Services diagnose, treat medical billing errors

ByABC News
June 20, 2012, 5:43 PM

— -- Rising health care costs may be one of the biggest retirement worries, but medical billing errors and fraud are also draining many retirement savings. As the problem gets worse, companies are coming up with troubleshooting services.

"Health care is changing dramatically in front of us, and there is a huge disconnect between the amount of money we are charged and an understanding of what we actually owe," says Tomer Shoval of Simplee, a Web-based service that launched an automated medical billing-error detection system this week to help consumers cope with the issue.

"Eight out of 10 times — and that is conservative — the bills that you get are not right," says Pat Palmer, founder of Medical Billing Advocates of America. "It is normally in the favor of the biller."

The billing abuse is likely to grow, says Palmer, who has followed the issue since 1997. One reason is the change in diagnosis codes that's supposed to take effect next year. "Nobody is ready for that, and a lot of insurance companies are just going to kick out claims," she says.

The money involved is huge. Every year, $68 billion, or 3%, of the money spent on health care, is lost to fraud , according to the National Health Care Anti-Fraud Association's 2008 analysis. Up to 40% of hospital insurance claim statements contain errors, says a 2009 study by Stephen Parente, health finance professor at the University of Minnesota.

There have been some efforts to stop the bogus charges. Medicare overhauled billing statements, and it rewards up to $1,000 if someone uncovers fraud.

But billing and medical codes can be so indecipherable that they easily mask mistakes and fraud. Several medical billing advocates can help a consumer who thinks a bill is too costly by finding errors and haggling with insurers. They usually charge a fee if they save some money.

Simplee offers a high-tech service that's free for any consumer who comes directly to its website. Employers, health savings account administrators and others can pay Simplee to provide the service to employees and members.

In the past, when consumers paid a small amount for out-of-pocket expenses, they paid little attention to bills. That's changed with costly, high-deductible plans.

Some larger employers are starting to introduce tools that provide information about health care cost and quality, says Sunit Patel, senior vice president of Fidelity's Benefits Consulting Group.

"If a test costs $800, most consumers have no idea what the going rate is for that procedure. If the typical market rate is $300, then that would raise a red flag."