The Surprising Truth About Surprise Billing
By Lon Young, M.D., FAAEM, Chief Medical Officer, CapRock Hospital
We are increasingly hearing about “the scourge of surprise medical bills” and how this practice affects patients following their medical care . As the name implies, a “surprise bill” represents an out-of-pocket expense beyond what a patient was expecting. In other words, a “surprise bill” is the result of insured patients paying more for care they expected to be covered by their already costly health plans.
How does this happen? How can the insult of such large, “surprise,” out-of-pocket, expenses be added to the injury of already painfully high monthly premiums that seem to cover increasingly less? The answer is health plan providers either deny a claim, severely underpay a claim, or costly high deductible plans. And, in spite of all their finger pointing, these factors have nothing to do with healthcare providers.
It might upset the average patient to know that “Just 64% of [HCSC] premiums were spent on medical care, resulting in almost $2.7 billion in gross profit.”
As Axios noted in a report last week, HCSC, which is the parent of Blue Cross Blue Shield of Texas “tallied a net profit of $4.1 billion on $35.9 billion of revenue in 2018 vs. $1.3 billion net profit on $32.6 billion of revenue in 2017.”
And yet, every day, American families are facing the specter of bankruptcy due to staggering medical debt. This is not the product of overzealous and greedy medical providers; this is happening because insurance companies are not honoring the contracts they have with their policyholders (i.e. patients) or are selling policies that offer very little coverage in exchange for painfully high premiums.
Let’s examine their tactics individually—
Denial of Claims:
Obviously, denied claims represent increased profits for huge insurance companies. One easy way for an insurer to deny a claim is if the care was provided by an out-of-network provider. Insurance companies only provide in-network contracts to those providers who will provide services at the lowest cost and then try with all their might to steer patients to only in-network providers.
And, while routine care can reasonably be expected to be obtained by an in-network provider, this is not true of emergent care. Due to its nature, emergency care requires special legal protections. We cannot control when or where emergencies happen to ensure we can receive timely care by an in-network provider. Therefore, according to state and federal law, insurers are required to pay for emergency care at in-network rates, regardless of the actual network status of the facility or physician involved in the care. In reality, there is no such thing as out-of-network emergency care.
Nevertheless, insurers continue to discuss emergent care in terms of in or out-of-network and even tell their policyholders that their surprise bill is due to being seen at an out-of-network facility or by an out-of-network emergency provider. This is to continue to reinforce the falsehood that all care must be provided in network, where they have negotiated the most profitable rates.
A second way to deny claims is to deem the care “non-emergent.” We all agree that patients should be given the benefit of the doubt when pursuing treatment options, particularly when it comes to a medical emergency. And yet, when life-saving care is needed, health insurers are increasingly pumping the brakes and retrospectively calling into question whether one of their policyholders really needed the ER or if they could have instead waited until another time to see their primary care physician or perhaps a non-doctor in an urgent care center.
What is the result of denying legitimate healthcare claims? Simple: it’s surprise bills. This is the way insurance companies steer patients away from the care they deserve and need and moving them toward a more “affordable” care venue that the insurance company can better control and profit from—even if it’s not the most appropriate care option.
Underpayment of Claims:
A second reason for surprise bills is an insurance company underpaying a claim. Regardless of the bill a provider sends to an insurer for payment, it is the insurance company that determines what the provider will be paid. Very often, the amount an insurer approves for payment is well below the cost of providing the care.
This gamesmanship forces the medical provider to make a choice—eat the remaining cost of care or pass it on to the patient whose insurer has sidestepped its responsibility to fairly compensate the provider and/or facility. Passing the unpaid cost on to the patient is known as “balance billing” and while uncommon, is sometimes necessary to compensate for the woeful underpayment by the insurance company. But, balance billing usually “surprises” the policyholder who, understandably, expects their insurance to fairly compensate their providers.
“Unconscionable” Out-Of-Pocket Expenses:
Despite ever-increasing premiums, leading to ever-increasing profits, the copays, deductibles and coinsurance amounts (collectively the “out-of-pocket” expense) associated with health plans continue to climb. In my experience, this is currently the most common reason for surprise bills, by far.
As the graphic below illustrates, out-of-pocket expenses have rapidly increased. So, if a patient’s claim is the first one they’ve had in a few years, “Surprise! Your plan does not pay anything until you have come out of pocket for potentially thousands of dollars.” In fact, according to the Kaiser Foundation, the majority of policyholders never satisfy their deductible or receive much in the way of actual coverage for the care they receive (and that they expect their premiums will cover).
When a policyholder questions their insurer about a surprise bill, they rarely point out they sold the patient a junk policy with an unconscionable out-of-pocket expense.
Myth vs. Truth
While insurance companies constantly point the finger at doctors and blame them for the high costs of care that patients are increasingly facing, they omit an obvious fact—they set the reimbursement rates and they decide what claims get denied, what amount they will pay providers and what out-of-pocket expense they generate. It’s no wonder they are sitting on record profits.
These observations come from my many years as an ER doctor and principal of a freestanding emergency center. We put the patient first, which means, among other things that we do our best to provide predictability in circumstances that can be unpredictable. That also means that when we provide emergency care to our patients, we want the insurance companies to honor their responsibilities and eliminate the unpleasant “surprise” factor so many of our patients now experience.
Surprise bills are largely unnecessary. If insurance companies will simply honor the contracts they have with their policyholders here in Texas and across the country, we will see a drop-off in the kind of headache-inducing surprise billing that has come to catch so many otherwise satisfied patients off-guard.
As the Texas Legislature works to take on this issue, doctors will continue working to set the record straight on this issue. Patients not only deserve the best care available, but they also deserve to be protected from all forms of harm, including financial.
We will keep doing our part to ensure Texas patients and their families are well taken care of.