By Dean Cleary
Americans have been caught between the giant healthcare and insurance lobbies for years but there may be a resolution soon
Imagine this, you go to the emergency room after a bicycle accident, taken by ambulance to the closest hospital. You have a few x-rays taken and learn that your arm is broken. A doctor set your arm in a splint, prescribed some pain medicine and sent you on your way with a recommendation to follow up with an orthopedist. Months later, you received a bill in the mail for $24,074.50. Your health insurance provider paid $3,830.79 and the hospital that treated you is now billing you for the remaining $20,243.71. You call the hospital thinking this has to be a mistake only to learn that the bill is correct and if you don’t pay soon it will co to collections. That is what happened to Nina Dang, age 24 who was treated at Zuckerberg General Hospital in San Francisco. The emergency room she was taken to was out-of-network and the hospital’s charges were higher than what the insurance provider wanted to pay.
In another situation, Scott Kohan, age 34 of Austin, TX was taken to the hospital after a violent attack that left his jaw broken. Kohan checked his insurance carrier’s website from his hospital bed and confirmed that Dell Seton Medical Center where he was being treated was in-network. However, that did not stop Kohan from receiving a $7,924 bill from an oral surgeon for the difference between his charges and what his insurance carrier paid. It turns out that the hospital was in-network but the physician that treated him was not.
Drew Calver, age 44 of Austin, TX suffered a heart attack and was rushed to St. David’s Medical Center. Calver underwent surgery and had stents implanted into his clogged artery. Calder was told by the hospital that they will accept his insurance and not to worry. Calver later received a bill for $108,951.31 which was the portion of the bill that his insurance company did not pay. The hospital sent the bill to collections and demanded payment in full.
These are not isolated incidents but a growing epidemic plaguing innocent Americans who have great health insurance but are caught through no fault of their own when they are treated at an out-of-network facility or by an any physician or service down the line that is not in-network. A Consumer Reports survey found that nearly one third of privately insured Americans have been hit with a surprise medical bill.
What Is Balance Billing
The industry term that describes the situations above is referred to as “balance billing.” A balance bill is the result of a disagreement between the hospital and the patient’s insurance company over billable services and what those services should cost. In jurisdictions in which balance billing is legal, an out-of-network hospital can bill the patient for what the insurance company does not pay. Many times, this can be less than a hundred dollars — other times it could be in tens or hundreds of thousands of dollars. In many of these cases, this happens at no fault of the patient who did everything right and purchased a quality health insurance plan and made a concerted effort to abide by the rules of the plan.
How The Billing Process Is Supposed To Work
NOTE: This article will only be discussing private health plans such as employer-sponsored plans and individual plans purchased on the marketplace. Medicare, Medicaid and military plans are governed differently and balance billing is illegal for patients within those programs. Also, the rules governing private plans vary from state to state and there are many nuances between different types of health plans. This article will be taking the point of view of PPO plans (preferred provider organization) which is the most common type of private medical insurance.
The way billing is supposed to work is that healthcare providers such as hospitals and physicians sign an agreement with one or more insurance companies to be included in their network. Being in-network gets you more patient referrals but at the cost of having to agree to strict price limitations on services. The agreement between the provider and the insurance carrier establishes a list of billable services, the documentation required to bill for that service and a mutually agreed upon price. These agreed upon prices are are often heavy discounts from the fees listed in the hospital’s chargemaster. A chargemaster is the master document that lists all of the services a hospital bills for and their costs.
Each billable service corresponds with a standardized five digit number referred to as a CPT code (current procedural terminology). These codes are governed and copywritten by the American Medical Association which sets the definitions and standards for what is a billable service. Insurance companies rely on these codes and descriptions (which are not easily accessible by the public) to determine whether or not a hospital met the definitions and standards required to bill for those services. The CPT codes do not provide pricing guidelines however.
The insurance company will then scrutinize the bill and knock down charges that do not meet the criteria set by the CPT code descriptions. The insurance company will then apply the agreed upon price. In most cases, if a hospital disagrees with the insurance company than they can challenge the decision through a state regulatory agency or independent arbitration (the rules differ widely by state and type of plan). In almost all in-network cases, a hospital cannot bill the patient for more money if they disagree with the insurance company.
This process is broken down if a patient receives care in an out-of-network facility in which a price agreement does not exist. A common misconception is that it is the patient’s fault they are being treated outside of their network. Although there are instances in which patients willingly choose to go outside their network, we are going to be discussing situations in which the patients end up with an out-of-network provider through no fault of their own. There are some common ways that this can occur:
1. A patient receives emergency services in an out-of-network hospital.
2. A patient received either emergency or non-emergency services in an in-network hospital but is unknowingly treated by an out-of-network doctor, doctor’s assistant, anesthesiologist, radiologist or lab technician.