When Victor Echevarria's son was eight months old, the child had a febrile seizure. A few weeks after hospitalization, the baby was doing well--but the family faced another challenge.

"Go home, everything's great; couple weeks later, the bills started coming," recalls Echevarria, former vice president of business development at TaskRabbit. What he and his wife owed, which included some stray prenatal bills from her pregnancy: $12,000.

"Now I understand what people feel when they end up with ridiculously high bills," says Echevarria. But the family was fortunate enough to correct errors in the billing, bringing the balance down to zero.

Errors in medical billing are common. One study found errors in 90 percent of hospital bills examined, according to ABC News. Echevarria's startup Remedy Labs, which has been in beta since May and launches nationally this week, aims to bring that percentage down. The company has $1.9 million in seed funding from investors including Marc Benioff with Efficient Capacity, Semil Shah with Haystack, Slow Ventures and more.

Founded in summer of 2015 with Marija Ringwelski, who comes from a background in health care, Remedy relies on a network of medical billing specialists to identify errors in clients' medical bills. Remedy takes 20 percent of savings, or a maximum of $99 per order. The contracted specialists make a commission on savings from errors they find, in addition to an hourly wage.

If Remedy saves you $100, it takes $20 of those savings as payment. If the company saves you $1,000, it takes $99--and if they save you $12,000, they still take just $99. If they don't find errors, they don't charge you. "We don't want to just transfer their liability," says Echevarria, the company's CEO.

Even with the $99 cap, "We can be profitable on every single bill where we find savings."

It's easy for errors to happen in medical billing, according to the chief executive. He pointed out that, per the tenth edition of medical billing and coding system International Classification of Diseases (ICD-10), the diagnosis code for having been bitten by a cow is w55.21; for cutting yourself with the lid of a can, w54.2.

You can see how a person can make a career out of being able to find the right code for a specific ailment--and how the wrong code can make its way onto a bill.

There are other opportunities for error as well. In the case of the bill for treatment of Echevarria's son, an experience that occurred after the pair started working on the company, a few things happened. In addition to a coding error in the lab bill, there was a last name misspelling and an insurance discount that failed to be included.

Ringwelski, head of product, came up with the idea for Remedy after polling people at San Francisco bus stops about their greatest health care concerns. What she found, says Echevarria, was that "nobody understood why they were being billed what they were being billed."

It's a problem that can lead to greater costs, as some avoid preventative care due to fear of how they will be billed. There's even an ICD-10 code that can be applied to such situations: Z91.120, "Patient's intentional underdosing of medication regimen due to financial hardship."

"Being poor is now diagnosable in our medical system," says Echevarria.

Published on: Sep 29, 2016