Note: This post originally appeared on The Finance Buff and has been cited by the Carnival of Personal Finance.
In the past five years I estimate I’ve found nearly $2,000 worth of errors in my medical bills. It isn’t that my family uses a lot of health care (we don’t) or that we see unscrupulous providers (we don’t). It is just that I am aware that there are a lot of medical billing errors so I look for them, and I find them. Last month I found one. I questioned a $680 charge on a medical bill and followed the trail back to the source of the error. What I found amazed me: a nearly $1,000,000 hospital billing mistake!
Health care is expensive enough without paying for services you didn’t receive or shouldn’t have been given. Medical billing errors are so common that everyone is likely to receive many erroneous bills in a lifetime. As reported by ABC News and elsewhere, medical bill error rates may be as high as 80%. Yet ordinary people are much less likely to find them. The Washington Post reported that in a survey of 11,000 people Consumer Reports found that only 5% of them had spotted a medical billing error. There are a lot of errors. Most people pay their bills without noticing them.
As I said, I am very careful with my medical bills. The first thing I do when I receive a bill is to check that it is consistent with the explanation of benefits (EOB) sent by my health insurance provider. The EOB lists the medical provider, date of service, claim identifier, what was billed to insurance, what the insurance company paid, what costs were disallowed and why, and, finally, what the patient owes. It’s a good idea to keep EOBs until you reconcile them with bills. But if you lose or discard them you can always get copies from your insurance company.
Checking the EOB is the first step but not always the last. Even when the bill matches the EOB that doesn’t mean it is correct. It only means that the insurance company has verified what you owe given what the medical provider billed. The insurance company is not able to catch all the mistakes that lead up to the bill, like incorrect coding. Every medical procedure has a unique code. If a coding error is made, the corresponding bill will be wrong.
It is up to the patient to catch those mistakes. It isn’t always easy because patients don’t know the codes and the codes aren’t on the bill. You have to be persistent when you suspect an error and learn how your care was coded and how those codes correspond to charges. It can take a little time, but it can save you hundreds or thousands of dollars.
Professional organizations, like the Medical Billing Advocates of America, can assist patients in validating medical bills. But they take a cut of the refund, as much as 50%. So if you use such a service you could end up paying a lot just to clean up bills that you didn’t owe.
When a medical bill I received last month didn’t seem right to me I followed my usual procedure of inquiry. It was for a service provided 1.5 years prior, which itself was odd. Why was the bill so late? What also caught my attention was that the bill was sent to my old address even though I hadn’t lived there for several years. So, even without looking at the amount I was suspicious. Not surprisingly, the amount, $680, didn’t make any sense to me. I did not understand what I was being billed for. I never pay a bill until I understand it.
My first call was to my insurance company. They validated the amount against the EOB. As I said, that means very little, but it is a good first step. Then I called the provider of the service and asked for an itemized bill, one that indicated in detail each procedure and service included in that $680 bill. I told them not to expect payment until I verified everything.
The itemized bill seemed okay except for one entry that stood out. It was for a service that cost over $3,000, most of which the insurance company had already paid. My liability was the $680. My neighbor happens to be a physician so I showed her the item in question (I could have easily called my doctor instead). She said that the service should only be rendered if the patient has a specific disease. She said there was no way a patient could have that disease and not know it. I didn’t have it.
This was the clincher. There was no way that I should be on the hook for any amount of that $3,000 service. It was either given in error or my care was miscoded, leading to an erroneous billing. Either way it is a medical provider error and not my responsibility.
When I brought this to the attention of the provider they did some checking. They discovered that I was not the only one who had been billed in error for this procedure. The error was traced to a computer glitch that had caused erroneous bills to be sent to patients for three years. I estimate that the provider saw on the order of 100 patients per year who might have triggered the computer glitch. At just over $3,000 per error, over a three year period this amounts to about $1,000,000 in billing errors. Most of that would have been paid by insurance companies. But some of it was paid by patients like me.
Apparently no other patient had questioned their bill; everyone had just paid it. When I finally reported a problem the source of the error was discovered. I saved myself, and many others, $680, not to mention all those insurance payments that we all pay for through premiums.
In total the time it took me to challenge the bill was one hour, to save myself $680. A penny saved is a penny earned. I don’t pass up that kind of after-tax wage rate. You shouldn’t either.
