Hospital Overcharging and Bogus Fees Cost New York Taxpayers Millions

New York, NYThe habit for some hospitals to inflate emergency room charges for those patients with a capacity to pay (to make up for those patients who don't) has an already over-taxed society seething with rage. With the overall US economic recovery continuing along its anemic path and Americans—many unemployed or underemployed—watching their spending, the prospect of high emergency room fees and other bills for medical service that have the potential to drive up health insurance premiums has Americans seeing red.

Now, two health insurers undertaking health programs for state workers and retirees in New York State have been slammed by the state comptroller for lack of due diligence in monitoring bills, invoices and fees for service coming in from hospitals and other health care providers.

The New York Post reported last week (4/12/12) that Empire Blue Cross and United HealthCare have been found lacking in their capacity to monitor invoices and fees—resulting in alleged hospital overcharging and inflated fees to the tune of $11 million.

High er charges (emergency room) and other inflated fees were found by the State Comptroller's Office to cost New York taxpayers millions, according to the Post article.

But the real shocker in the medical bill dispute relates to an apparent epidemic of so-called "phony evaluations" that cost the New York State Health Insurance Program as much as $7.8 million.

According to the report, one doctor billed United HealthCare for $561 to perform a lesion removal, together with $204 for evaluation and patient management services. However, according to the state comptroller's office, there was no medical record of any evaluation or management services performed. While the lesion removal can apparently be documented, the services performed and valued at $204 are alleged to have disappeared into a black hole.

Multiply such incidents by the thousands, and suddenly you have millions in hospital billings, doctors' invoices and emergency room charges for services that can't be verified or accounted for. Of the cases audited by the comptroller's office, bogus invoices for services never actually performed (or documented) occurred 12.7 percent of the time.

One audit by the comptroller's office showed that hospital overcharging happened 57 percent of the time, costing New York taxpayers $3.2 million. "An error rate showing that nearly six of every 10 claims are billed incorrectly is simply unacceptable and cannot continue," state Comptroller Tom DiNapoli said in a statement.

"While most New Yorkers are watching their spending, Blue Cross and Blue Shield, and United HealthCare are not monitoring bills, and are letting the state overpay health providers," DiNapoli said.

Inflated emergency room charges is one area in which hospitals have been known to hike fees for service, or medically mandate procedures that may not be necessary for a patient with the means, either with cash or through insurance, to pay. Insurers who pay attention routinely dispute medical bills, given the suspicion that hospitals routinely inflate emergency room cost and other fees, with an expectation those fees will be knocked down to a more realistic level by the insurer.

In the New York case, it was reported that both health insurers were in general agreement with the comptroller's findings with regard to lax oversight on hospital overcharging and questionable fees for service. The audits were released on April 11.