The Crime of Overbilling Healthcare

by

Over twenty years ago, Pat Palmer, in her own words, “stumbled upon a $400 overcharge in a bill my father received for a routine medical procedure.” That might have become the costliest “overcharge” the gouging, overbilling health care industry ever inflicted on itself. Because it led Ms. Palmer, whom Steve Brill (author of the Time Magazine cover story, “Why Medical Bills are Killing Us,” April 4, 2013) called “one of my earliest tutors as I tried to figure out the dysfunctional world of medical economics and billing,” to start a business investigating the overbilling of patients.

Located in Roanoke, Virginia, Medical Billing Advocates of America (MBAA) (billadvocates.com) makes money by saving patients money. No savings, no charge. In twenty years, she has collected a multitude of cases of doctors, hospitals and insurance companies overcharging. This evidence reflects routine, everyday overbilling in the many billions of dollars a year.begging slogans3

How extensive is this commercial crime wave? The nation’s expert on computerized billing fraud, Malcolm Sparrow, who is an applied mathematician at Harvard, estimates medical billing fraud adds up to a minimum sum of $270 billion a year or at least ten percent of all health care expenses. His classic book, License to Steal, showed that these ripoffs are not just clerical errors or computer malfunctions. The systemic fraud goes far beyond the organized criminal syndicates defrauding Medicare that the FBI raids once in a while. The frauds are designed with corporate interests in mind to filch your wallet directly or under the nose of unobservant insurers, from the very design of billing statements to the manipulation of codes.

Pat Palmer is out with a paperback titled Surviving Your Medical Bills, which is self-published by her firm, MBAA. Ms. Palmer explained she almost gave up on “all the rules and regulations that no one is enforcing.” It’s a good thing she didn’t. Instead, Ms. Palmer decided to rile up the patients and their families directly with her book by describing how outrageously brazen billing practices are (not just an aberration) and showing how people can become common-sense investigators if they receive these shocking bills.

Start with the fact that about eighty percent of all medical bills contain errors, with the average error being $1,300. Most of these overbillings favor, unsurprisingly, the sellers (euphemistically called “the providers”). Ms. Palmer says the situation has been getting worse. With the number of diagnostic codes growing from 17,000 to about 60,000 under Obamacare, to supposedly improve efficiency, the system has become even more complicated, with hospitals and few others knowing how to game or beat the system.

She lists many of the ways that medical bills are hugely inflated, using the technique known as unbundling, when tests and procedures are broken down into their individual components, which allows for double or triple billing. Some hospitals also, by their own admission, incorporate their overhead in the itemized pricing of even simple items like $20 aspirins or $15 disposable razors.

An example of double-billing technique is when a patient is charged thousands of dollars a day for being in an intensive care unit (ICU) and then also charged for the ventilator which is already factored into the cost of the ICU. Hospitals charge for their mistakes as in the radiology department. Another example is when they charge, say $12, for each time a nurse brings you an aspirin, even though you’re paying for these hospital services in your room rate. Transporting that aspirin is called an “oral administration fee.” Gobbleygook names are omnipresent in these bills.

You can get these itemizations by refusing to accept a “summary bill,” and ask, as is your right under state law, to receive an itemized bill which sometimes will extend to pages of computer printout in inscrutable code that you can then demand an explanation in ordinary English.

Hospital billings for similar services or items vary wildly and arbitrarily. Ms. Palmer found a hospital charging $444.78 for a 10-milligram vial of the neuromuscular blocking drug Norcuron. She then found another hospital “charging $17.90 for the very same 10-milligram vial.”

In her book, she often refers to documented examples of massive overbilling on major surgeries, major medical equipment and lesser items. People have been charged for phantom procedures, nominal physician visits, for hospital employees transporting specimens down a few floors to the labs. Patients, are charged for omnibus services and products, then charged again and again for the pieces.

Now obviously there are variations as well in levels of honesty and fraud between institutions and practices. But overall, what Palmer and Sparrow are writing about is, arguably, our country’s biggest commercial crime wave.

However, strangely, prosecutors reserve their few grand jury indictments largely for the criminal underworld stealing from Medicare or other insurers. For the corporate establishment, there are always the easy ways out such as confessing error, but not intent, when caught or arguing reasonable industry practices. They quickly correct the specific bill of its offending bloat and satisfy the complaining patient, but nothing changes overall.

Clearly the current criminal laws do not adequately prevent such computerized theft and need to be amended to account for this fraud. Furthermore, if our nation followed the example of other countries and transitioned to a universal full Medicare for-all-system, this would end fee for service and the Pat Palmers would be out of business (see singlepayeraction.org for more information).

The main point of this book is that if enough outraged or concerned patients can follow Pat Palmer’s clear roadmap and challenge the bilkers, maybe the law enforcers will get the message and maybe the lawmakers will give these law enforcers the budgets to stop these widespread corporate crimes.

Ralph Nader’s latest book is: Unstoppable: the Emerging Left-Right Alliance to Dismantle the Corporate State.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

Like What You’ve Read? Support CounterPunch
Weekend Edition
July 31-33, 2015
Jeffrey St. Clair
Bernie and the Sandernistas
John Pilger
Julian Assange: the Untold Story of an Epic Struggle for Justice
Roberto J. González – David Price
Remaking the Human Terrain: The US Military’s Continuing Quest to Commandeer Culture
Lawrence Ware
Bernie Sanders’ Race Problem
Andrew Levine
The Logic of Illlogic: Narrow Self-Interest Keeps Israel’s “Existential Threats” Alive
ANDRE VLTCHEK
Kos, Bodrum, Desperate Refugees and a Dying Child
Paul Street
“That’s Politics”: the Sandernistas on the Master’s Schedule
Ted Rall
How the LAPD Conspired to Get Me Fired from the LA Times
Mike Whitney
Power-Mad Erdogan Launches War in Attempt to Become Turkey’s Supreme Leader
Ellen Brown
The Greek Coup: Liquidity as a Weapon of Coercion
Stephen Lendman
Russia Challenges America’s Orwellian NED
Will Parrish
The Politics of California’s Water System
John Wight
The Murder of Ali Saad Dawabsha, a Palestinian Infant Burned Alive by Israeli Terrorists
Jeffrey Blankfort
Leading Bibi’s Army in the War for Washington
Geoffrey McDonald
Obama’s Overtime Tweak: What is the Fair Price of a Missed Life?
Brian Cloughley
Hypocrisy, Obama-Style
Robert Fantina
Israeli Missteps Take a Toll
Pete Dolack
Speculators Circling Puerto Rico Latest Mode of Colonialism
Ron Jacobs
Spying on Black Writers: the FB Eye Blues
Paul Buhle
The Leftwing Seventies?
Binoy Kampmark
The TPP Trade Deal: of Sovereignty and Secrecy
David Swanson
Vietnam, Fifty Years After Defeating the US
Robert Hunziker
Human-Made Evolution
Shamus Cooke
Why Obama’s “Safe Zone” in Syria Will Inflame the War Zone
David Rosen
Hillary Clinton: Learn From Your Sisters
Sam Husseini
How #AllLivesMatter and #BlackLivesMatter Can Devalue Life
Shepherd Bliss
Why I Support Bernie Sanders for President
Louis Proyect
Manufacturing Denial
Howard Lisnoff
The Wrong Argument
Tracey Harris
Living Tiny: a Richer and More Sustainable Future
Kollibri terre Sonnenblume
A Day of Tears: Report from the “sHell No!” Action in Portland
Tom Clifford
Guns of August: the Gulf War Revisited
Renee Lovelace
I Dream of Ghana
Colin Todhunter
GMOs: Where Does Science Begin and Lobbying End?
Ben Debney
Modern Newspeak Dictionary, pt. II
Christopher Brauchli
Guns Don’t Kill People, Immigrants Do and Other Congressional Words of Wisdom
S. Mubashir Noor
India’s UNSC Endgame
Ellen Taylor
The Voyage of the Golden Rule
Norman Ball
Ten Questions for Lee Drutman: Author of “The Business of America is Lobbying”
Franklin Lamb
Return to Ma’loula, Syria
Masturah Alatas
Six Critics in Search of an Author
Mark Hand
Cinéma Engagé: Filmmaker Chronicles Texas Fracking Wars
Mary Lou Singleton
Gender, Patriarchy, and All That Jazz
Patrick Hiller
The Icebreaker and #ShellNo: How Activists Determine the Course
Charles Larson
Tango Bends Its Gender: Carolina De Robertis’s “The Gods of Tango”