Friday, September 5, 2014

The $20,000 bruise

The $20,000 bruise story in the Wall Street Journal makes good reading. All of these health care disasters make good reading.
 I let the billing supervisor speak for a moment, and then cut him off using the ammo I had acquired from billing-coders' blogs. "You billed a G0390 for trauma-team activation. But chapters 4 and 25 of the MCPM require there be EMS or outside hospital activation if you are billing a G0390. There was no such activation here. So here is what I need you to do: Remove that $10,000 charge and reissue the bill."
He was silent for a moment. And then he said, " Let me talk to my supervisor."
...To the hospital's immense credit, they sent a refund to our insurance company and reissued the bill without the $10,000 trauma activation. They could have refused. What would my recourse have been? To hire a lawyer? Try to interest my insurer in fighting over a measly $10,000 charge? That is a tiny line item in their book of business.
All of us have experienced or know people who have experienced similar nightmares.

A question for any experts who read this blog. Surely there is a business opportunity here, no? "We negotiate your medical bill."  It is a huge waste of resources for Mr. David a "co-founder and chief strategy officer of Organovo Inc., a biotech company in California" to spend hours on the phone and more hours on the internet learning about medicare coding procedures. And all his acquired knowledge  is now wasted. Surely such a business could operate, like many lawyers, on a contingency fee basis, and take a fraction of money saved.

Yes, as Mr. David points out, this is what insurance companies are supposed to do. But copays are going up, and more people are gong to be paying out of pocket anyway.

Are there businesses like this that I, and Mr. David, simply don't know about?

Update: I knew that were there is demand there must be supply! A correspondent sends me a link to, which looks like this:


  1. I'm reminded of the AER's recent paper:

    It's about insurance in general, but can be easily be extended to a three-party health insurance setting. Applying their argument to healthcare, when auditing bills is costly, it is not profitable enough to engage in the socially optimal amount of billing error deterrence.

    The optimal billing error (ie fraud) deterrence strategy depends on the information sets. When both fraud and audit decisions are public information, then obviously we can achieve the first-best of total fraud deterrence . When fraud is private information but audit strategies are publicly known, then it is optimal for insurers to pay a reward for audited bills that contain no errors, and it is possible to achieve total fraud deterrence. In the third-best, audit strategies and fraud are private information, which yields the result that it is optimal for insurers to "nitpick," meaning that they will reduce payments for any audited bill regardless of whether there is a billing error or not (that is, they will offload a portion of the auditing costs onto either the hospital or the patient). However, in the third-best total fraud suppression is not generally possible.

  2. John,

    Thank you for bringing this article to my attention. It'll make a good marketing piece for my firm, ProClaim Medical Recovey.

    We work for employers that self-insure their group health plans. Our job: audit medical claim payments to identify and recover overpayments.

  3. There are companies that will scrutinize legal bills....

  4. We need more services like Mr. Leonard's. I have to educate my patients about how to fight their bills on a regular basis. There are tons of traps in the health care system. For example, your surgeon schedules you for a procedure at XYZ Hospital. You check with your insurer and XYZ is in-network.

    You have your surgery. The surgeon gets $500. The hospital gets $900. The anesthesiologist gets $1500. Your co-pay on that is $500.

    What happened?

    The hospital is in-network but the anesthesiologist is not. I tell my patients to call both the anesthesia group and the hospital and raise a fuss. This usually works but it's a PITA.

    ER visits are in a world of their own. Pre-authorization, in-network status, etc are often thrown out the window. Have you noticed how many urgent care centers have sprung up? Why do you think that's happening?It's the Wild West.

    You absolutely must get a detailed bill so you can contest the $10 Band-Aid and the $150 for skin glue, but how many people can decipher these charges? I think ProClaim is a fantastic idea but can you scale it for the little guy or is he out of luck because the yield is too low? In my own experience fighting with insurers on a daily basis, it's a Pyrrhic victory to have a $20/hr employee fight a $15 underpayment if they have to spend 20 minutes on hold and 30 minutes arguing.

  5. I'm one of the co-founders of CoPatient, so thanks for the mention! One of the earlier commenters mentioned self-insured employers, and one of the by-products of the increasing trend of employers self-insuring their health plan is that health plans have decreasing incentives to combat these billing problems on behalf of patients. Additionally, continuing consolidation of hospitals has created a very challenging contracting environment for the health plans, so they are often loathe to take up the fight on the consumer's behalf against a dominant health system. As long as these trends continue, we'll continue to have a steady flow of consumers that need our service. We save people an average of 40% of their original bill so it can be done successfully with the right expertise and technology at your side.


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