Medical Billing Errors Spawn Healthy Business : Consumers: Virginia woman takes 50% of each refund as her fee, but collects nothing if she doesn’t find errors and get her client a check.

John Hale Sr. thought his medical bills for minor surgery were a bit too major. But they seemed to be written in some indecipherable code, so he grumbled, shook his head and paid up.

“I can’t sit down and read those things,” Hale said.

Then he heard about Pat Palmer, a Salem woman who makes medical bill blunders her business.

With Palmer’s help, Hale, a diesel engine mechanic from Salem, received a refund check of more than $600 on bills during the past two years. He was surprised--and upset. “It makes me wonder, in the 30 years I’ve been paying insurance, how much extra money I’ve paid.”

During the previous three months, Palmer obtained $15,000 in refunds for 22 clients. Only two were correctly billed, she said.

“People are paying thousands of dollars out of their own pockets that they shouldn’t be paying,” Palmer said.

Palmer’s company, Medical Recovery Service, takes 50% of each refund as its fee, but collects nothing if she doesn’t find errors and get her client a check from a medical provider or insurance company.

“I think their motto is, if there are enough hassles and hoops to jump through, you’ll say forget it and pay your bill,” said Palmer, 38. “Older people don’t have the knowledge and stamina and younger people don’t have the time to get them corrected.”

James Goss, media relations director for Trigon Blue Cross Blue Shield in Virginia, said insurance companies have automated and manual cross-checking procedures to catch errors. They also do audits on claims routinely.

“There are times when some claims come in incorrectly--sometimes intentionally and sometimes unintentionally,” Goss said. “Most physicians in our networks understand and follow the rules and a small, minor number don’t, and that’s when we run into problems.”

Clients give Palmer permission to have access to their medical records, and away she goes, running around the runarounds. In one case, it took 18 telephone calls to clear up one error--a charge that wasn’t paid by an insurance company because it was filed under the wrong code. “They filed it wrong three times before they got it right.”

It is an unlikely business, and Palmer is an unlikely entrepreneur.

She has no college degree. She was working for a Roanoke insurance company as a record keeper when she discovered something about her colleagues’ work habits.

“It takes less time to deny a claim that process it, and they have to keep up with a quota,” she said. “If they were falling behind before coming to lunch, you can see what happens.”

That’s when she decided to check out her father’s bills. “My dad would always get these denials and end up paying most of his medical bills.”

She obtained his itemized bills and then read the insurance policy manuals “from front to back” to determine if he was compensated correctly.

She learned that her company, like most others, has a carry-over clause that requires charges in the last three months of the year to be applied to the next year’s deductible.

In her father’s case, it wasn’t followed and “they called it an administrative error or a computer error.” His refund: $147. Then she did the same for her husband, and determined that he was due $380 in overcharges.

After doing the same for friends and friends of friends, she decided to get a business license and eventually had enough clients to quit her job and run Medical Recovery Service out of her home.

Palmer recommends that everyone ask for an itemized statement from hospitals, clinics and physicians rather than a summary of broad categories like room and board and medical supplies.

“They usually only give it to you if you ask,” she said. “You would be amazed at what you pay for.”