Most of us have a nightmare scenario when it comes to our medical bills. Weeks after a procedure, a notice arrives from our health plan with a complicated explanation of what is and what isn't covered. Then the hospital follows up with a charge that often seems both nonsensical and inconceivably high.
In many cases, these bills gather dust in a drawer. More than 40 million Americans have unpaid medical expenses that are impacting their credit, according to the Consumer Financial Protection Bureau, and much of this debt comes from out-of-network doctors that consumers thought were in-network. Many hospitals will hire debt collectors, who go to great lengths to recover this debt.
Medical billing is a particularly thorny and broken part of the U.S. health care system that many in Silicon Valley's technology sector won't touch. But Seth Cohen, president and co-founder of the start-up Ooda Health, has a workaround that is so deceptively simple, it might just work.
Cohen, who has worked in health-technology for more than a decade, most recently at Castlight Health, thinks that providers — namely hospitals and doctor's offices — shouldn't be responsible for collecting bills from patients.
Instead, he and his team are working to convince the health insurers to take on the burden.
"It's absurd when you think about it," said Cohen by phone. "Can you imagine finishing your meal at a restaurant and then handing over a credit card only to get a bill months later, followed by a collections agency that's hired to chase you up? No, the credit card company takes on the responsibility right then and there."
Here's how it works: Once a patient gets seen by a health provider, the claim gets submitted to the insurance company, which adjudicates it and issues a payment to the hospital or clinic for the insurance portion of the bill. From there, Ooda quickly pays the provider for the patient's portion of the bill, and Ooda and the insurer jointly manage what the patient owes.
Cohen said that Ooda, which is backed by a mix of venture capitalists and health insurers, is working with Anthem, Blue Shield of California and Blue Cross Blue Shield of Arizona on a year-long pilot experiment. If it works, these insurers can opt to work with Ooda more permanently.
Ultimately, Ooda hopes to deliver bills more quickly and with fewer surprises, especially if they can work with some of the companies that staff up hospitals with out-of-network doctors. Cohen also hopes that more people will opt to pay, especially as the several plans are offering an option for consumers to pay back bills over time with zero interest.
Thus far, Cohen said that 2,000 bills have been paid through Ooda's system and 96 percent of those surveyed said the experience was better. He also said the company is on track to collect more in 5 months than providers typically do in a year.