David Sprecher thought he was doing everything right when he took his wife, Tyna, to the emergency room three years ago with problems breathing after pneumonia treatment.
“We went to Deaconness, because they were in-network for us,” Sprecher said. “We hadn’t done anything like this.”
At every turn of his wife’s treatment, Sprecher said he asked the doctors and nurses if insurance would be footing the bill for their care. They responded with uncertainty, but Tyna Sprecher needed the care, so the couple continued the treatment for about a week and hoped for the best.
The first bills that showed up were promising. A $50,000 hospital bill was negotiated down to a little more than $6,000 by the couple’s insurance, about $1,000 of which they were responsible for. Some lab fees were eventually taken care of with a few phone calls.
Then the bills for specific physicians started to arrive.
“They submitted to our insurance, and our insurance said no,” Sprecher said. “The hospital’s in our network, but these doctors are not, so, denied.”
The couple found themselves facing thousands of dollars in medical debt that independent studies have shown is quite common for visitors to emergency rooms across the country. The issue, known as “balance billing” by the hospitals and insurance companies, but called “surprise billing” by patient advocates and legislators trying to fix the problem, affects one out of every five Americans that is admitted at an ER, according to a 2017 study published in the journal Health Affairs.
It happens when patients visit a health care facility that’s in the coverage network of their health care provider, but receive care from physicians inside who aren’t.
A bill seeking to correct the issue in Washington state passed the state House of Representatives last week by a convincing 84 to 13 vote, and is scheduled to be taken up in the Senate.
“We still know that medical debt is the number one cause of bankruptcy,” said state Rep. Marcus Riccelli, a sponsor of the bill that was requested by the state’s Office of the Insurance Commissioner this session. “I think it’s just common sense. It’s time.”
Health care providers and insurance companies who once expressed skepticism of efforts at legislative reform, while agreeing with the premise that patients like the Sprechers shouldn’t be stuck with such a bill, are now expressing some optimism that a deal can be done. But they also emphasize that the final agreement shouldn’t disrupt delicate market forces that, when working well, push each party to an agreement to provide care.
“We want to see this issue resolved in a way that protects patients and is fair for physicians,” said Sean Graham, director of legislative and political affairs for the Washington State Medical Association.
“The solution needs to not tilt negotiating positions, for either carriers or providers, in one direction or the other,” said Meg Jones, executive director of the Association of Washington Healthcare Plans, a trade group that represents most of the major insurance providers in the region, including Premera Blue Cross, Aetna and Kaiser Permanente.
In the middle are the hospitals themselves, which often become the subject of patient ire at such bills, even though they’re coming from the billing groups for the individual doctors.
“We’re in complete agreement that the patient shouldn’t be in the middle of this, but things need to be crafted appropriately so that there’s the right payments made,” said Beth Zborowski, interim vice president of communications for the Washington State Hospital Association.
The enthusiasm to end the practice has reached the federal level, thanks in no small part to stories like the Sprechers’ being told by national media outlets, often with the amounts totaling in the tens of thousands of dollars. President Donald Trump told reporters at the White House in January that “we’re going to stop all of it.”
A fair price?
The sticking point has been what price to settle on as fair reimbursement for a medical procedure when there’s no contract between the doctor providing care and the insurer covering the patient. When a patient visits a doctor in their network, that negotiation has already occurred, with a contract laying out the rates for specific procedures.
When that negotiation hasn’t occurred, the insurance company and provider enter a potential standoff, with the insurers offering to pay a certain amount and the physician or facility setting a price. Under federal law, the patient can be required to pay the difference, hence the phrase “balance billing.”
In emergency cases, the price requested by the doctor can be several times greater than what is traditionally covered under Medicare, a standard of comparison used by researchers at the University of Southern California-Brookings Schaeffer Initiative for Health Policy in its investigation of states devising policies to address balance billing. Emergency department physicians showed the largest differentiation between bills and Medicare reimbursement in their study, in some cases up to eight to 10 times greater for the same service.
Graham, with the medical association representing the state’s physicians, said he has heard skepticism from providers that the discrepancy was that stark in Washington.
Sprecher said he compared the prices charged by some of the physicians that treated his wife to Healthcare Bluebook, an online service that seeks to provide a service similar to the car-buying tool compiling reasonable charges for certain health care services. The couple’s bill was $4,590, but those same services penciled out to about $750.
“I would have been willing to pay this amount, but the billing company insisted on the total $4,590,” Sprecher said in an email. “They also started threatening me with collection letters while we were trying to work it out. Every time I called they just tried to get me to make a payment with a credit card.”
The bill passed in the House of Representatives creates an arbitration process that would bar health care providers from billing patients, skirting the controversy created when regulators seek to establish the set rate of a procedure.
The health care providers, hospitals and insurance companies all have expressed concern that even that system could upend market forces that nudge the parties toward entering a network agreement. If the price is set too low, insurance companies have no incentive to come to the table to deal with providers who charge higher rates. And if it’s too high, doctors may be satisfied to remain outside of a contract with insurance companies because their rates will be better than if they negotiate a deal.
The legislation requires the state’s Office of Financial Management to maintain a database of health care claims paid throughout the state to “assist” the negotiation process between health care providers and insurance companies in determining a reasonable cost for services. That database, called Washington Health Care Compare, is already available online for consumers, part of an effort to combat the perception that health care costs are confusing and non-transparent.
Jones, with the Association of Washington Healthcare Plans, said insurance providers are still concerned that those amounts are too high for most procedures and would keep physicians from contracting with health plans.
“You don’t want the payment methodology to reward a provider for staying out-of-network,” she said.
Graham, of the medical association representing physicians statewide, said doctors want to enter into network agreements in order to ensure patient volume. But some carriers have shrunk their networks in recent years and it’s been more difficult for doctors to find contracts, he said.
They’ve done so, in part, because of changes made under the Affordable Care Act that required certain levels of coverage and established out-of-pocket expense maximums for plans sold on state exchanges. In order to keep premium costs down, insurers began limiting where they offered coverage, with most of the plans being offered on the exchange narrower in scope than those available before the health care law passed.
Federal legislation could be on the way, too
The Legislature’s efforts also won’t extend to a majority of those insured in Washington state. Self-funded insurance plans, like most of those that are offered by employers, are subject to federal regulations that do not yet include the kinds of protections against balanced billing that have now been approved in 21 states, with varying methods to address the issue.
According to a 2018 analysis of health care coverage by the nonprofit Henry J. Kaiser Family Foundation, 61 percent of American workers are covered by a plan that is either fully or partially self-insured, and would thus not be automatically subject to any law Washington passed.
“Self-insured plans could opt in, but they’re not mandated to,” said Stephanie Marquis, media relations manager at the Office of the Insurance Commissioner. Such a decision would be made by the plan’s benefits administrator.
But state action could prompt federal lawmakers to take a look, Marquis said.
“(Congress) may look to the states as incubators,” she said.
That seems to be the case, with Trump and lawmakers from both sides beginning talks of federal legislation intended to address the issue. So far, none of those proposed pieces of legislation has received a committee hearing.
Such a fix, either at the federal or state level, will come too late for the Sprechers. They spent hours on the phone attempting to resolve their outstanding debt. David Sprecher earns his income through rental properties and the specter of that much medical debt loomed large.
“At the time, we had one of the better insurance plans (on the exchange),” Sprecher said. But their cap on expenses didn’t cover the bills coming from the hospital doctors who were out of their network. Eventually, a patient advocate stepped in and lowered the bill.
The experience has turned the couple off of health insurance entirely. They’ve turned to an alternative method of coverage, called a health care sharing ministry, that operates outside the regulatory framework of the insurance industry.
“I had no confidence at all that my insurance would cover my health care needs,” Sprecher said. “I felt like they wanted to get out of it, in any way they possibly could. They really didn’t care about me or my wife, they just didn’t want to have to pay the bill themselves.”