In Praise of Medical Advocates

A hospital patient’s first bill is usually for an impossible, back-breaking amount….but typically all the insurers have already negotiated a substantial discount.

However — most patients do not understand this. They have no one to reassure them, counsel them, and to fight for them if they have no insurer. Americans are used to fixed prices at Walmart or the grocery store; they do not want to bargain with the doctors and hospitals they must trust with their lives.

Patient advocates can be incredibly important. I am impressed by a new firm called Resolve.

The idea for Resolve began in 2016, when founder Braden Pan received an exorbitant hospital bill himself for a 15-minute consultation visit.

Pan was a success in fhe world of start ups, and he joined with other entrepreneurs to create an entire firm of advocates. On its website today, Resolve claims to have achieved $27 million in savings for patients. “We’ve done this hundreds of times before. We know how it works,” Pan said. “You have to go in with the mindset of, ‘I’m not going to take no for an answer. I’m going to get this figured out.’

Consumers pay a flat fee – usually $250 – plus a percentage of any savings (up to 25 percent) that Resolve achieves on their behalf.

Can the advocates’ firm survive?

I tried to start my own company in this niche market in 2015. I called my venture ”The Minnesota Insurance Trouble Shooter.”

My problem was collecting enough in fees to become solvent. My typical case was an uninsured or poorly insured patient who got a bill for $20,000.

Of course they had no way of paying $20,000. But my problem was that they also could not pay 25% of $20,000 either. Most of them were broke even before they had an expensive health event. All of them were members of ALICE – asset limited, income constrained, and employed. Typically they had multiple problem debts, not just their medical bills.

The Resolve website has biographic data on 35 employees. It must take a lot of revenue to pay the salaries of this group. (Unless they’re all on commission, like their counterparts in the collection industry.) Resolve might be burning through its startup cash.

Truthfully, we ought to have patient advocates in every city who are paid by the government, and do not need to charge anything for their help. We should all be in praise of medical advocates.

However, not all billings and debts can be resolved in this way. Some hospitals and insurers will dig in their heels and play hardball. Billings may escalate into a complex lawsuit, and the defendants will have very deep pockets.

Health insurance companies have a substantial number of lawyers on staff. Their only job may be to address lawsuits related to claims. Each insurance company and hospital has its own arduous appeal process. Many people get exhausted over their denied claims; that’s what the insurers are betting on.

My own solution for hard cases is this:

An HHS inspector general or administrative law judge should have the power to punish healthcare frauds and/or price gouging. Fining the insurer or hospital triple the amount in question might change the corporate behavior. In a $100,000 dispute, the corporate defendants might have to pay the $100,000 plus an additional $300,000 fine for their conduct.

Most insurers and large hospitals are sitting on huge financial reserves. Most of them pay their key employees well over $500,000 a year. It is about time they were penalized for going hard after paupers.