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About one-third of insured patients with problematic medical bills received care from an out-of-network provider that their insurance wouldn’t cover, according to a recent report from the Kaiser Family Foundation (KFF).1 Sixty-nine percent were unaware of this problem when they received the care.
“That’s an indication that surprise medical bills arise frequently and result in bills that patients can’t afford to pay,” says Karen Pollitz, a senior fellow at KFF.
Pollitz and colleagues conducted some case studies on people with medical debt.
“Numerous times, people expressed surprise that one hospital stay could generate so many bills,” she reports.
Physicians and other healthcare providers aren’t always hospital employees; thus, they don’t always have contracts with the same insurers as the hospital.
“Surprise bills can turn into big numbers pretty quickly,” Pollitz says. “We talked to one woman who, sadly, lost her house after her husband was hospitalized and had severe complications.”
Patients might receive bills from the laboratory, attending physicians, imaging, surgical assistants, the ED, ICU doctors, the pathologist, and the hospitalist.
“A lot of patients don’t even realize that it’s possible that every person who touches them while they’re in the hospital could send them a separate bill,” Pollitz says.
Patients usually believe they’ve done their “due diligence” by confirming that their physicians and hospitals are in network.
Mark Rukavina, principal of Community Health Advisors, which assists non-profit hospitals in complying with regulatory requirements, says, “Later, they get walloped by a bill because some specialist isn’t in the network.”
Not surprisingly, patients typically blame the hospital for surprise bills.
“The patient is oftentimes miffed and sees the hospital as being responsible,” Rukavina says, noting this blame can negatively affect the hospital’s revenue. “I have no empirical data on this — it’s purely anecdotal — but after talking with patients and many revenue cycle people, it’s clear that surprise bills from specialists make it harder for hospitals to collect the bills that patients owe them.”
Patients are in a tough spot, because information on who is in network for their particular plan isn’t always easy to find.
“Hospitals are trying to do a better job of informing patients. But, frankly, they don’t know all the time, either,” Rukavina adds.
Hospitals might explain to patients, “Yes, we accept your insurance, but some lines of service might not. You need to talk to those providers directly to find out whether they’re in network.”
“Anesthesia, radiology, and ED are the three big specialty areas that create problems,” Rukavina explains.
The problem of surprise medical bills is nothing new.
“It’s certainly been a concern for quite some time, but there is growing frustration with it,” Rukavina says. “There is a lot of tumult at this point in time.”
In 2015, New York’s Emergency Medical Services and Surprise Bills law was enacted, which requires greater transparency on out-of-network charges.
“States have tried to attack it in various ways, holding consumers harmless in some ways through various approaches,” Rukavina says.
Several states, including Florida and California, have introduced similar legislation.
Some laws limit what a patient is obligated to pay if the hospital is in network, but providers aren’t. In Rukavina’s eyes, this limit isn’t a solution.
“The consumer may be held harmless, leaving the provider and the insurer to duke it out,” he explains.
Some hospitals agree to apply a discounted rate or exercise some forbearance on collection, if patients end up with out-of-network bills.
Some plans indemnify patients from the costs of unexpected out-of-network care, if the patient received care at an in-network facility.
“If someone inside that facility ends up treating you, and they are out of network, the plan will pay the charges,” Pollitz explains.
Patients who buy insurance typically aren’t informed about the possibility of surprise medical bills.
“If we’re requiring people to buy insurance, we should require those selling it to explain how it works. Patients shouldn’t have to be detectives to figure it out,” Rukavina says.