Picture this: You walk into a restaurant, sit down, and are greeted by a cheerful waitress in a red apron. She hands you a menu and you order the burger while your partner takes the Greek salad and a milkshake. She returns a few minutes later with your tray of food. Everything is delicious and you take the bill. The milkshake and the Greek salad reflect the prices on the menu. The burger, however, shows up as a $48 charge, not the $12 that you see on the menu. “I’m sorry, this doesn’t match-- there must be a problem,” you say. “Nope, sorry,” replies the waitress, “the burger cook is not part of our restaurant, so you pay his fee, not ours.” You protest and speak to the owner who smiles and provides two options: pay it now--or walk out and deal with the credit bureaus! This sounds ridiculous but it's common in healthcare. In fact, 67% of people worry about not being able to cover a surprise bill and consequently many people avoid medical care.
What’s happening? When an insurance company builds a network of hospitals and doctors for its members, a discounted “in-network” reimbursement rate is negotiated for each medical procedure. When the insurance company pays a claim for a member, it is paid at this discounted rate. This constrains the cash flow of the hospital or the doctor office, many of which are for-profit entities. To get around these discounted rates, some providers(doctors) in the facility, just like the cook in the restaurant, are categorized as "out-of-network." When these out-of-network provider charges are later sent to the insurance company, they get rejected. The hospital or doctor office turns around and sends the bill to the member. BOOM, there’s your surprise medical bill.
Emergency visits, ambulance rides, pathology, radiology and laboratory fees are the most common sources of out-of-network charges to consumers. So, the practice is not only legal, but common-- over 50% of Americans report having received a surprise medical bill with an average amount of $1,500. Now don’t you wish we were just talking about an overpriced burger!
What to do? Although surprise medical bill legislation has bi-partisan support on Capitol Hill, attempts to pass laws have failed. The policy ideas that have been circulated typically get squashed by medical lobby groups. So, is there a way to align the interests of insurance companies, hospitals, and doctors to reduce these out-of-network bills for the consumer?
Tom Wolk, M.D. weighed in: “In the absence of a global fee, non-participating providers may balance bill (consumers) for their services --Ideally there would be a participating alternative, but this is not always practical." He continues, “Whether by legislation or by contracting with hospitals, non-participating providers should accept payments by contract or accept a participating rate.”
At Bill Dog, we’ve seen instances where insurance companies pay the contracted rate and the difference is billed to the consumer, but ultimately written off by the provider. In other cases, a fee reduction can be negotiated and sometimes the insurance company will function as arbitrator. But every situation is different. If you are having a problem with a medical bill, please reach out to us--we might be able to help.