Health Education Editor · Last reviewed January 2025
Medical billing is one of the most confusing aspects of the American healthcare system. The process involves multiple parties — healthcare providers, insurance companies, and patients — each communicating through different documents with overlapping but distinct information. Understanding the key documents and your rights as a patient can help you avoid paying more than you owe and navigate billing disputes effectively.
The Explanation of Benefits (EOB) Is Not a Bill
After receiving covered healthcare services, your insurer will send an Explanation of Benefits showing what the provider billed, what the insurer allowed (the negotiated rate), what the insurer paid, and what you owe as cost-sharing. An EOB is informational — it explains how your claim was processed, but it is not a bill. Compare your EOB to the provider's actual bill to identify any discrepancies before paying.
Common Billing Errors
Medical billing errors are surprisingly common — estimates suggest that a significant percentage of medical bills contain at least one error. Common errors include: duplicate charges for the same service; billing for services not performed; upcoding (billing for a more complex service than was provided); incorrect diagnosis codes that can affect insurance processing; and facility fees not disclosed in advance. Review your itemized bill carefully and compare it to your EOB and your recollection of the care received.
Disputing a Bill
To dispute a billing error, start by requesting an itemized bill from the provider — you have a right to this document. Contact the provider's billing department in writing, identifying the specific charge you believe is incorrect and explaining why. Keep copies of all correspondence. If the provider disputes your concern, you can also contact your insurer to dispute how the claim was processed, as some billing errors also affect insurance payment calculations.
Medical Bill Negotiation and Financial Assistance
Most providers — hospitals in particular — have financial assistance (charity care) programs for patients who cannot afford their bills. Federal law (IRS Section 501(r)) requires nonprofit hospitals to have financial assistance policies and to make them widely available. Do not pay a large hospital bill without first inquiring about financial assistance eligibility. Medical bills are also frequently negotiable — particularly for uninsured patients paying out of pocket, providers will often accept the insurance-negotiated rate or less. Asking for a prompt-pay discount or setting up an interest-free payment plan are reasonable requests.
Medical Debt Protections
Medical debt collection is governed by the Fair Debt Collection Practices Act (FDCPA), which prohibits abusive collection practices. Hospitals receiving federal funding cannot take certain aggressive collection actions (liens, wage garnishment) against patients who are eligible for financial assistance before completing the financial assistance application process. Medical debt under $500 was removed from consumer credit reports as of 2023 under a new CFPB policy.
Related: Your Patient Rights · How Insurance Works · Appealing Coverage Denials