White Paper
It's Time To Level The Paying Field
How to protect your group and members from the epidemic of medical overbilling
To access and download your complimentary copy of It’s Time To Level The Paying Field, click here.
There Are Billions Of Reasons To Fight Healthcare Overbilling
Impossible Billings
A 47-year-old woman was diagnosed with cancer of her left breast. She underwent surgery to remove both breasts and lymph nodes in her left armpit, to lower the risk of recurrence.
The surgeon billed for three mastectomies and charged $99,380. He ultimately accepted $3,072 after WellRithms’ bill edits and repricing
-
Without WellRithms:
$99,380 -
With WellRithms: $3,072
Gauge on Gauze
A police officer injured in the line of duty was hospitalized with a severe open fracture of his heel bone. Over 20 days he required multiple surgeries and skin grafts to reconstruct his foot.
An implant for the foot repair was billed at $3,645 despite there being no documentation it was used. The charges included $8,317 for an irrigation device that is never separately reimbursed. Perhaps most egregious was the facility charging $21,220 for ten boxes of gauze pads that cost $0.90 each. This charge appeared three times, totaling more than $63,000 for $9 worth of supplies.
The final hospital bill came to $761,464. After WellRithms’ review and repricing, the hospital accepted payment of $187,782.
-
Without WellRithms:
$761,464 -
With WellRithms: $187,782
The Growing Cost Burden
Neither case was an anomaly. The business of medicine is replete with systemic billing errors, abuses, and fraud. Unfortunately, most companies, unions, and other plan sponsors don’t see the silent siphoning of their benefits funds.
Medical overbilling is estimated by the JAMA Network to have cost between $289 billion and $324 billion in 2019, or roughly $1,000 for every person in the U.S. Consider that number in light of your plan’s members and dependents.
Under the JAMA cost estimate a group with 10,000 members and dependents could conceivably be paying $10 million in overbilled charges. Meanwhile, overbilling continues contributing to skyrocketing health benefit costs.
- High Dollar Claims on the Rise: Million-dollar-plus claims per million covered employees rose 45% from 2019 to 2022.
- A Common Problem: 20% of self-insured employers had at least one member with over $1 million in claims from 2018 through 2022.
- Catastrophic Claims: A 2019 survey of employer health plans reports that 64% of respondents experienced a claim above $500,000, and 31% of participants reported a claim exceeding $1,000,000.
- Threat to Healthcare: Nearly 8 in 10 employers consider high-cost claims a significant threat to employer-sponsored healthcare, with an increasing number of companies facing claims in excess of $2 million.
If the projected 7% health premium increases for 2024vii continues year-over-year for a decade, health benefit costs will double. This overhead cost puts U.S. employers at a competitive disadvantage globally.
The Root Causes of Overbilling
- Egregious physician overbilling: We often see surgical and other bills exceeding justifiable charges by a factor of ten or more. For example, a spine surgeon, coded as a co-surgeon, recently charged $445,000 for a two-level fusion and decompression.
- Upcoding: Reporting a higher level of service than actually provided is commonplace.
- Unbundling: This widespread practice of charging for separate parts of a procedure that are included in the primary procedure, such as billing separately for the closure after surgery, as if it were independent of the surgery. Unbundling is analogous to an auto shop charging for an oil change and billing additionally to lift and close the car’s hood.
- Gaming stop-loss outliers for workers’ compensation claims: Within most states, workers’ compensation claims are paid according to predetermined fee schedules. If billed charges exceed a specified threshold, fee schedules are replaced by a percentage of charges for the entire bill. So providers are financially motivated to inflate charges by unbundling services, upcoding, and charging for services /materials / medication not provided.
- Exclusion lists, or “skip lists”: These are secretly negotiated contracts between hospital systems and third-party administrators (TPAs). The hospital systems offer what they claim to be their lowest rate for agreements from the TPAs that charges will not be rigorously reviewed.
Purchasers Respond: Enough is Enough
Several recent lawsuits have charged that major insurers are going beyond simple neglect of their self-funded clients’ interests and have secretly overcharged plans.
01
Kraft Challenges Aetna
Kraft Heinz Company Employee Administration Board, et al. v. Aetna Life Insurance Company
Kraft Heinz alleges Aetna paid millions of dollars in provider claims that never should have been paid and wrongfully retained millions of dollars in undisclosed fees.
Kraft Heinz alleges that Aetna failed to give the company its own medical claims data, paid duplicate claims, failed to properly collect overpayments, and reprocessed claims for a lower amount while failing to refund or credit Kraft Heinz. The suit asserts that Aetna subsequently negotiated lower payments to out-of-network providers while keeping the difference, and then commingled plan assets with its own account.ixKraft Heinz also alleges Aetna applied less rigorous claims adjudication standards to self-funded plan claims than it applied when adjudicating claims for its fully funded plans. Furthermore, the suit alleges that Aetna induced providers to join Aetna’s network by agreeing to place providers on exclusion lists that commit Aetna to providing limited or no scrutiny of provider claims.
02
Unions Cheated
Trustees of International Union of Bricklayers and Allied Craftworkers Local 1 Connecticut Health Fund et al. v. Elevance, Inc., et al.
Plaintiffs allege that Elevance (formerly Anthem) repriced claims for reduced payments, charged the union the higher price, then kept the savings due back to the plan.
03
Inflated Fees
The appeal in Massachusetts Laborers’ Health and Welfare Fund, et al. v. Blue Cross Blue Shield of Massachusetts
The health and welfare fund alleges that Blue Cross failed to accurately price claims, which caused millions of dollars in plan overpayments. The fund alleges Blue Cross calculated some claim payments exceeding what providers billed, processed erroneous pricing for hospital stays and procedures, and retained recovery fees where overpayments stemmed from its own errors. The appeal also alleges that Blue Cross retained inflated recovery fees by applying the recovery percentage to the higher original claim amounts instead of the lower recovered amount.
The Bottom Line
When your organization is fighting for talent, fighting economic headwinds, and fighting global competition it shouldn’t have to fight its health care partners over the integrity of their business practices. Yet if a plan administrator does not advocate on the plan’s behalf, what can your organization do to protect itself?
Defending Your Plan
Uncovering The Illusion of PPO Discounts
First, recognize that your networks’ PPO discounts are not the solution. PPO discount percentages have been in place for decades, yet overbilling has worsened. PPO discounts that are a percentage of billed charges are phantom savings, as charges are inflated to egregious levels. If a hospital charges five times its underlying service cost, a 40% PPO discount still results in payment that is three times the service cost.
