Killer Billing Errors

Duplicate Charges. Faulty Totals. Your Hospital's Mistakes Can Ruin You

Weeks after doctors removed her right ovary, Leann Carrozzo asked what she thought was a simple question: Why did a routine two-hour surgery cost $25,652.14?

Carrozzo, 43, requested an itemized bill from Good Samaritan Hospital in San Jose. That led to more questions: Why did equipment account for more than half of the charges? Couldn't some of the items be sterilized and reused? If so, why were they so pricey? What was that $2,190 "endo-ta staple" anyway?

Two years later, Carrozzo says she still has no answers. The billing department at the hospital and the insurance company told her they were merely punching in codes from billing documents. After negotiating certain discounts with the hospital, the insurance company paid $17,000 of the bill, and the hospital wanted Carrozzo to pony up another $2,148.

"Shame on them," Carrozzo said. "Shame on the insurance company for paying a bill immediately, apparently without understanding what they were paying for. . . . And how can the hospital be charging these insane amounts and giving lame excuses about codes? . . . Just fix it."

Sounds simple enough, but it's not.

Just about everyone agrees that the medical billing process makes little sense from a consumer's perspective. Prices vary wildly on procedures as routine as a root canal, even within the same community. One surgical procedure will generate a bill from the hospital, another bill from the surgeon, and more from the radiologist, the anesthesiologist and maybe a pathologist. Then there are those pesky pricing codes, attached to everything from a latex glove to a cotton swab. One slip of a keystroke by a billing clerk can dramatically alter the tally.

"Then consider that a hospital might be dealing with 40 different insurance companies, and Medicare and Medicaid, each with a different billing system and format for payment," said Uwe Reinhardt, a health care economist at Princeton University. "Chaos reigns when it comes to billing because nothing is standardized -- not just in hospitals, but in doctors' offices and even pharmacies."

Is it any wonder then that mistakes happen, as Carrozzo suspects was the case with her surgery?

No wonder at all, several consumer advocates say. Mistakes have become so prevalent that a niche industry has evolved to help patients decipher their bills. Pat Palmer, founder of Medical Billing Advocates of America, estimates that she finds multiple errors in 8 out of every 10 hospital bills she reviews. Her organization, made up of 30 independent consultants nationwide, works for individuals, large self-insured companies and even state governments. For a fee, set by each consultant, the group roots out errors in medical billing and insurance reimbursements. It also hosts seminars to train consultants. Medical Billing Advocates says it has found as much as $400,000 in errors when it examined the bills submitted to self-insured companies.

It apparently doesn't take a consultant to spot errors, though. Five percent of the 11,000 people recently surveyed by Consumer Reports said they discovered major mistakes after examining their hospital bills. The patients with $2,000 or more in out-of-pocket expenses, meaning those costs not covered by their medical plans, were twice as likely to uncover errors.