Medical Billing Advocates Could Help You Save Big

Leamy: Using an advocate makes sense despite contracted insurance rates.

ByABC News
December 7, 2009, 5:05 PM

March 8, 2010 — -- 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!!! :)
~Eileen F.

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.
~Mark L.

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.