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News August 2019

Washington Watch

Surprise! We Kept You Alive But Killed Your Finances

By Alan M. Schlein

Studies show that two-thirds of Americans say they are "very worried" or "somewhat worried" that they or a family member will receive a surprise bill. These worries are so profound that they are the most-cited concern related to health care costs and other household expenses in dozens of surveys.

A few years ago, I survived a series of near-death medical experiences. Then I was confronted with something I didn't expect -- astonishingly huge surprise medical bills from doctors who worked on me in emergency situations but who were outside my supposedly excellent in-network insurance coverage.

When I could have chosen to be selective with specific in-network doctors, I was not in any condition, physically or mentally, to make any decisions about which medical person should be working on me. When you are barely conscious, and in one case, when my brain had swelled from spinal meningitis, I wasn't exactly clear-headed and focused on grilling anesthesiologists and infection specialists about whether they are covered by my network.

I was in a similar situation when I was in chest pain from a heart attack – not exactly at my best to ask about my medical coverage.

Over time, these incidents cost me my home, and left me with six-figure debts that I've been working off ever since. While I remain in debt but optimistic about life, I am empathetic whenever I hear about others facing "surprise" medical bills.

Roughly one in every six times someone is taken to an emergency room or checks into a hospital, they get a surprise medical bill, a new study finds. That's millions of people, who have solid coverage from large employers but are nonetheless exposed to "out-of-network: charges than often amount to thousands of dollars to many, millions to others.


Meanwhile on Capitol Hill

Congress, in a rare bipartisan effort that even has White House support, is poised to eliminate so-called surprise medical billing – when patients receive medical care, then get bills from providers they did not choose. Roughly one in every six times someone is taken to an emergency room or checks into a hospital, they get a surprise medical bill, a new study finds. That's millions of people, who have solid coverage from large employers but are nonetheless exposed to "out-of-network charges that often amount to thousands of dollars to many millions of others.

But doctors, hospitals and insurance companies disagree about exactly what should happen when patients are treated by doctors and other medical professionals who do not have agreements with insurance companies.

With Congress likely to reach agreement on only one major health care bill in this session of Congress, this agreement on surprise medical bills is all but certain to become part of a larger health care bill, that will inevitably face complications from other issues fights and could end up getting sidelined.

Outrageous cases of surprise medical bills can be found everywhere. Kaiser Health News has documented a series of them in a monthly "bill of the month" series and other stories. Among the most disturbing have been:

  • A young camper's $142,938 snakebite;
  • A $48,512 bill for a woman who got a cat bite;
  • A man's fainting spell at work which led to a $4,692 ER bill;
  • A young woman's $17,850 bill for a urine test after back surgery;
  • The Texas woman who underwent spinal surgery. Her insurance company, Blue Cross and Blue Shield of Texas, which covered her surgery and hospital bills of more than $100,000, somehow only covered $815 of the "surprise" $94,031 bill she got for neuromonitoring which was separate from the spinal surgery bills. They said she was responsible for the balance.

These examples reveal how concerned consumers are with this problem. Studies show that two-thirds of Americans say they are "very worried" or "somewhat worried" that they or a family member will receive a surprise bill. These worries are so profound that they are the most-cited concern related to health care costs and other household expenses in dozens of surveys.

But not all surprise bills come about in the same way. In an emergency, patients often wind up in a hospital that's not covered in their insurer's network. Even at an in-network hospital, individual emergency physicians or anesthesiologists may not have a contract with the patient's insurer. Even for those with scheduled surgery at an in-network hospital, not all the doctors involved may be in the patient's plan. And as I found out, in unusual emergency situations, some E.R. doctors call in outside doctors and specialists as consultants, who often are not covered by most plans. 

Patients, suddenly in emergency rooms, are often in both physical and emotional distress, and many don't have the time or the wherewithal to sort out whether every doctor or specialist who treats them is in-network or who is covered or not covered in their plan.

These out-of-network doctors or health providers then bill the patient directly for the difference between what the insurance company will cover and what the provider charges, often adding up to astronomical amounts for services provided when the patient was most vulnerable.

One of the great tricks that billing consultants who negotiate with insurance companies for hospitals told me as I tried to work down my own bills, was that while doctors' fees and lab tests are fixed prices, hospitals expect people to negotiate with them, the way you might expect to negotiate with a vendor at a flea market. Their bills are more a wish list price than an actual expectation. Since these consultants make their money by saving money for insurance companies, the same technique can work for individuals if they are savvy enough to work with hospital billing offices. But most people never realize that.

Some patients are able to negotiate lower charges by working with their insurers and the medical providers. But that is a long, stress-filled difficult process. When it fails, another process starts the collection agency nightmare – something that can take many years to work out.
So What Will Congress Do?

While employers and insurers may voluntarily protect employees or enrollees from what the industry calls "balance billing," no federal law regulates charges submitted by out-of-network providers. States can help protect enrollees from unexpected balance bills. However, state protections are limited by federal law (ERISA), which exempts self-insured employer-sponsored plans, covering 61 percent of privately insured employees from state regulation.

A Commonwealth Fund study in June 2017, that found that 21 states had laws offering consumers at least some protections in a balance billing situation. But only six of those states – California, Connecticut, Florida, Illinois, Maryland, and New York – had laws meeting anything close to a "comprehensive" protection standard. In addition, surprise bills vary greatly by state, according to a recent Kaiser Family Foundation study. In Texas, for example, 27 percent of emergency room visits and 38 percent of in-network hospital stays triggered at least one such bill, while in Minnesota that rate was between 2 and 3 percent. Nationwide, the study found, 18 percent of emergency room visits and 16 percent of stays at an in-network hospital triggered a surprise bill for patients with health insurance through a large employer.

Why such rate variations? It seems to be related to the breadth of hospital and doctor networks in each state and the way those networks are designed. The Kaiser study found that patients in New York, Florida, New Jersey and Kansas were also more likely to get surprise bills, while those from South Dakota, Nebraska, Maine and Mississippi were less likely.

So despite efforts at the state level, the large employer plans are usually regulated by the federal government, so Congress is trying to step in. In the U.S. Senate, a bipartisan consensus bill from Sens. Lamar Alexander, R-Tenn. and Patty Murray, D-Wash., would require insurers to pay out-of-network doctors and hospitals the median or midpoint -rate paid to in-network providers. The House Energy and Commerce Committee is also working on similar legislation and President Trump has said he wants to sign a bill.

The surprise medical bill issue is an obvious one that needs to be solved. But if patients no longer beat the cost of surprise billing, then who does? And that's where the consensus ends. The insurance industry, doctors and hospitals with powerful lobbying clout on Capitol Hill – all point fingers at each other. One proposal would force all doctors to be in network at hospitals they work in. Another would automatically require bill disputes to arbitration.

In general, insurers and employers' groups favor the Alexander-Murray approach to pay out-of-networks using in-network rates as a framework. But hospitals and doctors instead want disputed bills to go to arbitration. These sharp differences could waylay the entire legislation.

To get the legislation through the Senate Labor Committee, Alexander and Murray agreed on a compromise. If passed, insurance companies will pay out-of-network doctors for care, but that bill is tied to the median in-network fee for treatments. Doctors and hospitals will also be banned from "balance billing" patients if they think they are due more than what the insurer will pay them.

But some lawmakers see that a form of price-setting and that raises other political issues. Hospitals have long fought against price-setting and raised the political threat of rural hospitals across the U.S. being forced to close as a result. Some Republican lawmakers, like Sen. Mike Braun, R-Ind., worry that the system is so broken that if improvements aren't made the industry will be facing a switch to a single-payer system, like that advocated by Sen, Bernie Sanders and the Democrats pushing for a Medicare for All system in the future. And that broadens the issue from a consensus to do something about surprise billing to a larger discussion about the future of health care policy in the country.

The Alexander-Murray bill also includes a range of big-ticket health care concerns. The 196-page bill touches nearly every aspect of the health care industry, from lowering the price of prescription drugs and creating a national database of health care costs to increasing vaccine rates and preventing youth tobacco use by raising the legal age for buying tobacco products to 21.

Just adding drug pricing legislation into the surprise medical bill fight (and not counting any other issues) will make a complex piece of legislation nearly impossible to pass. Some in Congress suggest this surprise medical bill could be Congress's signature and perhaps only health care legislation bill this year.

Several different major medical bills are in various stages of movement toward House and Senate approval. With only one sweeping health care bill likely to get through the House, Senate and get Trump's signature, here's a quick look at other bills that may complicate the issue or end up being lumped into a broader, amendment-laden version of the Alexander-Murray bill.

House Democrats are pushing for a floor vote on authorizing Medicare to directly negotiate prescription drug prices. Congress specifically forbid this when it set up Part D prescription drugs for seniors in 2006. But Medicare negotiations are a complete nonstarter for Senate Republicans and the administration has opposed it, although candidate Trump once advocated the idea.

Lawmakers from both parties in the House and Senate are looking at requiring drugmakers to pay rebates to the government if the prices of medications covered by Medicare escalate beyond a yet-to-be determined measure of inflation. While this won't solve the problem of high prices for brand name drugs, it could restrain cost increases for long-available medications such as insulin.

Meanwhile, the chairman of the Senate Finance Committee, Sen. Charles Grassley, R-Iowa, and the committee's top Democrat, Ore. Sen. Rob Wyden are working on trying to find a bipartisan compromise on drug pricing legislation. It is also looking to restructure Medicare Part D's catastrophic coverage phase to put a stop to incentives that drive patients into the catastrophic phase faster.

Also being considered within the drug pricing portion of the legislation is another area vital to seniors, where there is general agreement among lawmakers. Medicare's Part D prescription drug benefit currently has no limit on out-of-pocket costs paid by patients, which means beneficiaries taking very expensive medications may wind up with copays that can be as steep as their mortgage payment or rent price.
Lawmakers from both parties and in both chambers want to limit those copays as does the Trump administration. But almost everyone wants to do that tied to meaningful limits on prescription drug prices. And the drug price bills are far from close to having any consensus, other than to do something soon.


[Also contributing: Associated Press, Kaiser Health News and BuzzFeed News.]


Alan Schlein runs, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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