Surprise Billing — An American Story

With the U.S. Healthcare System, even when you try to do everything right, something can still go very wrong

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Lee Schaefer has great federal employee insurance through Blue Cross Blue Shield, but she and her husband are “risk averse,” she says, so when it came time to finish out her pregnancy, they took pre-emptive steps. They researched the costs of her delivery, went to an in-network hospital, including an in-network anesthesiologist — in other words, they thought they’d figured out all the fees before she delivered her daughter, Etta, in 2010.

Despite our insurance and all our research, we ended up on a long-term payment plan…

After Ms. Schaefer was induced at thirty-seven weeks for high blood pressure at New Jersey’s Overlook Medical Center, the baby stopped breathing in the nursery and was transferred to the neonatal intensive care unit. The hospital charge for eight days of ICU observation was fully covered. But “we got billed for ten thousand dollars from MidAtlantic Neonatology — the pediatricians — and they don’t take our particular insurance,” she said. (The neonatology group staffs four intensive care units in suburban New Jersey.) The Schaefers negotiated that down to $5,000 but, she said, “despite our insurance and all our research, we ended up on a long-term payment plan.”

We’ve come to accept such bills as an inevitable burden of being American…

We live in an age of medical wonders — transplants, gene therapy, life-saving drugs, and preventive strategies — but the healthcare system remains fantastically expensive, inefficient, bewildering, and inequitable. How many of us have thought we had an idea about how much a medical encounter might cost, or thought we’d played by our insurers rules, only to receive a bill we’re expected to pay, displaying terrifying numbers? At first, you assume it must be a mistake, but in the end, most of us will write a check, perhaps under threat of collection. How much longer can we keep setting up payment plans, maxing out credit cards, and tapping into retirement savings? And yet we’ve come to accept such bills as an inevitable burden of being American.

My book, An American Sickness (now out in paperback!), details how the U.S. Healthcare System has devolved into this monster, but my bigger hope is that it’ll be a call to arms — a road map for us to fight back personally, politically, and systematically. Business has hijacked much of our healthcare but we don’t have to be willing victims. Yes, surprise out-of-network bills like the one encountered by Lee Schaefer have become common in our system, but we can and we should fight them.

Our wallets are, quite literally, collateral damage in their trade war.

Surprise bills often arise because an insurer and a group of providers — such as the neonatology group — don’t agree on what the physicians’ services are worth. In many U.S. hospitals, the physicians are independent contractors who bill separately for their services. Right or wrong, the doctors feel the increasingly stingy insurers are low-balling payments for their particular type of work. So the physicians simply refuse to join an insurer’s network. That may be a fine solution for the doctors and the insurer, but it leaves patients financially vulnerable, billed for out-of-network treatment. Our wallets are, quite literally, collateral damage in their trade war.

The big problem, of course, is that patients have little choice when it comes to hospital treatment: the ambulance decides to take you to the nearest hospital, which may or may not be in your network. Or like in our example, in spite of your best efforts to choose providers and facilities which participate in your insurance plan, one or more of the doctors involved in your hospital care (the pathologist or the surgical assistant or the anesthesiologist or the ER doctor) did not: “We regret to inform you that this provider does not participate in your insurance plan,” the bill reads.

Don’t write a check. Drive a hard bargain.

Until the laws and regulators in your state better address this problem, we have to push back ourselves. Informed consent is a bedrock legal and medical principle and your grounds to not pay. This is the essence of your argument:

  • You went to an in-network hospital so that your care would be covered.
  • You were not informed of the out-of-network status of these providers and did not consent to them participating in your care.
  • If it’s an emergency — if you were taken to the nearest ER or your newborn suffered a respiratory arrest — you were not in a position to go elsewhere.

Don’t write a check. Find out if your state has passed a surprise billing law. Then, whether it has or not, write a letter of protest. (In my book, I provide some templates for protest letters that you may adjust to suit your situation. They work. I’ve used them myself.)

Many out-of-network providers will negotiate bills, which is how Lee Schaffer got the $10,000 charge knocked down to $5000, on a payment plan. Remember the doctors do not participate in the network because they are displeased with the insurer, but they may well feel more sympathetic towards you.

Hospitals and doctors get away with unconscionable prices and practices because they think patients will be too timid or tired to call them out on their greed, and usually they’re right.

But I would drive an even harder bargain: the doctor or hospital and the insurer should have to work out a fair payment between themselves. You did what you could to stay in network.

Acknowledging this growing problem, a few states have recently passed laws offering patients some protection from surprise out-of-network charges. New York is considered a national model. Such laws generally stipulate that if you visit an out-of-network hospital in an emergency or get treatment from an out-of-network doctor at your in-network hospital, you are only responsible for an amount equal to your plan’s in-network charges.

But the onus for invoking that right is still on the patient. First, you have to know such a law exists. Then, you exercise that right by sending the surprise bill back to your insurer and to the provider, along with a form that can be downloaded from the Internet, all in duplicate and on paper.

Do it! Hospitals and doctors get away with unconscionable prices and practices because they think patients will be too timid or tired to call them out on their greed, and usually they’re right.

For patients, figuring out who is in network is more than complicated — it’s impossible.

Ultimately, we might need legislation to really affect change. But, in the meantime, wouldn’t it be good public policy if hospitals in your network were simply required to guarantee that all the doctors who treat you on their premises will be in your insurance network. State regulators could insist that this be written into insurance contracts, and your company HR representatives could insist on this during annual policy negotiations. The hospital has contracts with emergency room doctors, anesthesiologists, pathologists, and radiologists. It has up-front bargaining power to ensure they join networks if they want to work under the hospital’s roof. Of course, not every single doctor has to participate in the many insurance plans with which the hospital has contracts. But if you have Cigna insurance, for example, and the hospital takes your plan, the ancillary doctors who treat you should take Aetna too. After all, my hospital knows which of its anesthesiologists take my insurance and assigns the anesthesiologist to my case.

This is just one solution to the surprise billing landmine that catches so many patients off-guard, straining their finances. Hospitals and insurers will say this particular solution is complicated for them to implement. But for patients, figuring out who is in network is more than complicated — it’s impossible.

“No Surprise Charges” could and should become the industry mantra. Hospitals making that simple promise would have my business. Yours?

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