Paying any kind of bill isn’t exactly a pleasure, but medical bills, which tend to be extra dense and difficult to understand, seem to exact a particular kind of pain. That’s why many of us probably don’t give our healthcare statements the kind of scrutiny they deserve. But, according to various studies, anywhere from 30 to 80 percent of bills contain errors. And those costs add up. The American Medical Association estimates that errors in health insurance claims waste $17 billion each year. Others say that between medical billing mistakes and fraud, as much as $68 billion could be lost every year.
But Tomer Shoval, co-founder and CEO of health startup Simplee, believes that if consumers have an easy way to manage their healthcare financials and identify areas for savings and errors, those figures could be shaved. Simplee, which is like a Mint for health (with extra tutorials and optimization features), launched in January 2011 to provide consumers with a platform for storing, managing and paying their health care expenses. The company today rolled out a new system that automatically detects errors in users’ medical bills.
Over the past few years, as employers and insurance companies have shifted to consumer and consumer-driven health plans with high deductibles, Shoval said, consumers’ out of pocket spending has climbed. Between 2006 and 2010, he said, the annual amount an average family pays out of pocket has increased nearly 80 percent, from $2,0000 to $3,6000.
‘Disconnect’ between what consumers pay and what they understand
“There is a disconnect between spending more and more money and not knowing anything about it,” he said. “Our mission is to make it easy and simple for you to know where your money is going and why and help you get more for less.”
When a consumer signs up for the service, Simplee connects to all of his healthcare accounts and aggregates the data from health, vision and dental records. From a consolidated dashboard, users can see all of their medical expenses (including each transaction, their medical deductible status and total spending) and make payments directly from the site.
The new error detection system automatically scans each member’s healthcare records for several of the most common types of billing issues. For example, if a patient’s co-insurance cost (the percentage of the amount split with an insurance company that the consumer pays) changes from bill to bill, Simplee algorithms will flag the discrepancy as a possible error. The system also looks for keywords indicating a preventative service (which tend to be free) and if it spots one that requires a payment, it will notify the consumer. Along with the error alert, Simplee offers consumers a recommended next step as well as a way for getting in touch with their insurer to fix the problem.
Average error detected by Simplee recovers $100
As an example, Shoval referenced a Simplee user who was overcharged by more than $900 because his insurer mistakenly charged him out-of-network rates for a procedure that should have been covered at in-network rates. The average error the system detects is $100, he said.
Simplee is part of a growing movement to bring consumers more information and services to manage their own healthcare. While some consumers may be wary of sharing their healthcare records with an as-yet untested third party, this latest error-spotting feature could show them the benefits of giving access to their personal data. (Simplee said it is very strict about privacy and will not sell user information.) The company declined to share the number of people currently using the site, but said it currently manages about half a billion dollars in member medical visits. As an indication of engagement, Shoval said about 60 percent of the members use the site at least once every three months, with the average user paying about $1,000 in medical bills through the site annually.
The Palo Alto, Calif.-based company, which last month raised $6 million in Series A financing, is similar to startup CakeHealth, in that both companies want to make managing healthcare expenses as easy and understandable as possible for consumers. But in addition to being a bit more mature than CakeHealth (which just launched in September and has raised an undisclosed amount of seed funding), Simplee has a different business model. While CakeHealth intends to take a “freemium” approach that offers a basic option to consumers but will likely charge for value-added services, Shoval said Simplee (and all of its savings optimization services) will be free to consumers. The company plans to make its money through a software-as-a-service model and partner with employers, HSA banks and FSA/HRA administrators.