February 22, 2025

Anatomy of a Medical Bill

John Dang M.D.

A medical bill is generated with any healthcare service (lab draws, office visit, hospitalization). An important concept to keep in mind is that unless you do not intend to use your insurance, most billing operates on a service first payment later model, called “reimbursement”. This is how it works: 

For example, Becky goes to urgent care for a cough. Her insurance plan is a flat 10% co-insurance, so she pays nothing during the visit.

The healthcare provider will code the correct CPT code for the service, along with associated diagnostic ICD10 code.

In Becky’s situation, the urgent care doesn’t send a bill to her directly. The claim is sent to Becky’s insurance company; the CPT code is 99204, with associated ICD 10 codes R05.1 and J06.9.

The insurance company sees the claim and approves the claim. If in network, the bill is adjusted down to contractual rates.

In Becky’s situation, urgent care is in network and bills the insurance company $500; this is then adjusted down to $300, which is the contractual rate.

In Becky’s situation, she has a 10% co-insurance responsibility; therefore, the insurance company will send the urgent care a $270 check with instructions (called an EOB) for the urgent care to bill Becky $30.

Typically in a few weeks after the visit, the patient will receive a bill directly from the healthcare provider.

In Becky’s situation, she receives a bill from the urgent care for $30.