Millions of Americans every year receive surgeries in hospitals and do not know how much the medical bill will be until months later. When they receive the bill, they realize that they had to pay not only for the surgery itself, but also for the anesthesia, x-ray images, materials used during the surgery, and even for the time of some remote radiologist who reviewed your images. The most egregious contributor to outsized medical bills is the inclusion of out-of-network payments, which are derived from services that were provided by those outside of your insurance network. If the radiologist who examined your x-rays before the surgery is out-of-network, you’re out of luck. These out-of-network payments can go up to 10x higher than in-network payments . What’s more shocking is that even in cases when you elect to receive the surgeries (for example, knee replacement surgery), you have a 1 in 5 chance of getting billed with an out-of-network charge. This phenomenon is called surprise medical billing.

It is difficult to find one culprit that drives the existence of surprise medical billing. Insurance companies originally designed in-network webs of doctors and services based on extensive research around demographics, population density, doctor locations, and many other variables. However, they are constantly creating narrower doctor networks so that they can contain and manage quickly rising costs as they are required to take on more patients including those with preexisting conditions under the Affordable Care Act. Doctors generally get paid whether they are in-network or out-of-network with the patient so they have limited incentive or even the power to shift this dynamic. Hospitals will continue to push as many services and fees to patients to make money, regardless of their in-network status. Surprise billing is just another example of how convoluted, burdensome, and conflict-prone our current healthcare system is.

How Technology Can Start to Tackle Opaque Medical Bills

Is there a way for digital health startups to give more power to patients so that they don’t have to continue facing astronomical medical bills? A few years ago, a startup called Remedy set out to reduce medical bills by utilizing algorithmic software and human billing expertise to detect mistakes in medical bills and help patients collect refunds from insurance providers. Although this wouldn’t have solved the entirety of the problem, especially those related to out-of-network billings, the company was at least attempting to equip patients with the ability to receive professional help on evaluating their often-complicated medical bills and fix mistakes that could have easily been overlooked. Since medical bills may have error rates as high as 90%, it seemed like a promising way to disrupt the convoluted medical billing process.

However, Remedy was constantly running into obstacles designed by hospitals, doctors and insurance companies. When their team of billing experts contacted back offices of hospitals and doctors, they were often met with implicit resistance. Some administrators would lose request forms and ask the company to resubmit new applications. Others would require extensive sets of paperwork that would result in a significant resource drain (under HIPAA guidelines, hospitals and doctors can charge fees to patients and companies like Remedy for data access). At the end of the day, the healthcare system enjoys its status quo as each participant knows exactly how much money they are making — at the expense of the patients. These participants seldom want to give that power away especially when the patients have no way of fighting back.

Realizing being on the side of patients was not resulting in financial success, Remedy eventually pivoted to start offering its services to insurance companies. As insurance companies wanted to make sure their claims did not have any errors (as the re-claim process takes a lot of labor and financial resources to fix), they were willing buyers of Remedy’s software which could detect errors using advanced data analytics. When they were just about to gain traction, they ran out of money and were forced to shut down, having spent too much of their resources trying to advocate for patients.

A Future Where Patients Have the Power

Had Remedy focused on working with insurers first, would it have continued to thrive and inadvertently help patients by lowering the number of mistakes on their medical bill? Maybe. Have other startups learned from this mistake and implemented a strategy partnering with insurance companies? Some certainly have.

Cedar leverages machine learning to create an easy-to-use platform that promises optimal outreach to more effectively collect outstanding medical bill balances from patients. They tout their personalized approach to garner the best response from each patient, which seems to have resulted in a 30% increase in collections of outstanding payments. Other startups such as InboxHealth and MedPilot each claim that they have a better method of utilizing the latest artificial intelligence and machine learning technology to resolve outstanding patient balances for insurance companies and doctors.

Are these startups ultimately improving the patient experience when it comes to the collections process? Each company claims they cater to the personal circumstance of each patient and also offer personalized solutions, such as low-interest loans to help pay for medical bills. What seems to be missing from their Mission pages is how these companies are planning on lowering the costs of the medical bills and correcting for mistakes that the insurance companies or doctors often create. As partners to the insurance companies, these companies tend to work from the perspectives of their money-giving partners rather than prioritizing the patients. There doesn’t seem to be any notable startups that are tackling what Remedy intended to do in the past — to manage down the outrageous costs of medical bills for patients.

Looking outward into the future, digital health platforms have the opportunity to help patients by transferring power from insurance companies or doctors to the patients, who are the consumers of healthcare services. Without patients, there would be no $4 trillion healthcare industry in the U.S. As patients receive access to more information through the internet or other resources, they have increasingly taken over control over their own health and wellness. Take for example the proliferation of health monitoring apps often used with smart devices like the Apple Watch. Consumers are increasingly tracking their own heart rates or insulin levels to help them make appropriate decisions about their own wellness. Although fixing mistakes on medical bills won’t suddenly make all medical bills affordable, it could be a crucial step that can start the movement of consumers demanding for more clarity and transparency across the entire billing process. And consumers have the power to drive significant changes.

Medical bills should not be a black box that spews out a randomized number months after patients receive their treatment. Imagine a world where patients are actively seeking health services as a precautionary measure because they are confident they can pay for their medical bills. This will not only lower the total costs of healthcare driven by higher levels of surgery from patients waiting too long before visiting doctors or hospitals, but will also lead to a healthier and happier society. That’s the kind of world I want to live in.