How Your Medical Bill Can End Up Being a Lot Bigger Than You Expect
September 20, 2019
Experts say medical bills are many times much higher than original estimates for surgery, treatments, and other procedures.
A new law that took effect Jan. 1 requires healthcare providers to be transparent on their prices.
However, experts say there are large loopholes in the law, and the rules are sometimes difficult to enforce.
Jobbie Spillane took her 17-year-old son to a Kaiser medical facility in Northern California in 2018 for a procedure he underwent every 4 months.
Only this time, there was an unwelcome twist.
“I showed up only to be told that there was a $300 copay for the procedure,” she said. “I had driven all the way to Oakland from Petaluma at 6 a.m. for a necessary procedure that had never cost us anything in the past. I was stunned, and I paid for it, but had some scathing words for the doctor and the administration.”
Spillane had been told for years her son’s treatment was a medical necessity. He received Botox for his salivary glands due to a breathing condition that elevated his risk for pneumonia and other issues.
On this day, her son’s treatment was coded as “cosmetic surgery.”
“They never reimbursed me. But moving forward, we have not paid for the procedure again,” Spillane said.
Understanding how medical billing procedures work can seem like winning the lottery, spotting Bigfoot, or winning an Oscar. It rarely seems to happen to normal people.
“No one ever said, ‘I understand this medical bill,’ not a single person,” said Ed Scott, CEO of New Jersey–based ElectrifAI, an artificial intelligence developer that helps providers catch billing mistakes.
“You go to a restaurant and you can see a hamburger is $12… why can I not see how much it is to take care of my health and my body?” he said.
These surprise medical bills aren’t uncommon. They can happen during office visits as well as after surgery or medical treatments.
What’s the law?
Healthcare has become one of the hot-button issues early in the 2020 election. Price transparency is at the forefront of the debate.
In July, President Trump proposed that hospitals be required to post prices they’ve negotiated with insurers online. A month earlier, he signed an executive order aimed at giving Americans more information about their healthcare costs.
The argument goes that consumers will make more informed choices, which will lower costs. Health providers and insurance companies say revealing prices will stifle competition.
Kaiser officials say they support providing consumers with detailed information.
“Kaiser Permanente supports price transparency and is in compliance with the CMS hospital price transparency rule. Additionally, Kaiser Permanente provides a convenient cost estimator tool to our members that helps them manage their health expenses by providing a general estimate of out-of-pocket costs for many of the most common medical exams, tests and procedures,” Kaiser officials said in a statement emailed to Healthline.
The CMS (Centers for Medicare and Medicaid Services) hospital transparency rule is a new federal mandate that went into effect Jan. 1, requiring providers to post price lists online.
The providers must update those prices at least once a year. Hospitals can choose the data’s format, but it must be machine-readable and must include all items and services provided by the facility.
Enforcing the rules
One of the criticisms of the new rule is that it’s difficult to enforce.
“We have a long way to go before such regulations have any real impact on the patient experience,” Sachin Jain, founder and CEO of surgical provider network Carrum Health, told Healthline. “There are enough loopholes in the current regulation that one can easily drive a truck through them.”
Jain uses an example of a hospital giving a person an estimate of surgery, based on the care providers all being in the same network.
“However, the actual surgery might have an anesthesiologist out of network, and there is no way the patient can hold the hospital responsible for that additional cost,” Jain said.
“As the industry has evolved, the complexity has only become more troublesome for patients. We’ve talked to patients who’ve had surgeries in the past, only to have sticker shock when the bills arrive,” he said.
A surprise bill for treatment
Tyler G. was hospitalized earlier this year for severe depression.
He was scheduled for nine sessions of electroconvulsive therapy. He says he was given an invoice for $2,500 before his eighth treatment. He was told he received the same invoice for the previous session, which he didn’t remember.
For the sixth session, he told Healthline he was charged $2,200. For the next session, he says he was charged $4,700.
“These were for the same exact procedure, medicine, recovery… everything,” said the Wichita, Kansas, resident.
He adds he was never given a reason for the discrepancy. His insurance only covered the first five treatments, even though he was told all nine were covered.
He didn’t get the final two sessions and ended up attempting suicide a few months later.
“I feel like this error on the hospital’s part and the lack of proper treatment that had been ordered by my doctors could have easily resulted in my death,” he said.
Tyler ended up hiring New York–based MedWise Insurance Advocacy, which convinced the insurer that there was a network deficiency. They ended up covering it — saving Tyler more than $7,000 — after a yearlong struggle.
How mistakes happen
Scott sees the mistakes every day, as his business is fixing those errors for more than 200 providers nationwide before they get to patients.
Only his company usually finds things for which the provider mistakenly didn’t charge.
He says providers usually mischarge for up to 2 percent of their total amount billed every year.
“It’s unbelievable,” Scott said. “It’s a lack of communication between the patient, the insurance company, and the provider.”
He says hospitals are often at a disadvantage, using dated billing technology and not always knowing how much of a patient’s deductible has already been met.
He’s dealt with real-life billing issues as well, like when his wife underwent a procedure that cost three times what they expected.
“We called these guys up and find out the hospital is staffing a department with people who aren’t in their network,” Scott said. “It’s outrageous and it’s fraud. You put a lot of trust into a provider, and you don’t expect them to outsource half a hospital.”
A cascade of bills
The sheer volume of bills can be overwhelming, says Barry Pack, a Clearwater, Florida, resident who had partial knee replacement surgery a year ago. He believed the $4,000 he paid upfront was the end of his share.
“I started getting bills from everyone in the hospital that had anything to do with my surgery,” Pack told Healthline.
“I was still in a lot of pain from the surgery, and I had to fight with the hospital and the doctors that came into my room. Once I started getting bills from everyone in the hospital, I called them back and told them I am only paying what [Blue Cross Blue Shield] said I owed. I was getting bills from two different anesthesiologists for thousands of dollars and several other people related to the hospital,” he said.
In the end, it was the insurance company who helped him.
“It was out of control,” Pack said. “But I listened to BCBS, and I only ended up paying what they said. [BCBS] said, ‘You would have paid a lot of money that you didn’t owe.’”
Scott says something must be done to overhaul the system soon, with an older population of baby boomers about to surge.
“We’d better figure it out. We’d better start using technology,” he said.
Jain says the best way for people to avoid billing snafus is to negotiate an “all-inclusive bundled price with a provider ahead of the procedure,” which is how his company operates.
“So nobody has to experience a surprise bill. And best of all, hospitals and surgeons are on the hook when problems arise,” he said.