Monday, March 30, 2015

Crushed between two elephants

Here's a fascinating story about a developing trend. It's by Jordan Shapiro at the St. Louis Post-Dispatch and is presented over at Kaiser Health News. (KHN, by the way, is one of just a few go-to media outlets when you want to know what's really happening in health care.)

Jordan explains:

UnitedHealthcare, which covers approximately one-fourth of Missourians, has changed the way it handles something known as “balance billing” — the difference between the provider’s charge and the amount allowed by the insurer. The insurer’s move this year, designed to force down costs, means the insurer won’t pay the bills of some emergency room physicians and other specialists even though they work for hospitals in the UnitedHealthcare network. That could leave a customer with health insurance coverage stuck with thousands of dollars in unexpected expenses.

UnitedHealthcare previously would pay almost all of the bill from the emergency room doctors who performed services at an in-network hospital. But now UnitedHealthcare says it would scale back how much it would pay. It will now only pay the prevailing out-of-network rate, leaving the remainder of the bill to patients.

UnitedHealthcare blames the hospitals that contract out their emergency care to other providers who may or may not be in the insurer’s network.

It feels like the battle of the titans, with consumers getting crushed in the middle. As KHN's Jay Hancock noted on Twitter:

"What happens when Big Insurance plays the heavy with Big Hospitals? Consumers get screwed."


Anonymous said...

Had this experience in California in January. The hospital was in network and the hospitalists who covered all patients (poorly) were in hospital, but bills for ER, and numerous consults who breezed through for brief moments were out of network and sent some very hefty bills. There was no indication by any of them that their services would not be covered since they did not participate in the network. This does not seem very fair for a consumer who is then completely uninformed regarding what the cost of his care will be. Certainly, it is less than transparent. While anyone would understand the squeeze the hospitals put on doctors---the patient is still caught in the middle. The hospitalist orders up a room service list of consults without a word of discussion or consent from the patient and his wallet.

Barry Carol said...

I think all doctors who work in hospitals should be required to join the same insurance networks that the hospital participates in. If they don’t want to, practice medicine somewhere else. As hospitals consolidate into fewer and fewer large systems, there should be fewer places for doctors to go. Alternatively, hospitals could bring more of these doctors onto their own payroll as salaried employees. If that isn’t workable and the docs don’t want to join the hospital’s insurance networks, then perhaps they should have to accept the insurer’s out of network rate as full payment. In New York, as I understand it, the out of network rate is typically about 140% of Medicare which doesn’t sound too bad to me.

nonlocal MD said...

As Barry points out, it is easy for the hospitals to contractually require that their in-house physicians join the hospital's participating networks. This was part of our pathology group's contract for many, many years. In fact, I don't understand why this is still an issue at all.

As for out of network physicians such as consultants or 'first assistants' on surgeries etc., sticking the patient with these bills unannounced borders on fraudulent. As profiled in the NYT some time ago, these bills can exceed those of the primary practitioner since they are out of network and can charge what they want. There should be laws preventing such bill-padding.

Paul Levy said...

Dialogue from Facebook:

Norma Sandrock: How is it possible that the hospital does not require that the hospital-based physicians (ED, Radiology, Pathology, Anesthesiology, and the Hospitalists) participate in all the same networks the hospital does? This is not rocket science.

Paul Levy: This is an out-sourced service, quite common across the country.

David States: Or to rephrase, how could an insurer write a contract with a hospital that does not require the hospital to use in network staffing, especially for the ER? The insurer is really pushing the limits of false advertising by failing to warn that ER services may not be covered. For many insurers, they won't be fully covered at the majority of ERs.

David States: This argues that ER services should really be managed as public utilities. They exist for the general good, within their catchment areas they are monopolies and consumers (aka patients) really are not in a position to bargain.

Norma Sandrock: Even if they're outsourced, the docs still need medical staff privileges, right? The hospital can make appointment contingent upon joining whatever insurance panels in which the hospital participates.

David States: Moral hazard: the insurer will actually pay less if the hospital uses an out of network physician, they have a negative incentive to push hospitals to force staff to agree to assignment.

Paul, what are the economic implications of out of network staffing for the hospitals? Certainly there are reputational costs (don't go there, you will get gouged), but are they directly affected by professional bilking?

Beverly Heywood Rogers: Paul, I don't see how them being outsourced prevents the hospital from requiring them to participate in their networks. Just put it in the contract for crying out loud.

David Joyce MD said...

A universal fact. There is no relationship between provider charges, provider collectible, insurance fee schedules, provider costs, or value of the service to the patient. Providers do not even know how or why their charges are what they are. As a result they are inflated and no one should pay that. This does not happen when pricing an iPhone. Providers, get your charges in line and then maybe we can talk.

Anonymous said...

The California experience was at a chain hospital just outside of San Francisco. The insurer Blue Shield of CA who in response to the flood of provider billings issued small checks for each to the patient (about 25% of the charges) and instructed the patient that they were responsible for the remainder acknowledging that the provider could charge whatever they wanted without first informing the patient of either the non-network status or the large bills. The second issue was that out of network charges incur and second out of pocket maximum per year---also without any notice to the patient at the time of service. When further questioned about this practice and a discussion of how substandard the care was thought to have been as the patient was discharged precipitously and was readmitted elsewhere in less than two weeks, the agent offered to explore the charges and to hold off on payment. Ultimately the agent reported that BS could cover 75% of the provider charges, but to await a final EOB from them to determine the final tally. In exploring the reviews online, there was a flood of complaints regarding the aggressive and excessive billing of this particular hospital in addition to similar unpleasant care experiences. That some of the provider and hospital charges were due to bungled (in my opinion) procedures and general care was additionally repugnant. Not bordering on fraud---the very definition of it. This on top of a ten day hospital stay billed out around $300,000. No wonder we in health care are in so much trouble.

Barry Carol said...

To follow up on David Joyce’s comment, one of the most aggravating aspects of this issue, aside from the lack of price transparency and the element of surprise, is the huge disconnect between the provider charge and the cost of providing the service and the value of the service. I wonder how these providers would feel if they or a family member were on the receiving end of these bills and aggressive collection tactics used to try to force payment.

I don’t begrudge doctors a comfortable living after years of expensive education and training but many of these charges are just plain unreasonable on their face. If doctors can’t or won’t fix this, then regulation limiting how much can be charged, especially for care that must be delivered under emergency conditions, could be how the issue is ultimately resolved.

Anonymous said...

Agree with Barry Carol. There were reasonable surgeon charges for a recent hospital stay of 33 hours, but absolutely crazy hospital charges of $42,000! My primary insurer knocked that down to $6198. Oddly, my secondary insurer only knocked it down to $32,000 or so, which would still have been outrageous. The uninsured person would have hounded for the whole ridiculous amount, with potentially tragic consequences (most of us could come up with $6200, while $42000 is quite another story).