I want to answer viewer questions again this week, because we're really beginning to have a vibrant, vigorous discussion about how to SAVE BIG. Recently on "GMA Weekend" and also on ABC News Now, I have reported that you can save thousands by hiring a medical billing advocate to find and fight hospital billing errors for you. Eighty percent of hospital bills contain errors, according to Medical Billing Advocates of America.
I told the story of a woman without health insurance who got breast cancer and had to have a lumpectomy. The hospital initially told her the procedure would cost $5,000 but then charged her $12,700! Desperate, she sought the help of a medical billing advocate. This pro found $6,858 worth of erroneous charges and got the hospital to drop them. It's funny. That story got two utterly different viewer responses. Here they are:
Q: Hi Elisabeth, I saw your article on ABC News regarding medical billing and was wondering if it's something I need to pursue. My daughter spent two weeks collectively in the hospital last fall for a tumor removal. Even though we have insurance, would it still be worth hiring an advocate? We are close to bankruptcy from the bills. Please help!!! :)
Q: One of the biggest fallacies is on medical billing errors. Most insurances pay a flat rate for a hospitalization or procedure. The co-pay and deductible are based on that adjudicated rate -- not the total amount of the charges or bill. Therefore, if the charges for the procedure, hospital stay, etc., are $100,000, insurance contracted rate is $23,000, and the patient has a $5,000 deductible, the patient owes the $5,000. Finding an error of several thousand dollars is not going to make a difference.
So who's right? Me? Or Mark L.? Should Eileen bother hiring a medical billing advocate? Lucky for me, I'm the one writing the column, so I get to vote that I am in the right in this debate! Now let me back up my contention.
Mark's viewpoint -- that hospital billing errors don't matter because your insurance company negotiates a lower rate for the service and pays for it -- is short-sighted. Here's why: Millions of Americans, such as myself, have health insurance plans that charge "coinsurance" rather than a flat co-pay. Coinsurance means you are charged a percentage of your medical care. The most common cost-sharing arrangement is an 80/20 plan, where the insurance company pays 80 percent of your bill and you pay the other 20 percent.
Twenty percent of a big bill for a major hospitalization is a lot of money. For example, a girlfriend of mine's husband had a heart attack and almost died. His hospital bill was $200,000. He was responsible for 20 percent of that, or $40,000. Ouch. So hiring an advocate to find and fight errors is in your interest if you have a coinsurance arrangement.
Insurance Lifetime Limits
It's also worth it on another level. Insurance policies have maximum lifetime limits that they will pay out. Often, those lifetime limits are not as generous as they should be, and you may have no choice if you are insured through your employer and not given many options. Therefore, you want to keep your costs down as much as possible to stay away from that lifetime limit on coverage.
And finally, even if you have a Cadillac plan that covers absolutely everything (lucky you, few of us do), it's just wrong to let hospitals sloppily -- or fraudulently -- overbill. They should be held accountable.
The great thing about medical billing advocates is that many of them work on contingency. You don't pay them a thing unless they negotiate a discount for you. That's how confident they are that they will, indeed, find errors. If they do find errors, typically you then pay them a commission of 15 to 35 percent of the savings found.
Here are some resources to help you find a medical billing advocate.
CareCounsel (A service available through your employer only.)