Errors in Retirees’ Medical Bills are Rife

The stories are harrowing. In complaints to the federal government, retirees describe the costly errors in medical billing that they struggle, often unsuccessfully, to straighten out.

One low-income person was told, during his cancer treatments, that they weren’t covered when in fact the hospital wasn’t processing his Medicaid coverage. Another retiree submitted letters to a specialist’s office over a two-year period explaining – with supporting insurance documents – why he didn’t owe the doctor the money he’d been billed for a test.

Someone else, while being whisked to the hospital in an ambulance, provided his Medicare and supplemental insurance cards during the ride. He never got a bill – just a call from a debt collection agency.

Finally, one retiree gave up: “I decided to pay the darn bills even though I don’t owe them.”

The Consumer Financial Protection Bureau reports that unpaid medical bills for people over 65 amounted to $54 billion in 2020 – a 20 percent increase over 2019’s unpaid bills. Too many of these unpaid bills were charged in error, demanding that retirees pay money they didn’t owe, the agency said. And the amount of unpaid bills they reported in surveys rose in 2020, even though older Americans had lower out-of-pocket expenses because they avoided going to the doctor during the first year of COVID.

In theory, Americans over 65 are better covered than anyone, because they usually are on Medicare. And the majority of people over 65 who reported to the CFPB that they were billed in error had some other form of insurance in addition to Medicare.

The billing errors occur for all kinds of reasons, from medical providers’ failure to run charges through an insurer to the more complex system of medical coding required for the health conditions that crop up as people age. Another problem is a lack of coordination between the federal Medicare and federal-state Medicaid programs. People with dual coverage make up 10 percent of the retirees reporting they have unpaid medical debt, even though, in most cases, they should be paying little or no out-of-pocket costs for their care.

“Older adults face a complex billing system with a high likelihood of errors and inaccurate bills,” CFPB said in its report. “[I]naccurate and erroneous bills are common, and resources to prevent and correct errors are limited.”

Billing errors are a particular problem for elderly people because they may be suffering from dementia, can have difficulty negotiating telephone decision trees to get someone to help them, or have disabilities such as poor hearing that interfere with resolution of problems with insurers, doctors, and bill collectors. Bills that are incorrectly referred to collection agencies can cause a lot of undue stress or result in payments that should not have been made.

Disadvantaged people are most affected, the CFPB said. While 7 percent of all Americans over 65 report having unpaid medical bills, that rises to 12 percent for retirees of color and to 13 percent for low-income retirees.   

As is the case with harassing debt collectors and cases of abuse, consumers can file a complaint with the CFPB.

Maybe the clout of the federal government will help.

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.