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Medical Billing Errors Increase Consumer Healthcare Debt

By Ryan Mcaskill

- There is no question that medical bills can easily get out of hand if consumers do not keep them in check. Without proper insurance and an understanding of what the coverage actually means, debt can mount. However, according to a new study some of the blame may be on hospitals and health providers that have errors in their processes.

Financial-advice company NerdWallet examined the medical debt numbers of American’s over the age of 18. It found that 63 percent of individuals have received a bill that was higher than expected. To show the impact that this would have, 73 percent of consumers stated they would make better health decisions if they knew the full costs beforehand.

The report also estimates that in 2014, American hospitals will provide over $50 billion worth of hospital care for which no payment is received from the insurer or patient.

While there is certainly some blame to be placed on consumers, hospitals and insurers play a part also. After examining data from across all Medicare Compliance Reviews of U.S. hospitals conducted by the Office of the Inspector General in 2013, the report found that none of them were 100 percent compliant with Medicare medical billing requirements. In every case, faulty billing practices resulted in overpayments.

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  • To be more specific, 49 percent of the Medicare medical claims the government investigated contained a billing error that created overcharges of up to 26.4 percent.

    Inconsistencies were also found in pricing. Over 50 percent of the time, hospitals charge a different price for the same inpatient treatment with an average of 25 percent difference between the lowest and highest charge. Significant regional difference were discovered as well with prices in states including California and New Jersey higher than Midwestern and Southern states.

    According to Medical Bill Advocates of America founder Pat Palmer, in 20 years of work his company has helped save clients over $100 million.

    “Most of that money was saved after identifying errors and overcharges on hospital billings and improper insurance reimbursements. Over 80 percent of the medical bills clients send to us have errors.” Palmer further explained, “Our clients feel overwhelmed by the cost of health care. Why is our system so complicated that regaining health means losing financial well-being?”

    Christina LaMontagne, General Manager of Health at NerdWallet and author of the study added that the medical system can be complex for the average consumer. Hard-to-detect medical billing errors can easily go overlooked.

    “The system that Americans trust for their medical care is not very trustworthy when it comes to their finances,” LaMontagne said. “Many Americans think they are getting the greatest care in the world, and yet the American household is more indebted to the medical system than ever before.”