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Over 65? Beware Medical Debt

4 million owe a record $54 billion

spinner image A senior woman looks at past due bills spreas across a table along with prescription medicine containers.
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Two years. That’s how long Donna Domingo has been fighting with her insurance company over a medical expense.

A diabetic, Domingo needs an insulin pump, which the insurance company considers a prescription medication, not a piece of medical equipment. That makes her share of the cost nearly $500 for each three-month supply.

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“There’s no drug in it. It’s a device,” says Domingo, 62, who worked in the pharmaceutical industry for 27 years. “How can you bill me for a medical device under a prescription program?”

Disabled and living on Social Security, she says she had to cut into the rest of her household budget to keep paying these bills.

“How am I supposed to afford this? I’m taking it out of food money,” says Domingo, who lives in Port Jervis, New York.

This kind of frustration is becoming much more widespread, leaving 7 percent of Americans over 65, or nearly 4 million of them, with nearly $54 billion worth of unpaid medical bills collectively — even though almost all have Medicare and nearly half pay for a second layer of private insurance.

That was up 20 percent from 2019 to 2020, the most recent period for which the figure is reliably available and a time when older adults actually made fewer doctor visits because of COVID-19. It comes to more than a quarter of what the independent policy research organization KFF estimates is $195 billion in medical debt faced by U.S. adults of all ages.

The average individual amount purportedly owed by over-65s with unpaid medical bills also increased, to $13,800, according to the federal Consumer Financial Protection Bureau, or CFPB.

Billing errors a big cause

Although even Domingo concedes that complex Medicare reimbursement rules mean that the insurance company in her case may be right, the CFPB finds “a high likelihood” that many bills like these are simply wrong, forcing seniors into endless battles with customer service representatives and bill collectors over charges made in error. Many simply pay.

“A lot of them might end up saying, ‘Just put it on my credit card,’ ” says Krutika Amin, former director of policy and research at the Center for Consumer Information and Insurance Oversight of the U.S. Department of Health and Human Services.

“As we age, we’re more likely to need health care, and the complexities of being disabled or not able to deal with paperwork and financial situations also get worse,” says Amin, associate director of the Peterson-KFF Health System Tracker at KFF, formerly the Kaiser Family Foundation. “They might not be savvy enough to know how to negotiate or have the support to negotiate.”

Worse still, nearly 8 in 10 Americans with medical debt report forgoing or delaying health care or prescription drugs and nearly 15 percent say they have been denied additional care by a medical or dental provider, a KFF survey found.

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Problem getting worse 

There are many reasons that this problem has been getting worse, according to researchers.

Older patients need more complex care, for instance, which requires more elaborate medical coding that is easy to get wrong. Hospitals and medical practices and their billing departments have increasingly consolidated, bringing together mismatched systems.

The payment processes of Medicare and supplemental insurance companies also sometimes fail to sync up, leaving providers to bill people directly; consumers who reported having several layers of insurance are actually more likely to report problems with inaccurate billing than those who have only Medicare, the CFPB finds. Ninety-five percent of adults 65 or older have Medicare and 46 percent have supplemental private coverage, according to the National Center for Health Statistics; fewer than 1 percent are uninsured, by far the lowest proportion of any age group.

“We have this crazy quilt health care system, and it’s absolutely geared to confuse patients and the general public,” says Len Kirschner, a doctor and former director of the Arizona Health Care Cost Containment System. “It is so complicated that even people who are expert at it are confused by it.”

In the worst cases, says Kirschner, 87, who lives near Phoenix, unpaid medical bills to older adults “are sent to a collection agency and they are hammered by the collection agency.”

Some of these charges are legitimate, says Loren Adler, a fellow and associate director at the Brookings Schaeffer Initiative on Health Policy. Older adults who don’t have supplemental medical insurance can face copays of as much as 20 percent and four-figure deductibles for inpatient hospital admissions.

“That, in many cases, is going to leave folks with a pretty substantial bill,” Adler says.

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Many errors

But many charges are billed in error, according to the CFPB report, which is based in part on about 1,100 debt collection and more than 300 credit-reporting complaints made to the agency about Medicare billing.

“We systematically see populations that are well covered, well insured, including dually eligible Medicare-Medicaid beneficiaries, with high percentages of unpaid bills,” says Hector Ortiz, a CFPB senior policy analyst who worked on the study.

Some, he says, were billed for services that should have been covered. In other cases, providers failed to submit their claims correctly.

Many people learn about these errors when the debt collectors start to call. “And at that point, it’s difficult for an older adult to fix the problem. They have to go back to the provider, they have to collect the documentation. It’s a time-consuming process,” Ortiz says. And “it’s placing that burden on people who can’t use the internet or don’t have digital skills or access.”

Forty-one percent of U.S. consumers who experienced at least one billing mistake in the past five years were “significantly frustrated” trying to correct it, a January survey by the claims and payments company Zelis found. A similar proportion spent up to a month getting bills corrected, and 70 percent spent more than two hours trying to resolve an error.

Patients often “just end up paying the bill to get people out of their hair, if they have the money or can scrounge it together,” Adler says. “There’s only so much fighting folks want to do here. Then there’s the time suck of trying to fight it and trying to figure it out. Everyone has done the runaround with insurance companies and providers to try to fix something.”

The White House announced on Sept. 21 a proposal to keep medical bills off a person’s credit report. The CFPB, which is working out the details, said in a statement that including medical debt in credit scores is problematic because “mistakes and inaccuracies in medical billing are common.”

Threats to a patient’s credit reports is a common collection tactic used by hospitals, according to KFF Health News.  “These measures will improve the credit scores of millions of Americans so that they will better be able to invest in their future,” Vice President Kamala Harris said.

Where to get help

If you have a medical billing issue, don’t give up. You can get help.

AARP. Our Money Map can provide guidance for dealing with medical providers, reducing your costs and finding the best ways to pay your bill. It’s free.

Centers for Medicare & Medicaid Services. CMS can give you information about eligibility for Medicare and Medicaid, as well as details about both programs’ rules. 

Consumer Financial Protection BureauConsumers can file complaints about incorrect bills or harassing debt collection processes.

Patient Advocate Foundation. The PAF can help you find patient advocates in your area. Patients must be diagnosed with a chronic, life-threatening and debilitating disease to qualify for free aid.

State Health Insurance Assistance Program. SHIP offers free one-on-one assistance with Medicare-related issues. The government has several programs for helping with medical bills. Here’s how to find them.

As for Domingo, she has no plans to give up.

“Living hell,” she calls her yearslong fight with her insurer, chuckling. “I had a whole notebook full of people I spoke to, whether it was the insurance company, whether it was the distributor. You never really get a straight answer. You talk to 20 different people, and you get 20 different explanations.”

But she adds, “I’m going to fight till the last bit of breath in me.”

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