sweater blue — $7.” The supermarket tells me I’ve paid $2 for 1.3 pounds of gala apples.

“Medical bills and explanation of benefits are undecipherable and incomprehensible even for experts to understand, and the law is very forgiving about that,” said Mark Hall, a professor of health law at Wake Forest University. “We’ve not seen a lot of pressure to standardize medical billing, but there’s certainly a need.”

Hospitals and medical clinics, for their part, often counter by saying that detailed bills are simply too complicated for patients and that they provide the information required by insurers. But with rising copays and deductibles, patients are shouldering an increasing burden. And if providers of Lasik and plastic surgeons can come up with clear prices and payment terms, why can’t others in medicine?

In other industries, lawmakers have swooped in to end unscrupulous practices. The 1968 Truth in Lending Act required clearer terms in writing loans and offering credit. After the housing crisis, the 2009 Mortgage Disclosure Improvement Act demanded that lenders provide clear and consistent information to home buyers. The idea was to protect buyers from being seduced by low-interest teaser rates that would jump dramatically a few years later, for example.

But, Mr. Hall said, such legislation applies only to specific sectors: “There is no general law that says bills must be clear and there are no rules about which can be reported to credit agencies. I think bills are transparent at the grocery not because there’s a law, but because that’s what customers expect.”

Christina LaMontagne, vice president in charge of health at NerdWallet, a consumer financial services company that offers medical bill audits, educational tools and experts to talk patients through their bills, said, “The idea that consumers want user-friendly explanations is exactly the issue.”

“The lack of standardization is a function of history,” she continued, “and relates to how many cooks are in the kitchen: doctors, hospital, insurers, billers. Getting them to agree on how to standardize the bill feels like herding cats.”

I called the American Medical Billing Association, a trade group based in Oklahoma, expecting a defense and instead got a kind of mea culpa, from Cyndee Weston, its executive director: “There are no industry standards with regards to what information a patient should receive regarding their bill,” she said. “The software industry has pretty much decided what information patients should receive, and to my knowledge, they have not had any stakeholder input. That would certainly be a worthwhile project for our industry.”

One recent study found that up to 90 percent of hospital bills contain errors.

Therese Meuel, a business consultant who volunteers as an Affordable Care Act patient navigator in the Bay Area, needed a kidney biopsy earlier this year. She said she “treated it as a kind of experiment to see how difficult it was to be a good consumer.” She discovered that “it was pretty much impossible.”

For a simple needle biopsy that would require 24 hours of observation afterward, she spent hours verifying that the hospital, radiologist, pathologist and anesthesiologist were all in her network, to keep out-of-pocket expenses to a minimum. The hospital bill ended up being around $15,000, for which Ms. Meuel owed $665.46. There were also bills from the radiologist ($1,263) and pathologist ($3,799.25) for which she owed smaller amounts.

The explanation of benefits from Blue Shield listed a few line items that had been paid to the hospital labeled “hospital,” “miscellaneous” or “labs.” All further explanation appeared in CPT codes. Only the explanation of payouts to the pathologist was given in words: “tissue exam special status group 2” ($372.75), “immunofluorescent study” ($1,748.25) and “electron microscopy” ($1,328.25). Not very helpful.

The itemized bill the hospital sent at her request offered minimal elucidation, containing items like: “1. 25030731 HC RT OXYGEN DAILY CHARGE — $2,132.25.”; “2. 0305 30516895 LAB HCT-CHRG ONLY — $104.81”; “3. 35033106 HC CT GUIDED NEEDLE PLCMNT ASP BlOP — $1,828.50.”

(My translation: 1. The supplemental oxygen delivered into the nose after surgery, a routine precaution at many hospitals. 2. A blood test for anemia. 3. The use of a CT scan to guide the biopsy needle into the kidney.)

Ms. LaMontagne of NerdWallet said the pressure to end such confusing billing practices will grow. “The baby boomers have tolerated the current system,” she said. “But 20-somethings and millennials are not used to this and they won’t.”

Until then, you can Google most codes and get a sense of their meaning.

What exactly you owe after that depends on the co-payments and deductibles stipulated by your insurance plan. Many policies have separate deductibles for in-network and out-of-network care and for drugs. There may be different co-payments depending on whether your test is done at a hospital or in an office.

Before you embark on the journey of decoding your bill, you might also want to have a look at a tutorial — Understanding Your Medical Bill — produced by the Khan Academy, an online educator, and the Brookings Institution in Washington. It’s a bit over 12 minutes. That’s about five minutes longer than the Khan Academy’s tutorial explaining Newton’s second law.

For a continuing conversation about health care costs and pricing in the United States, please join our Facebook group, Paying Till It Hurts.

Elisabeth Rosenthal (@nytrosenthal) is a New York Times correspondent who is writing a book about the health care system.