According to a Consumer Reports survey, nearly a quarter of privately insured Americans report receiving unexpected bills from unfamiliar doctors, even though they thought everything included in their treatment would be covered by their health plans.
This isn’t just a confusing inconvenience—it costs patients and payers significant amounts of money.
The survey found that more than half (57%) of patients end up paying the full bill because they don’t know they can appeal and correct the charge, let alone how to do so. According to a study by Black Book, patient healthcare costs—which include deductibles and other out-of-pocket payments—increased by 30% from 2015 to 2017. Balance billing contributes to this uptick in costs.
But the tide is beginning to turn in favor of patient protection. Increasingly, state legislatures are beginning to require greater upfront transparency from providers in terms of who is treating patients and which services are covered by their insurance.
Just how do these surprise charges slip into medical invoices?
Patients are often affected by balance billing, which occurs when providers bill patients directly for the remainder of the bill that their insurer has elected not to pay. A growing number of states have already enacted legislation to prohibit balance billing in both emergency and nonemergency situations.
States such as Texas, New Mexico, and Washington are introducing bills this year to protect consumers against this practice. Some of these laws address aspects of balance billing, such as emergency room bills and insurance arbitration processes.
Often, patients aren’t aware they can appeal unexpected medical charges and instead simply pay for them, no questions asked. Rather than just paying the invoices, patients should go through them line by line and look for the two most common contributors to higher costs: administrative errors and out-of-network physician consultations.
Simple administrative mistakes are common, and they can be costly. For example, insurance companies might deny a claim that contains incorrect patient information, billing codes that do not match the services provided, or itemized treatments that do not match the patient’s plan documents.
In many cases, patients receive bills because they are unknowingly treated by out-of-network physicians. Let’s say a patient is injured in a car accident and is taken to an in-network hospital’s ER. The attending physician might be fully covered by the plan, but other doctors who treat the patient may be out-of-network—and the patient does not know that until he or she receives a bill.
Situations like this one can turn a small copayment into a financial disaster costing thousands of dollars.
State and federal lawmakers are stepping in
On the federal level, Medicaid and Medicare recipients have some protections against balance billing. While there are currently no federal laws in place to protect consumers with private insurance plans from getting stuck with unexpected medical bills, several pieces of legislation addressing the issue have been introduced in Congress. Sen. Bill Cassidy, R-La., released a discussion draft of balance billing legislation in September, 2018, while Senators Maggie Hassan, D-N.H., and Jeanne Shaheen, D-N.H., introduced a separate measure in October 2018.
“Patients should have the power, even in emergency situations when they are unable to negotiate,” Senator Cassidy wrote in an article on his website. “Our proposal protects patients in those emergency situations where current law does not, so that they don’t receive a surprise bill that is basically uncapped by anything but a sense of shame.”
Several states have already stepped in to protect patients’ rights. A survey by California’s Senate Committee on Health found that 63% of state residents assumed that providers at in-network hospitals were automatically in-network, and that nearly 25% of Californians had received surprise bills from in-network facilities. California’s findings have inspired state legislators to join other states in passing strict legislation to protect residents from costly surprises in their bills.
As of December 2018, 25 states had passed laws offering some protection against balance billing to consumers. But only nine of those states—California, Connecticut, Florida, Illinois, Maryland, New Hampshire, New Jersey, New York, and Oregon—are providing what the organization considers to be comprehensive protection. Its criteria for comprehensive protection includes laws that apply to all types of insurance plans and cover in-network and emergency room settings.
Patient awareness and system transparency
More than 20 states have laws in place that apply directly to emergency room bills, where surprise out-of-network costs are most likely to occur. Researchers estimated that one in five inpatient emergency room cases leads to surprise bills, which has prompted bipartisan support for tighter legislation.
States are also demanding more transparency from doctors and instituting arbitration processes for providers and insurers to resolve disputed out-of-network bills, removing the burden from consumers. New Jersey, for example, recently created a strong dispute-resolution process to establish payment amounts for out-of-network services.
If a provider has already collected the deductible, copay, or co-insurance, it is illegal to bill the patient for anything above the allowable rate. Patients should always contact their insurance companies before paying any questionable medical bills.
Although many people pay for health insurance to protect themselves from going into debt when they’re sick or injured, the reality is that medical debt is still the number one reason U.S. citizens file for bankruptcy. Legislators on both sides of the aisle are fed up, and many are working overtime to introduce laws to protect consumers.
Until federal legislation is passed, it’s up to the states to protect their constituents.
Doug Klinger is the CEO of Zelis Healthcare.