Surprise – You have a medical bill you didn’t expect

Sept. 10, 2018 / By Steve Delaronde

Nobody likes surprises when it comes to their health.  We don’t want to be surprised by a diagnosis that we did not expect or treatment that we did not anticipate, and we certainly don’t want to be surprised by a bill we thought was too high or should have been paid by our health insurance company.  Unfortunately, stories of patients receiving unexpected hospital bills, like the $109,000 heart attack bill that an insured patient received from a Texas hospital, are still common.  Is this a situation that will continue for the unsuspecting patient, or is anything being done to address it?

A Kaiser Family Foundation poll published on September 5, 2018 found that 39 percent of insured adults ages 18-64 had received an unexpected medical bill in the past 12 months that they thought would be covered by their insurer.  Some of this is preventive care that the patient thought was covered by insurance, but the procedure was either miscoded by the provider or deemed as diagnostic rather than preventive. Unexpected medical bills also come from providers that are considered out-of-network by insurers. Ten percent of insured adults have received a bill from an out-of-network provider in the past 12 months that they did not expect…and the price can be in the thousands of dollars.

Insurers develop networks of hospitals, physicians, laboratories and other medical service providers that agree to lower rates for members within a plan.  Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are two of the most common types of health insurance plans.  Members that obtain services outside of an HMO network are responsible for the entire cost of the service.  PPO members who obtain out-of-network services may have some of the costs covered by their insurer, but typically are responsible for the difference between what the provider charges and what the insurer would pay to an in-network provider.  This is known as balance billing.

However, in-network hospitals can still deliver sticker shock to patients.  This occurs when an in-network facility uses out-of-network specialists and services, such as an in-network hospital that uses an out-of-network pathologist or specialist.  According to a 2017 Commonwealth Fund analysis of state laws, 21 states offer some type of balance billing protections to consumers, but only 6 states are considered to have a comprehensive approach to the issue – California, Connecticut, Florida, Illinois, Maryland and New York.  Additionally, these protections do not exist for the 60 percent of insured workers that are in self-funded plans.

There is currently no national solution to address unexpected balance billing by out-of-network providers.  Legislation proposed by Representative Lloyd Doggett of Texas in February 2017 would limit surprise billing for patients, but it has yet to receive a hearing in Congress.  The Centers for Medicare and Medicaid Services (CMS) limits the amount that can be charged by non-participating Medicare physicians, which helps assure that 99 percent of all physician services are paid on assignment.  These limits to do not exist for privately insured individuals.

The Kaiser Family Foundation poll found that two-thirds of insured adults worry about being able to afford surprise medical bills.  This is more than the numbe of Americans who worry about affording prescription drugs, insurance deductibles, or basic needs such as food, transportation, rent or utilities.  A federal solution may not be immediate or sufficiently comprehensive to address this, which means states should continue developing solutions that encourage payers and providers to proactively identify out-of-network providers for patients, as well as limit unexpected patient liability for these costs.

Steve Delaronde is director of consulting for populations and payment solutions at 3M Health Information Systems.