In his book The Seat of the Soul, author Gary Zukav shares a story about a customer having dinner in Italy. Upon receiving his bill, the man reviews each handwritten item until he reaches the last line that roughly translated means, “If it goes, it goes.” The man hands the bill to the waiter and asks, “What is this item?” to which the waiter replies, “It didn’t go” and removes the charge from the bill.
If waiters in Italy have figured out that many consumers can be duped into paying for items they never received, how can American consumers stand a chance navigating our health-care system?
If you’ve ever interacted with the health-care system, you likely received a bill for your care followed by an explanation of benefits from your insurance company. If your care required a hospital stay, your bill will contain charges from every physician who treated you. In addition, you will receive charges for lab tests, X-rays and scans, medical supplies, pharmacy charges, admission charges, facility charges and room charges. A three-day stay in the hospital can result in a three-page itemized bill.
Beginning in 2009, the federal government mandated the audit of Medicare claims with the passage of the Medicare Recovery Audit Program. In fiscal 2014, after five years of auditing, it was reported that Medicare made $2.57 billion in overpayments that resulted from provider billing errors. In 2015, this number fell to $359 million, still a far cry from accurate invoicing.
Patient advocacy organizations such as Medical Billing Advocates of America and CoPatient, which audit medical bills for consumers, estimate that between 70% and 80% of the medical bills they audit in private insurance programs contain errors.
Further compounding the problem is the practice of auto-adjudicating claims. Auto-adjudicating refers to claims carriers pay automatically without review and can represent as much as 90% of claims. The higher the auto-adjudication, the more claims that pass through your plan without any checks and balances.
Many carriers set a dollar amount to trigger the review of claims. From an employer’s perspective, $10,000 in claims for one employee costs the same as $1,000 in claims for 10 employees. However, insurance carriers may review the claims in the first scenario, but not the second, because a $1,000 claim does not trigger a review.
The auto-adjudication and billing epidemic has created a new industry of companies that assume billing responsibilities for providers. These organizations work on performance- based contracts and are compensated only a share of the additional revenue generated for the provider based on their ability to bill your health insurance in the most profitable manner.
As an employer and sponsor of a group health plan, understanding how your insurance carrier partner is allocating and spending your premium dollars is essential to containing costs.
The status quo insurance broker focuses the renewal conversation around carriers, networks and plan design changes. Focusing on these areas and not the health-care supply chain does absolutely nothing to reduce true costs.
When the vast majority of medical bills include errors and most claims are being processed without review, you are losing money every time someone uses your health insurance.
Copyright 2020 The Business Journal, Youngstown, Ohio.
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