State Rep. Rusty Kidd was being carried down stairs in his wheelchair last November when one of the steps suddenly broke. Kidd flipped in the fall. The doctors at his local hospital in Milledgeville diagnosed a broken neck and sent him to Atlanta by air ambulance.
Kidd recovered. But he got another jolt when he opened a bill for the helicopter ride — about $27,000. Kidd’s insurer paid what it thought was reasonable: about $8,000. The company wanted Kidd to pay the rest.
“The average person can’t pay $19,000 and I can’t pay $19,000,” said Kidd, an independent.
People such as Kidd, who have what is considered full medical coverage, can end up with crushing medical bills on top of what they pay in deductibles and co-pays through a practice called “balance billing.”
It happens when patients get care from a hospital, doctor or ambulance company that is not part of the network of providers under contract with the patient’s insurer.
Without a set contract, insurers often pay only what they determine is a reasonable price for the service. The patient can get stuck with the balance.
The nature of health care pricing is at the heart of the issue.
Consumers who study their insurance benefit statements often marvel at the difference between the full-priced charges for a lab test or a hospital stay and the discounted rate negotiated by the insurer. The negotiated rate is often just a fraction of the full charge. Doctors and hospitals say their full charges reflect the expense of providing charity care and accepting government insurance plans that don’t cover their costs. But those footing the bill say that being asked to pay a charge that is often many times what an in-network or a Medicare patient pays simply isn’t reasonable.
State legislators on the House Health and Human Services Committee heard testimony on the issue last month. A handful of states have passed legislation aimed at limiting “balance billing” — with most focused on emergency care. Georgia does not. Rep. Sharon Cooper, R-Marietta, chairwoman of the committee, said she was concerned by some of what she heard — especially allegations that hospitals bypassed an appeals process offered by one health care plan that would have extended negotiations with the insurer and instead decided to “harass the patient and scare them with collection notices.”
Cooper said she wanted more information before considering legislation.
Experts say it’s impossible to know how often patients get stuck with bills for amounts beyond what insurers pay. Even consumers who think they’re limiting themselves to choices provided by their insurers can find themselves subject to balance billing.
A family preparing for a new baby, for example, might carefully select an in-network hospital and ob-gyn for delivery. But the anesthesiologist on call might not be in the network and could end up billing a patient for more than the health plan is willing to pay.
Executives representing the Langdale Co., a Valdosta-based wood products firm with about 1,000 workers, told state lawmakers that their employees had repeatedly been hit with high bills on top of what the company’s plan paid for care — with most of the problems coming from hospitals. Like most large employers, Langdale is self-insured. But unlike many companies, Langdale reviews and pays its employees’ bills instead of turning that job over to a third party.
That approach has helped Langdale control health care spending. But it has made it difficult, a Langdale executive testified, for the company to get network contracts from providers. Instead of paying out-of-network charges, the company works with a consultant who audits the bills and then pays the provider the Medicare rate plus 20 percent or the reported cost of the service plus 12 percent — whichever is greater. If the hospital disagrees with the payment, it can appeal.
Langdale refuses to pay full price, saying the charges are simply out of line. A consultant for the company said the unreasonable charges include line items such as $24 for a Pepcid AC, $18 for a gauze pad and $40 for a pregnancy test.
One Langdale employee testified that he got stuck with a bill for “thousands and thousands of dollars” after Langdale paid what it calculated was reasonable for a February surgery. He said the hospital turned the bill over to a collection agency within two months and he was worried about the consequences because “in our society, everything is driven by credit score.”
Earl Rogers, a lobbyist at the Georgia Hospital Association, told the legislative committee that hospitals must mark up their charges to help cover the $1.5 billion in free care that Georgia hospitals provide.
“That kind of leads to that $5.50 aspirin we’ve been talking about,” Rogers told the committee.
Doctors say they also get squeezed by inadequate payments. What many insurers consider a “reasonable” payment is a sum many doctors say is too low. Some doctors are supporting a bill that would allow Medicare patients and their doctors to negotiate a rate — with the patient agreeing to pay what Medicare doesn’t cover.
Failing to pay what doctors consider a reasonable rate is hurting both the doctors and their patients, said Donald J. Palmisano Jr., executive director of the Medical Association of Georgia. “The patient doesn’t realize why they are paying more money and the physician is getting frustrated with the insurance company.”
Robert Zirkelbach, press secretary for America’s Health Insurance Plans, an insurance industry trade organization, said that insurers know that every time policy makers reduce Medicare and Medicaid spending it puts more pressure on private insurers to cover the gap. But he said accepting that reality doesn’t justify the extraordinary charges for out-of-network patients.
“When you have a situation where charges are 10 times what Medicare would be reimbursing for that same service, the insurer has a very good reason to question the validity of that,” Zirkelbach said.
A study of out-of-network charges prepared for America’s Health Insurance Plans found that one Georgia doctor billed $11,792 for a hip replacement in 2008, well above Medicare’s fee of $1,353. While Medicare paid $598 for a minimally invasive knee meniscus surgery, a doctor’s out of network charge was $8,800.
Kidd, the state legislator, said he couldn’t decide what to do about the $19,000 bill he got for the air ambulance service. He decided to talk to a friend whose family is in the ambulance business to figure out what his options were and the friend offered to review the bill and contact the company.
The company ended up agreeing to accept the $8,000 that the insurance company had already paid.
“The problem is, the average person can’t do that,” Kidd said. “I think nobody has a problem paying what is fair and just, but some things are just too high.”
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What to do if you get a “balance bill”
Action you can take includes:
-- Calling your health plan to determine what your payment responsibility is.
-- Calling your doctor’s office or hospital billing department to dispute the charges. Know your health plan’s balance billing rules.
-- Filing a formal complaint. In Georgia the state insurance commissioner fields health insurance complaints.
-- Hiring a medical advocate or patient billing representative.
-- Hiring a lawyer specializing in medical billing disputes.
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