Fighting for patients by battling their bad, inaccurate hospital bills

Just about anyone who’s seen a healthcare bill knows that the process is, at a minimum, confusing. With the seemingly endless back-and-fourth between insurance and the provider on arbitrary pricing, even the savviest patient has difficulty discerning exactly how much they owe, for both routine procedures and complex hospital care.

And while price transparency tools and companies are emerging to address the issue, one startup, CoPatient, is taking it a step further by actually processing the bills and deciphering who owes what.

Started by two former athenahealth employees – Rebecca Palm and Katie Vahle – in 2012, CoPatient works directly with consumers who are suspect of their bill and then applies its insider knowledge to resolve any dispute on overcharges. The company generates revenue by taking a 35 percent cut of the savings it identifies.

The idea stemmed from the steady march toward higher-deductible health plans for employees – being asked to shoulder more of the cost meant far more interaction with the opaque payment practices, according to Palm.

“As benefits became less rich, there was more on the consumer,” she said.

Vahle added: “When high-deductible plans were introduced, the range was $500 to $1,000. Now it’s $5,000. That’s much more exposure to billing. There’s been some really confused consumers.”

Started in Boston, CoPatient spent the last two years in Portland, where its main investor, Cambia Health Solutions, is located. It recently relocated back to Boston. To date, CoPatient has raised $4.7 million, including a $3.6 million Series A in early 2014. Other investors are .406 Ventures and athenahealth CEO Jonathan Bush.

The concept is sure to appeal to consumers, long vexed by the thoroughly byzantine billing process in healthcare. To that end, CoPatient estimates that 63 percent of Americans have received a medical bill that was more than expected, while two-thirds of all bankruptcies stem from medical costs.

CoPatient says it finds errors on 80 percent of all bills it reviews and saves an average of $3,000 for consumers.

Yet the concept can help providers, too, allowing for much quicker payment over protracted battles with patients.

“On the provider side, that was a pain point,” Palm said. “They were having a hard time collecting.”

There are two primary groups that providers struggle to get prompt payment from – patients who simply can’t afford it because they are low income or uninsured, and people who are willing and able to pay but don’t want to be over-billed.

CoPatient is looking to help the latter, applying both industry know-how and technology to assist skeptical consumers.

The company has 15 full-time employees, but it also subcontracts with about 15 to 20 medical billers and coders already in the industry, according to Palm.

“We decided someone should take a look at that bill and determine whether what (the consumers) were being asked to pay was fair,” Palm said. “And we found there was a cottage industry of medical billing advocates. We thought it would be interesting to apply technology to that really manual service to bring it to a much broader audience. Those doing it on their own could only tackle a few niche areas of billing. We can increase both the breadth of different types of patients as well as the size of patient loads.”

All levels of providers and their bills are targeted, from group practices to hospitals to labs to medical equipment providers, Palm said.

The concept could be just as useful to payers and providers, although a good deal have been resistant, Vahle said.

“We get a mixed reaction from the payer side, but generally it’s positive because many see the writing on the wall,” she said. “Often times we see a halo effect.” That’s because CoPatient often finds coding mistakes that a health plan might not be able to challenge.

“Their hands are bit tied in many cases,” she said. “They can’t challenge certain codes, they’re not in the patient room.”

While price transparency tools – such as Castlight, PokitDok, Vitals and numerous others offered by insurers – are gaining traction, Vahle said CoPatient is more complimentary to those tools, not in competition. And, while valuable, those services do little to address the wild variations in healthcare pricing for the same service at different locations.

“We’re trying to relieve that pain point,” she said, noting that full transparency in billing has yet to take full hold. “People should ask around, but we’re just not there yet. We see ourselves as the cleanup crew.”