Everyone Knows It Is Bad, But Is the Cure Worse?

 

By Tonic Advisors

The Problem

It’s a common scam aimed mostly at tourists abroad.  You’re on vacation and take a picture with a friendly local, and pretty soon you are told that you need to pay for the picture.  Someone hands you a rose, and ten seconds later wants $10 bucks for the flower you didn’t ask for.  Tag, you’re it…surprise!  If you don’t fork it over, you’re going to hear some cursing. Whether you understand the language or not, it’s “French,” as in “pardon my…”.

It’s unpleasant but you can understand that in some parts of the world it’s the only way to make a buck.  The crazy thing is that it happens in the United States too, but in the U.S. its not roving bands of scammers handing out flowers.  We have a problem in which a few people in suits, scrubs, and white lab coats are able to take advantage of unsuspecting patients.  Yes, this is harsh language (and no we don’t think all people in the health care space are out to make a quick buck).  Consider an example:

When Nicole Briggs felt intense stomach pain one night three years ago, she went to a freestanding ER near her home in the Denver suburbs. She was diagnosed with appendicitis and told she needed surgery as soon as possible.

She rushed to a nearby hospital, Swedish Medical Center — but first called ahead to make sure it took her insurance.

When the hospital said yes, Briggs thought that meant she was covered. “I thought [that meant] the anesthesiologist takes my insurance,” she said, “that the surgeon [does], that the nurse, you know, that that’s all part of the same deal.”

But two months after the surgery, she got a whopping bill for $4,727 from the surgeon, Dr. Emmett McGuire. Like most of the doctors at the hospital, McGuire practiced independently. He did not take her insurance.

She declined to pay the bill. Two years later, a collection agency slapped a lien on her home, which would block her ability to sell her house until she paid off the debt.[i]

If you’re lucky, you will never face this problem.  Unfortunately, it happens to many of us every day. According to the University of Chicago, 57% of adults have faced “surprise” medical bills.  Remember, these are people with insurance, not the uninsured.

 

Surprise Billing

Possible Solutions

Everyone agrees it’s a problem, but not everyone agrees on the solution. Some that have been brought up include:

  1. Mandated limits on medical billing rates. One of the problems that people have when they unwittingly go out of their insurance company’s network is that the billing rates from some providers are absolutely outrageous.  $4,000 for a $200 lab procedure is not unheard of.  One solution is to limit what a lab, hospital, doctor etc. can charge for a service.  This sounds okay, except, who gets to decide what the rates should be?
  2. Mandated notice and sign-off requirements. You could require that any time an out of network provider touches a patient the patient should get notice and be given options that include not using that resource and what the final tally will be.  This sounds pretty good but Nicole Briggs, in the example above, would be unlikely to try and negotiate a better position as she fights appendicitis.
  3. Bundled pricing. One of the problems Nicole had was that the facility was in network, but the doctors were not.  One solution would be to disallow disaggregated billing.  If you go in for a procedure, you pay one global bill for it, not five bills to everyone who touched you in the hospital.  When you take your car to the shop, you don’t get separate bills from the garage and the mechanics who work there.  This would require the facility to make sure that it coordinated with its physicians better.

Next Steps

Each of these solutions have their pros and cons.  We hope to go into greater detail on them in coming weeks as we expand on the issue.  In the meantime, we would love to hear what you think. Are you a(n):

  • Patient with a horror story to tell in which you got stuck with a big bill?
  • Provider who just doesn’t want to play the insurance game and believes that you should be able to charge the patient for the value you create?
  • Facility that uses out-of-network doctors?
  • Insurer frustrated that your members blame you for not providing the protection they expect?
  • Employer with employees that have faced crippling medical bills?

Leave a comment. We would love to hear your thoughts as we continue to formulate our series designed to help everyone understand this issue more fully.  Our next article will discuss federal and state proposals in the works to address the issue.

[i] https://www.nbcnews.com/nightly-news/video/patients-hit-with-surprise-medical-bills-even-if-they-have-insurance-1461232707921