Some patients fight back against surprise medical bills
Narrow physician networks and higher health plan deductibles are leaving more people with medical debt from balance bills and other hidden costs.
A Texas Supreme Court decision in April that uninsured patients suing hospitals can access records detailing how much insurance companies pay for similar procedures is likely to make it easier for uninsured Texans to negotiate under like circumstances.
The case involved Crystal Roberts, a car accident victim who received care at North Cypress Medical Center, then received a $11,000 bill for services including X-rays and CT scans. Roberts alleged the charges were excessive and demanded to see how much insurers such as Medicare, Aetna or Blue Cross Blue Shied would have paid for those services, according to the complaint.
Under Texas law, hospitals can’t charge uninsured patients more than a “reasonable and regular rate” — essentially, what an insurance company would pay for the same service. About half of states, including Texas, have laws with at least partial protection against balance billing, a related challenge for patients, but there is no nationwide regulation.
While this case involved an uninsured patient, it reflects a serious and growing problem — patients plunged into debt due to excessive or surprise medical bills. Consumers are often confused by the healthcare system, particularly around paying for care. While people know to stay in-network, emergency situations or a doctor’s referral to a specialist can lead to unexpected fees from out-of-network providers.
North Cypress refused to provide the information, claiming it was immaterial to the lawsuit and that disclosing “confidential proprietary” insurance information would cause it “irreparable harm.” The Texas Supreme Court disagreed, ruling 6-3 that the information was relevant to Roberts’ case.
“The reimbursement rates sought, taken together, reflect the amounts the hospital is willing to accept from the vast majority of its patients as payment in full for such services,” the court wrote. “While not dispositive, such amounts are at least relevant to what constitutes a reasonable charge.
Narrow networks, high deductibles exacerbate problem
A confluence of factors is fueling the problem. In an effort to negotiate lower service costs for consumers, health plans are narrowing their provider networks, increasing the odds that a patient may need to go out-of-network for a needed specialist. At the same time, insurers are raising their deductibles, forcing consumers to pay more out-of-pocket before insurance kicks in. Meanwhile, imaging centers, labs, ambulances and other services a hospital uses may not all be in a patient’s approved network.
Emergency rooms, where nonparticipating doctors may be on duty, are a notorious source of balance bills — outstanding charges physicians bill a patient after the insurance company pays its portion. In other cases, patients may have scheduled a procedure with an in-network physician, only to be hit with a surprise bill from an out-of-network doctor or anesthesiologist who assisted in the surgery.
“It’s a problem that seems to be getting worse,” says Akshay Gupta, co-founder and executive partner of CoPatient, a company that helps consumers understand and resolve their medical bills.
According to a study in Health Affairs, one-fifth of all hospital inpatient admissions that originated in the ER, 14% of outpatient ER visits and 9% of scheduled inpatient admissions led to surprise medical bills.
“A lot of consumers don’t understand how insurance works, and particularly these days with high-deductible health plans becoming more and more common, a lot of people are getting bills they don’t understand,” Gupta tells Healthcare Dive. “People that come to us are often quite distraught.”
States lag in price transparency, consumer protections
The problem is exacerbated by lack of price transparency on healthcare goods and services. An Altarum report from November gave just two states — Maine and New Hampshire — an A on healthcare price transparency. Maryland and Oregon received a B for their efforts, and Colorado, Virginia and Vermont each got a C. All the rest were graded F.
Few states have thorough laws that protect consumers from balance bills for out-of-network care provided in ERs or in-network hospitals. Of the 21 states offering protections as of last year, just six had a “comprehensive approach to protecting consumers in both settings,” and even those had gaps, according to a June 2017 Commonwealth Fund study. Since then, three more states — New Jersey, Virginia and Oregon — have also passed out-of-network legislation and a New Hampshire bill is under consideration. No federal protections exist to protect people in such situations.
New York’s protections are among the strongest. Known as the Emergency Medical Services and Surprise Bills law, the legislation has four major provisions. It holds patients harmless for emergency services and surprise inpatient bills and imposes significant disclosure requirements on hospitals, physicians and health plans. It provides for dispute resolution in the form of binding arbitration. It extended the state’s network adequacy rules to all regulated insurance products. And for consumers with unregulated products, such as a self-insured plan, if a balance exists after their plan has paid, the balance is treated as if they were uninsured and put into dispute resolutions, potentially letting the consumer off the hook.
The goal was simple, said Jeff Gold, senior vice president and special counsel at the Healthcare Association of New York State. “If a patient or a consumer couldn't vote with their feet, they needed to be insulated,” he told Healthcare Dive.
The results show a variety of outcomes. In 2016, there were 558 disputes of ER balance bills. Of those, there were 108 split decisions, 55 settlements and 167 were ineligible. The arbitration board deemed the physician’s charge was more reasonable in 40 cases and the plans’ charge in 154, according to data compiled by New York Department of Financial Services.
The results were similar for surprise bills. Of 251 disputes, 17 were split decisions, 30 settled, 145 were not eligible, the charges were more reasonable 27 times and payment was more reasonable 11 times.
Hospitals in the crossfire
The problem of balance billing doesn't occur in a vacuum. Providers, particularly specialty doctors, have long been frustrated by the reimbursement they receive using usual, customary and reasonable (UCR) rates for different geographic areas. Physicians who feel their claims are undervalued drop out of network and see the ER as a source of certain payment, Gold explains.
The Affordable Care Act attempted to address the problem by putting the responsibility on health plans for emergency services. Under the ACA, a plan met its responsibility when it paid the higher of the in-network rate, Medicare or the UCR. But that still left the door open for balance billing everywhere else.
Hospitals are “caught in the crossfire” between the patient who thought they had full coverage for emergency services, the physician and the insurer, Gold says. The anger and frustration consumers have toward their doctor or health plan that sent a balance bill often spills over to hospitals, which may feel helpless to control the behavior of out-of-network physicians.
Gold suspects hospitals also feel tremendous pressure to keep high-referring doctors happy to prevent them from sending patients to hospitals that let them balance bill.
The New York law eliminated that pain point. “I didn't really anticipate and understand how valuable that was going to be to level the playing field, because the executive could now run his or her hospital a lot more cleanly without the consumer exposure or without feeling like they were under pressure from the physicians,” Gold says.
The law is not perfect, he concedes. Because the prior obligation to hold consumers harmless doesn't kick in until they have an obligation, patients can still get bills —and may unwittingly pay them. A bill pending in the legislature would fix that so patients get a notice instead of a bill. It would also ensure consumers are refunded if they pay by mistake.
Employing best practices
In the absence of laws barring balance bills and surprise bills, there are steps hospitals and health plans can take to protect consumers from medical debt. The Healthcare Financial Management Association urges hospitals to inform patients that they may be eligible for financial assistance provided directly by the hospital and make clear to patients what services are and are not included in their price estimates. Hospitals also need to communicate better with uninsured patients about medical costs and options for sharing costs
The group has developed a set of medical account resolution best practices, including establishing formal policies that are followed internally and by business affiliates.
Health plan best practices include helping members estimate expected out-of-pocket costs and sharing price information for providers in a given region.
Beyond that, hospitals need to double down to ensure they have contracts with as many in-network providers as possible. “It requires the physicians, hospitals, health plans all working together to make sure that everybody’s in-network or, if they’re not, the patient knows that clearly up front,” says Rick Gundling, HFMA’s senior vice president for healthcare financial practices. “It’s kind of a three-legged stool.”
Consumers also need to become savvier when it comes to costs of medical care. Most people do see providers in their network, says Gupta. However, “because of their high-deductible health plan, they often don’t recognize until they get hit with a bill that the same MRI might be $3,000 after the deductible at a local hospital that is convenient for them versus $1,000 a mile down the street at an imaging center,” he adds.
The more progressive payers are putting protections in place with their hospital contracts that require all physicians, labs and imaging services conducted while a patient is in the hospital be delivered by in-network providers, Gupta says.
New reimbursement models, such as bundled payments, may ultimately make it easier for patients to anticipate medical costs, and the value-based care movement, with its incentives to reduce costs, could help.
Still, the problem is not likely to go away entirely. “Having been in this industry all these years, what I do know is every time you move the chairs, you find something else,” Gupta says. “It’s like a balloon. You push it in one place, it pushes out in another.”