Category: Cost of Healthcare, Health Insurance

How Do You Feel About Surprises?

Let me ask you a hypothetical question. Would you rather:

  1. Pay a $500 bill that you were totally expecting, or
  2. Pay a $300 bill that was a total surprise?

As the person who keeps track of bills and payments due for my family, I say there is NOTHING worse than a bill you weren’t expecting. No matter how much I owe, if I know about it up front, I can plan, estimate, maneuver, borrow or do whatever I have to do to pay that bill on time.

If I get ambushed, though… Grrrrr!!!! Don’t like it. Much more stressful.

Turns out that millions of our friends and neighbors, even ones who have high-quality health insurance, are getting ambushed with surprise bills from medical providers every day. Typically, this happens because they get care at an in-network hospital or clinic, but while there, get treated by a doctor or other provider, or have lab work done that’s out of network. The majority of the time, these  bills are complete surprises and hit you weeks after you got care. Without any notice at all, without you being able to say “no.”

Well, Mike, how many of these surprise  bills could there really be?

The latest research on this just blew my head off.

Kaiser Family Foundation says that 18.5% of all ER visits result in an unapproved or surprise  medical bill. According to the federal Centers for Disease Control and Prevention (CDC), we as a nation had 145.6 MILLION ER visits last year.

So, let’s see… 145,600,000 x 0.185 = 26,936,000  bills — JUST FROM Emergency Rooms!

But that’s not all…

The Journal of the American Medical Association (JAMA) just finished a huge study that suggested 20.5% of ALL SURGERIES resulted in surprise bills. The good old CDC also points out that 48.3 MILLION surgeries were performed in the U.S. last year.

So, 48,300,000 x 0.205 = 9,901,500 MORE surprise bills in a typical year.

Is this unexpected  billing by out-of-network providers a big problem? I’d say nearly 37 MILLION surprise bills per year, JUST from surgery and ER visits, is pretty big. Think about that.

That’s 37 million times a year Americans get a bill from a healthcare provider that they did not know was coming, for charges from providers they most likely didn’t KNOW were out of their networks because they got treated at an in-network facility or clinic. Thirty-seven million times in one year.

Is anybody doing anything about these unexpected or unapproved bills?

Following the example of state legislators in California and New York, the U.S. Congress is considering a couple of bills on this topic. It’s good that they are trying to protect consumers, but, as usual, Washington, D.C., can make things better for you or a LOT worse. There are two different approaches being considered.

The one that will have the lowest effects on your health insurance premiums is called “benchmarking.” It’s already in practice in California. The idea here is that when an out-of-network provider  bills you unexpectedly, your insurance company pays that provider a previously agreed-upon percentage of what Medicare would have paid for your treatment OR pays the provider an average rate based on similar in-network providers in that area.

The beauty of this approach is that it can be totally automated, and these claims processed for a few pennies each. That’s critical, since we are talking about nearly 40 million events per year. This approach in California is working very well and has protected hundreds of thousands of consumers already. Not that the providers are happy about it. They would prefer a different solution.

The other proposed solution is “arbitration,” a fancy word that means a dispute is decided by an agency or lawyers or other involved parties. This is the method New York is using to resolve surprise  billing, and significant cost increases have resulted.

Those increases are pushing up health insurance rates in New York. The average arbitration event has an administration fee of $400 per event. But providers who refuse to join insurance company networks get higher medical payments in arbitration, two or three times the in-network rate. That double whammy not only removes the incentive for providers to participate in affordable healthcare networks, it can really move your premiums upward.

Which solution protects you, the patient?

Naturally, providers are lobbying hard in D.C. to avoid benchmarking. They can make a lot more money from you and your insurance company via arbitration.

The problem is, with arbitrations, just the overhead costs to PROCESS them are staggering. Can you imagine? Nearly 40 million events per year at $400 each — that’s nearly $15 BILLION a year added to your health insurance premiums BEFORE insurers even pay the medical bill that the out-of-network provider  generated? That’s just the OVERHEAD cost of the process!!

To get their way on this issue in Washington, several provider lobbying groups are funding huge amounts of advertising. I’ve heard a few of these ads, and they are embarrassing in their misrepresentation of the issue. These providers and facilities are essentially defending their right to bill you without your permission. How’s that make sense?

And this is no longer just a national problem. Louisiana’s legislature will be presented with “surprise billing” legislation this session. And guess which method the provider community will be pushing? To make it more interesting, the FEDERAL Bills being considered actually DEFER to state bills where they exist! In fact, the state of Georgia just passed surprise billing legislation that was written and passed by doctors in the legislature. On its surface, the bill looks like it lowers your out-of-pocket costs, but you and many other people will end up paying those surprise bill when they are turned into higher premiums. Very closely mirroring the New York model, I expect health insurance premiums in Georgia to start heading northward very soon. Bad news for you, my Straight Talk friends.

Straight Talk is, if we end up with a national or state-based ARBITRATION solution to surprise billing, we are essentially allowing the people who created this problem to solve it to their advantage and pass all the costs onto you via higher insurance premiums.

If you decide to contact your Congressional or State representatives about this issue, tell them you want BENCHMARKING, not ARBITRATION. That’s the best way to stop a quick rise in your health insurance premiums and potentially resolve the issue of the unexpected or unapproved surprise medical billing.

Posted on: February 27, 2020

4 comments on “How Do You Feel About Surprises?

  1. JOHN


    • Michael Bertaut

      By now, any hospital treating a Medicare patient should have this stuff down. Medicare A/B pays first (first 60 days in the hospital under Part A are covered after the deductible, $1,408 in 2020). Part B on physician charges after the $198 deductible. If you have a supplemental plan you’ve had for years, it should cover the deductibles and every legitimate Medicare-approved charge over what Medicare paid. If your supplement is brand new for 2020, you may have to pay some deductibles out of pocket, but the wrap-around supplement plan should handle most of your costs.
      If the hospital charged me $1,400 for two cotton balls, I would contact the hospital and ask them to correct their mistake. If they failed to do that, might be worth making that fact a tad more public. I’ll leave that up to you!

      But by way of example, in the last two years my Dad has had a spinal fusion (at age 80) and a double-bypass surgery (at age 82). He’s doing GREAT, back working in his garden, and so far his total out of pocket costs have been exactly $0. He has Medicare plus a supplemental plan he’s had for 20 years.

      Hope that helps!….mrb

  2. Dave Normand

    Mike, took my wife to an in-network emergency room and paid her $350.00 ER copay. Later she gets a bill from the ER doctor stating that he’s not in-network and needs more than what her group insurance plan paid him. The insurance company paid him about $300. He wants over $600 more.

    Do we have any recourse?


    • Michael Bertaut

      Dave! What you are describing is classic “ambush billing”. In an emergency situation ER docs should be happy with in-network payments, but as long as hospitals don’t require their docs to join the same networks as they do, this problem will persist.

      I would look into two things: 1) Call the carrier and see if they will make the “in-network” payment; and 2) Call the ER docs office and ask them for that to be enough. and 3) Call the hospital and let them know how you feel about that, since ultimately they decide who they give the keys to their ER.

      This may get you part of the way. We are working hard in DC on a solution to this “ambush billing” or you may hear it called “surprise billing” to get the patient out of the loop. More to follow on this.

      Hang in there. Hope your wife is doing ok!….mrb


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