By Shanoor Seervai, The Commonwealth Fund.
If you have a heart attack, chances are you won’t feel up to asking the emergency room doctor, “Are you in my network?”
What’s more, if you’re lucky enough to recover, there’s the chance that you’ll be stuck with a bill for health services that you thought your insurance would cover.
On this episode of The Dose, host Shanoor Seervai talks to Kevin Lucia and Jack Hoadley of Georgetown University’s Health Policy Institute about the ubiquitous problem of surprise medical bills. Why do so many people get bills they don’t expect? And what are our leaders doing about it?
SHANOOR SEERVAI: So I broke my arm last year and had to have surgery on it in October — my left arm. And then a couple of weeks ago — so we’re talking more than four months after the surgery — I get this notice in the mail from a collection agency saying I owe the hospital money. And my first reaction is, “What? I’ve never not paid a bill.” And no one at the hospital presented me with a bill — not when I got there, not when I was leaving. Why did I owe them this money? Then I went to look at the fine print of my health insurance plan, and sure enough, I did have a copayment of $300 for the surgery. This bill came as a surprise to me, but in making today’s show, I learned that I’m lucky. This bill was just something that got missed in the whole process of getting surgery. But for many Americans, surprise medical bills running into thousands of dollars are a huge source of stress, and many of them go into debt trying to pay these bills.
I’m Shanoor Seervai, and on today’s episode of The Dose, I’ve invited Kevin Lucia and Jack Hoadley, both researchers at Georgetown University’s Health Policy Institute to talk to us about why medical bills often come as a surprise to people and what federal and state policymakers are doing to stop the problem.
Kevin, Jack — welcome to the show.
KEVIN LUCIA/JACK HOADLEY: Thank you for having us.
SHANOOR SEERVAI: So just to get started, do you have a sense of why I got that bill, Jack?
JACK HOADLEY: You know, I don’t. They should have sent you that bill earlier. They should have asked you to pay as you were leaving the hospital, or something like that. But somehow it got missed, and in this case, you figured it out. Unfortunately, that’s not always the case for a lot of other situations.
SHANOOR SEERVAI: So I’ve heard the term “surprise bill.” I’ve also heard the term “balance bill.” Can you tell me which is which, how they’re different?
JACK HOADLEY: Sure, I’d be happy to do that. So a surprise bill can be a term that refers to any number of situations. You might get a bill and are simply surprised by how much health care costs. You had no idea that to repair that broken arm you talked about, that the surgery was going to be that expensive.
Another surprise could be a situation where you know you’re insured, but you didn’t really understand that high deductible that’s part of your insurance policy. So what you discover is that even though you have insurance, you’ve got to pay the whole cost of that surgery. And so that comes as a surprise. So those are both surprise situations that come to us all the time. They’re not necessarily the things that we’re talking about today on this topic.
A “balance bill” is a term that refers to any time that the insurance pays part of your bill, and then you have to pay the balance, or the rest. In some of the situations where you’re seeing a provider that’s not in your insurance network — and maybe the bill for your office visit is $100, and the insurance pays $40 — you could be presented with a balance bill for the additional $60.
SHANOOR SEERVAI: Okay. As we’re talking through these surprise situations, and as we’re talking about what policymakers want to do about them, we’re going to be referring to both surprise bills and balance bills. Correct?
JACK HOADLEY: That’s right.
KEVIN LUCIA: So probably the best example is in response to an emergency — a medical emergency. It’s an obvious situation where people are typically out of control, and they don’t have a lot of control over which providers treat them.
So, you know, paying for health coverage, going to the hospital, in their network for treatment. They’re setting themselves up so that they can use their insurance in a way that maximizes the value of their insurance. And then they get home, and they get a bill from an out-of-network provider — someone who treated them while they were in that emergency setting that wasn’t covered by their coverage. And it’s really confusing and frustrating and sometimes very expensive.
SHANOOR SEERVAI: And I know that this is an issue that American people are really worried about. In a recent Kaiser health tracking poll before the 2018 midterms, two-thirds of Americans said that they were worried about getting a surprise medical bill. And the question that comes to my mind is: How does that even happen?
JACK HOADLEY: I mean we’d like to believe that every hospital has only — all the doctors practicing in that hospital belong to the same insurance networks that the hospital does. Unfortunately, that’s not the situation. Hospitals are making arrangements with various doctors in the community to cover their emergency rooms, to be the consulting cardiologist that comes in, if it’s a heart situation — or the obstetrician that’s going to deliver the baby that suddenly came unexpectedly, a little earlier than planned.
KEVIN LUCIA: Yes, the typical situations that we hear about — I mean, there are lots of reasons why this could happen, but often the clearest example is someone experiencing a heart attack who is rushed to the nearest emergency room. And of course they’re having a heart attack, and they don’t have time to say, “Hold on, stop! Are you in network?”
Or a woman in labor, who’s in the hospital — she has picked the network hospital. Her OB/GYN is in-network, and it’s the time when she needs to be seen by an anesthesiologist. And she’s not in a position to be able to clarify or ask the anesthesiologist if that provider is in or out of network.
SHANOOR SEERVAI: Right, because when you’re having a heart attack, or when you’re going into labor, you shouldn’t be having to have that sort of conversation with your provider — “Are you in my network?” or “Can you make sure that somebody who is is giving me care?”
KEVIN LUCIA: I mean, that’s right. You shouldn’t have to have that conversation, but you’re also not in a position of being able to have that conversation. You’re experiencing a medical emergency, or you’re in a position where it’s just not — it doesn’t make sense. You’re not in control of the situation, necessarily.
SHANOOR SEERVAI: Right.
JACK HOADLEY: And I could put that into perspective by giving you an example of a particular case that got some news attention late last year. This was a relatively young man in his 40s who started feeling the symptoms of a heart attack. So he was taken to an emergency room. Of course, in this case, he couldn’t even control what emergency room he was taken to.
And so this man ended up taken to an out-of-network hospital. When he got home, some days or weeks later — after four days in the hospital with various stents and room charges and all that sort of thing — he got a bill for $164,000.
SHANOOR SEERVAI: Oh, my goodness.
JACK HOADLEY: You know, he vented to his insurance, and they said, “Oh, yeah, we can pay some of that.” Well, they paid about $56,000, but that left him with a bill for something like $108,000. And you know, this is a school teacher who just doesn’t have $108,000 in the bank to write a check from.
But the fact that he got his case to the attention of a news reporter ended up really fixing the problem for him. He was then, in the end, offered to settled that $108,000 or $109,000 bill for just $332, and he was quite happy to accept that. But not all of us have the opportunity to call on a reporter to publicize our case and end up getting a result because of that.
SHANOOR SEERVAI: Yes, I guess he really did get lucky, but that won’t be the case for everyone. So talking about solutions, as I understand it, there isn’t any federal law that protects patients from surprise bills. Can you tell me more about this, Kevin?
KEVIN LUCIA: Yes, that is correct. It’s surprising, right?
SHANOOR SEERVAI: So the ACA was pretty thorough at making our health system work better for the people who use it, but then how did it miss this issue, since it’s clearly something that has a huge impact on patients? And I mean, even if we think about the name of the law: “The Patient Protection and Affordable Care Act.”
KEVIN LUCIA: I think, in part, it’s because of the way that the Affordable Care Act was passed. There was no final opportunity to tie up some of these loose ends.
SHANOOR SEERVAI: So with no resolution at the federal level, this got passed onto the states. And I know that both of you have done extensive research on which states have laws to protect people from surprise bills, and which ones don’t. So maybe, Jack, could you tell me a little bit more about your research?
JACK HOADLEY: Yes, because we knew that there was no federal protection, but we knew also that some states were stepping in to try to provide protection in their states, we thought it would be valuable to really do some work on figuring out what states were doing. Now we did that under the knowledge that state protections are limited by federal law, and they can’t address all of the situations. Federal law says that states can regulate sort of regular insurance products that people buy on an individual basis, but states cannot regulate many of the insurance products that employers sponsor and fund by themselves.
SHANOOR SEERVAI: So that’s basically the majority of Americans, right? Because 61 percent of people get coverage from their employers.
JACK HOADLEY: That’s right. And the states that have provided protections aren’t able to step in and help for those. Now what the states can do is to protect the other situations — the situations for people who buy insurance from the ACA marketplaces, for people who buy small-group policies — anything that insurance companies offer under what’s called “fully insured products.”
So we think that there are a number of noteworthy protections — in some states, really pretty comprehensive protections.
SHANOOR SEERVAI: So which are the states that offer these comprehensive protections? I’m understanding “comprehensive” to mean that they really try to anticipate different situations in which a consumer would need protection.
JACK HOADLEY: Yes, so there are nine states that have done these comprehensive protections, and they include Connecticut, New York, California, Florida, New Jersey, and a few other states.
SHANOOR SEERVAI: Are all consumers protected?
KEVIN LUCIA: Absolutely not. First of all, we were really looking at state laws that explicitly protect consumers in the two settings that we’ve been talking about — the network hospital setting and the emergency room setting. We didn’t review all the areas such as emergency transportation such as ambulances or air emergency transportation.
Second, as we talked about this before, federal law really exempts what we call “self-insured, employer-sponsored plans.” And they cover a significant number of people who are covered under privately insured employer plans. And they’re exempt from state regulations.
SHANOOR SEERVAI: Okay. So states take different approaches as to how they protect consumers from surprise bills. So Jack, tell me about the different approaches.
JACK HOADLEY: So, yeah. So one of the most significant challenges for policymakers when they’re creating these protections is how to make sure that the consumer is kept out of the middle in the billing. But in order to really do that well, you’ve got to make sure that there’s an appropriate payment rate set for the insurer to pay to the health care provider — because if they’re not happy with either how much they have to pay, if you’re the insurer, or how much you’re going to get if you’re the health care provider, then there’s still some risk that this could spill back to the consumer. In other cases, states have called on providers and insurers to engage in a dispute resolution process, to provide a way to go about settling on a rate. So you’d go to the dispute resolution, an arbitrator who’s going to say, “What rate is the proper rate to be paid?”
SHANOOR SEERVAI: Okay, so there’s either establishing how much the insurer has to pay the provider or you can establish how to resolve a conflict if it arises.
JACK HOADLEY: That’s right.
SHANOOR SEERVAI: And so which way works better?
KEVIN LUCIA: Either approach can work. What’s important is that the stakeholders, providers, and insurance companies buy into one approach. We’ve come to find that the success of these state laws that protect people from balance billing are often more successful when the policymakers have been really listening to the stakeholders and what their expectations are around these reimbursement standards.
SHANOOR SEERVAI: Now one of the reasons I wanted to talk to both of you about surprise bills is because it really has such an outsized impact on people’s lives and can cause financial turmoil. But another reason I’ve been thinking about this issue is that there’s been a lot of political interest at the federal level in doing something about the problem. So what’s going on there?
JACK HOADLEY: So last year, in the session of Congress that ended last year, we saw proposals from four different members of Congress — Senator Bill Cassidy, Senator Maggie Hassan, Representative Lloyd Doggett, and Representative Michelle Lujan Grisham — all of whom had some kind of legislation that they were introducing that they thought could help to try to address this problem.
SHANOOR SEERVAI: Jack, did any of the proposals that they introduced have bipartisan support?
JACK HOADLEY: Yes, there was bipartisan support. The Cassidy proposal in particular had both Republicans and Democrats as cosponsors. And in many ways, this is an issue that really is ripe for bipartisan support. It’s not necessarily one of those issues that cuts down party or ideological lines. It’s really a consumer protection issue that is actually quite compelling.
One important point is that some of the federal proposals make their protections contingent on notification procedures, so the idea is that if you’re notified that there’s the possibility of being billed by an out-of-network provider, then the protections might not apply.
SHANOOR SEERVAI: Why have federal proposals done this? Why do they make these “contingent protections,” as you call them?
JACK HOADLEY: Yes, it’s a way probably to try to build a consumer information piece into this.
The problem with that is that we’re all accustomed to going into the hospital, and one of the first things that happens — whether it’s for yourself or for a family member — is you get this clipboard full of pieces of paper that you’re supposed to read and sign. The emphasis is, “Sign here, sign here, sign here,” and not so much on all the reading. Plus, if it’s an emergency, you’re not really in a position to read all that stuff and say, “Oh, is there a different doctor I could see? I’m willing to delay this life-saving treatment to get the right doctor.”
SHANOOR SEERVAI: Right. If we come back to what Kevin was describing earlier, where you’re having a heart attack or you’re going into labor — how can you give informed consent in a situation like that, right?
KEVIN LUCIA: That’s really the problem.
SHANOOR SEERVAI: Which way do you think would be most effective in keeping people safe from these surprise bills?
KEVIN LUCIA: A federal solution would go the farthest, since so many individuals with private insurance are in these employee-sponsored, self-funded plans which are primarily regulated under federal law, and states aren’t in a position to regulate those plans. That said, insurance is fundamentally a local issue. So states may, in many cases, be in the best position to determine how a protection against surprise billing could best be implemented at the local level.
But our main point is that a balanced billing protection has to be comprehensive and really remove the consumer from this crossfire of who owes the bill, and to create some way to ensure that there’s a payment rate for the services that is viewed as fair by everyone.
SHANOOR SEERVAI: Now this makes me wonder: How is a patient supposed to know what is fair? How do they know when they’re presented with a surprise bill that they may be protected? Say, for example, a single mom with three kids who’s strapped for time — how does she go through the whole procedure of disputing a medical bill?
KEVIN LUCIA: There’s no easy way for a consumer to kind of navigate out of that situation. In some cases, consumers are basically used as leverage by the issuer or the provider in their disagreement on the payment level. Unfortunately, a consumer is at risk for being sent to collections if they don’t resolve the balance bill. A consumer could seek some sort of relief in court, but that takes time and money. And there’s the risk that they won’t prevail.
SHANOOR SEERVAI: Okay, so the best way to ease the stress and the financial burden is just to get the consumer out of the situation as soon as possible.
KEVIN LUCIA: That is the most effective way to protect consumers. California, for example, takes it one step further. They actually prohibit out-of-network providers from sending a bill to consumers for anything beyond their in-network cost-sharing and to provide refunds if a consumer is somehow inadvertently charged and then paid more for medical care.
SHANOOR SEERVAI: What’s the chance that this is actually going to work? Could we see a federal law on surprise billing?
KEVIN LUCIA: Right now, we’re optimistic that on both sides of the table, Democrats and Republicans seem to be clear that they do feel like this is a problem for consumers, and consumers should be protected from balance billing.
SHANOOR SEERVAI: And what’s the hardest part about coming to this federal solution?
JACK HOADLEY: The insurance companies, the providers, the hospitals. All of those stakeholders agree that they don’t want to see the consumer left holding the bill. That’s the point of agreement. That’s the energy that can kind of help get this thing passed.
But the potential block is if the stakeholders don’t like the nature of the solution that’s put forward. And so it’s like so many places in our political process. You’ve got to bring the stakeholders to the table with a flexibility that allows you to get to the solution.
SHANOOR SEERVAI: I liked what you said about flexibility. I guess what I’m thinking is what we can hope for is that whatever federal law does come to pass — if it does — is one that is flexible so this issue doesn’t end up going from something that’s bipartisan to something that’s polarizing, like so many other things.
JACK HOADLEY: Yes, that’s right. We seem to be in a moment of time — we’ve heard President Trump speak about the problems of these surprise medical bills. We’ve heard both the Speaker Nancy Pelosi talk about this, or her representatives. We’ve heard the Republican leader in the House of Representatives, Mr. McCarthy talk about this. And so we really do seem to be at a moment in time when federal policymakers are speaking actively about this from both sides.
SHANOOR SEERVAI: Kevin, Jack — thanks so much for talking me through what sounds like a really complicated problem.
KEVIN LUCIA: You’re welcome. We’re happy to do it.