Medical debt is the second most common reason why American’s file bankruptcy even those with insurance. A frightening statistic from the Federal General Accounting Office study reported that as many as 95 percent of all hospital bills include overcharges This could make for an interesting conversation during the cocktail hour at the American Hospital Association convention.
Hospitals will use the excuse that it is nearly impossible to keep up with the various billing programs of 40 to 50 different insurance companies and Medicare and Medicaid. All of these organizations have their own forms and codes for “who’s covered for what, under what circumstances” rules, and own billing and payment systems. “The medical billing system is complicated and confusing,” admits Rick H. Wade, senior vice president of the American Hospital Association, which represents most of the hospitals in the United States. On Dec. 27, 2002, he told a “Dateline NBC” investigative team, “Trying to understand all the code words and jargon can turn your brain into oatmeal.”
Many hospitals overprice procedures and supplies egregiously. “It’s not unusual to see supply items marked up sometimes as much as 1000 percent,” says Randall Marrs, owner of Medical Audit Recovery Services in Tulsa, Okla. “I’ve seen an oral swab billed for $55, when a package would cost you $2 at the drug store.” Saline solution, which is often billed as much as $75 per 1000 ml, costs the hospital no more than 35 to 40 cents, he adds. Those are details you may not notice if your hospital co-pay is a fixed amount. But if you have to pay a portion of the bill say 10% or 20% you’re paying part of those inflated costs.
Consider this: The average bill for an appendectomy is $35,000, according to Nora Johnson, a billing advocate with Medical Billing Advocates of America. For the same procedure, Medicare will typically pay a severely reduced price of roughly $5,000. An HMO may have a contract to pay $7,000 to $8,000, and a commercial insurer say Aetna or Blue Cross Blue Shield may pay $10,000. “But the uninsured will be dragged to court and have their wages garnished until they pay the $35,000″, Johnson says. It would be nice if they published a menu, but would that cause an up roar.
The health-care system is especially harsh on the uninsured: Not only do they pay all costs out of pocket, but their bills can be many times higher than those paid by insurance companies. “It’s not unusual, if you don’t have insurance, to overpay by 300% to 500%,” says Marrs.
The reality is that if the hospital professionals are billing with oatmeal brains how are the patients expected to understand the bills they receive. Billing can be confusing; for example, at first glance a $45 charge for an aspirin could raise anyone’s blood pressure that is until someone explains that it also includes:
1. A prescription from a cardiologist who wants the patient’s blood thinned but does not want to use a more potent medication.
2. An order is placed on hospital pharmacy for the aspirin; every medication must be accounted for
3. A nurse administering the aspirin verifies that it is given to the correct patient, a hospital safety protocol to eliminate medication errors.
4. Medication is entered into the patients chart.
5. Later a test is run to determine the medications performance.
So what effect does this have on you, after all your insurance company is paying the bill? First, there is the co-pay or deductible amount. If you have a 20 percent co-pay for every $100 overcharge you pay $20. Secondly, on most policies there is what referred to as a lifetime cap. This is the maximum amount that the policy will pay over the lifetime of the insured. Billing errors reduce the amount of cap or reserve that you might need. Faced with an extended hospital stay or a catastrophic illness, you could find yourself depleting your lifes savings or even filing for bankruptcy.
Medical debt is the second most common reason why Americans file bankruptcy even those with insurance.
The reality is that hospital billing errors are there and they need to be corrected, while it would be unjust to suggest that it is a standard practice to intentionally overstate a patient’s bill. Many hospitals go to extraordinary lengths to discourage patients from delving too deeply into their bills. “Citizens are becoming more educated about hospital billing and taking responsibility of ensuring that their charges are correct,” according to Dr. Kimberly Elsbach, of the University of California, Davis. “Hospitals are countering that with their own efforts to discourage people from becoming involved with challenges or audits because it costs them a great deal of time and money.” Often decoding a major hospital bill requires experience and knowledge beyond the capabilities of the average patient.
It is so demanding that a new industry to decode hospital bills for patients has developed. Often referred to as Patient Advocates their background includes experience in the following areas: medical billing, accounting, health insurance, hospital administration. They will audit the billing to determining billing overcharges and underpayment by the patient’s insurance company. In addition to auditing the Advocate will often negotiate a discount that reflects what the proper charges should have been. Experience and knowledgeable advocates are often called upon to assist the under or uninsured to develop a plan that includes discounts and a payment structure that the patient can afford and the hospital will accept. This keeps some of the patient out of bankruptcy.
Prior to hiring an Advocate you should request:
* References
* Contact their local Better Business Bureau
* Determine past experience of the advocate
* Interview staff members who will be working your case.
* Request an estimated resolution time line.
Normal charges by advocates are based on:
* Hourly rates
* Percentage of the savings
* Combination of the above
Hospitals occasionally will offer the services of a billing advocate employed by the hospital. Just remember who signs their check.
If you challenge the bill from the hospital, remember that as you search for errors in your favor they will be able to determine if they neglected any charges. It is a double edged sword.
Tips to eliminate overcharges
If you have time to plan for a hospital stay here are a few steps that experts say you can take these steps to make sure that you’re not bled dry.
* First and foremost DONT BE AFRAID TO ASK QUESTIONS about your stay and any procedures.
* If your hospitalization isn’t for an emergency, check your insurance policy to find out just what it will cover and have the insurance company pre-certify it with the hospital. Be sure to carefully review the section on “exceptions and exclusions.” It will tell you what your plan will not cover.