Medical billing experts say more than 80 percent of healthcare invoices reflect some kind of administrative error. Ripples spreading outward from this extra layer of complexity created an entire new sub-industry called medical billings auditors or patient advocates.

Mistakes crop up for reasons ranging from a doctor’s terrible handwriting to keyboarding errors, a computer glitch, or even deliberate fraud. In any event, the problem adds to the growing cost of healthcare for providers, insurers, patients, and ultimately the nation. Any error missed and paid by the insurer ultimately affects the actuarial record and increases the insurance premium next year.

Many obvious errors are caught by insurance audit departments and are kicked back to the provider. Attempts are made to reach agreement at the insurer and provider level, but remember the motivation of neither party is necessarily the patient’s best interest. A study by The Healthcare Advisory Board and the Healthcare Financial Management Association found every time a claim needs to be reworked for a rejection, it costs that provider and the insurer an average of $25 each per claim.

The provider goal is maximization of revenue. The insurer wants to limit its expense liability under the policy. The patient has already agreed that in the event of payment denial, he or she will be responsible for the entire bill. This can be a double whammy. Not only is the balance due, the “courtesy contract discount” has yet to be applied.

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