Killer Billing Errors

From the oncologists: $37,000. So far, the insurance company has picked up $13,000, she said.

For a biopsy: $7,000. The Goodales paid about $4,000 of that out of pocket.

Then came the whopper: $72,000 from Long Beach Memorial Medical Center for five days of intense inpatient radiation sessions. Insurance paid $16,500 and negotiated a $14,000 discount, she said. That left the Goodales with a $41,500 tab.

That's when Ann Goodale turned to Joyce Zilai, owner and operator of Medical Claims Recovery in Portland, Ore. Zilai spotted what she describes as nearly $12,000 in billing errors.

Among them: Darryl Goodale received six heavy-duty radiation treatments at $4,000 a pop, but he was charged for seven, Zilai said. The itemized bill lists two "initial" visits, each more than $100. And certain costs that should have been included in the price of the operating room -- such as the $48 drape that covered his body -- were charged separately as well. "It's called the nickel-and-dime concept," Zilai said.

Many consumer activists argue that hospitals nickel-and-dime to offset the steep discounts they offer to insurance companies.

The system works like this: Hospitals grant volume discounts to private insurers. In return, the insurers place the hospital on a preferred list of providers and steer millions of patients to them. On that, everyone agrees.

But consumer advocates say insurers don't have the time or wherewithal to review bills line by line. Content with the discounts they receive, they say, insurers pay immediately and let the less egregious errors slip through the cracks rather than risk damaging their relationships with the hospitals.

For their part, insurance carriers say it's convenient, but wrong-headed, to blame them for the system's woes. It's not in their interest, they say, to condone errors or fraud, no matter what the dollar amount involved. The companies consider themselves effective intermediaries in negotiating prices in the a la carte world of hospital costs.

"The health plans in general are the consumer advocates," said Mohit Ghose, spokesman for America's Health Insurance Plans in Washington, which represents 1,300 insurance carriers. "We are the ones doing the negotiations so the consumer doesn't have to."