Navigating the Labyrinth of Out-of-Network Health Care Billing

Wednesday, February 16, 2011

Whatever happens to health care reform, private insurance will continue to play a central role in American health care. And while some 75 percent of Americans with private insurance like their plans, according to one recent survey, hundreds of thousands of frustrated people call insurance regulators every year looking for help. Including me.

Last year, chronic sinus problems of mine had gotten so bad they were beginning to interfere with my work (it's bad news in radio to sound like a cartoon character). But a few weeks after minor surgery solved the problem, I was surprised by a bill for $500 from a hospital pathologist I'd never heard of. I made several weeks of calls, bouncing back and forth between the pathologist, my insurer and my surgeon. I got nowhere. I grudgingly paid my bill — and set out to determine what the heck just happened.

"This is a painful and bothersome subject I face frequently," said my surgeon, Dr. Daniel Branovan, from the New York Eye and Ear  Infirmary in the East Village. "There's very few things more bothersome to me than to have a patient who's satisfied by my care but who is extremely annoyed, bothered by financial circumstance surrounding that care — particularly when they're outside of my control."

By law, Branovan had to send a tissue sample to a pathologist for examination.  And his only choice is the hospital pathologist — who doesn't take my insurance. It seemed strange to me that the surgeon would take my coverage, but the hospital's one-and-only pathologist wouldn't.  So, I went to meet Dr. Steven McCormick.

McCormick said the problem starts with the hospital having more than 700 surgeons, who all  take different insurance. "The insurance companies know that, and it's my opinion that they try to" — McCormick searched for a diplomatic phrase — "take advantage of that situation."

McCormick said insurance companies pay him below-market rates.  Taking all insurance plans wouldn't be practical because he'd need too large a staff just to haggle with all the companies.  "We do it based on pure economics," he said.

Patient advocate Elisabeth Benjamin of the Community Service Society of New York gets calls all the time from people like me, who are caught in this battle between doctors and insurers. 

"You go into the hospital, you have an expectation you're getting full service," Benjamin said, "and yet somehow our system more and more is allowing pathologists, radiologists — pretty soon nurses are going to be charged separately and be able to do their own out of network billing.  When's it going to stop?"

So, why can't hospitals force doctors to accept the same insurance?  David Woods, from the Eye and Ear Infirmary, said doctors are independent contractors, who can choose which insurance coverage is worth their time. And he said: Can you blame them?

"If the reimbursement was adequate, then there wouldn't even be an argument over whether a physician should or should not be part of a plan," said Woods. "The insurance industry will say, 'Well, we have 245,000 members that we cover in Manhattan, so if you don't take this you're not going to get the volume you should be getting. So you're going to accept our rates our else.'"

You won’t be surprised to learn the insurance companies disagree. My insurer wouldn't comment for this story. But an industry representative named Paul Macielak, at state hearings in 2008, said, basically: reimbursement levels are just fine; it’s the doctors who are to blame for setting their prices so high.

"It all starts with the bill," Macielak said. "It all starts with the charge. And we can describe it as significant, excess, substantial, unreasonable, unconscionable. It's price-gouging."

So, doctors say the insurers low-ball them. Insurers say doctors high-ball them. And one of the few things they agree on is what you and I should do: our homework. Both sides say we consumers need to educate ourselves, get the information, figure out how to interpret it, make the right decision.

Well, ok. But isn't that asking a lot of patients — especially those who in emergency situations, who are far more at the mercy of non-insurance-accepting doctors than I was? I asked New York state insurance regulator Troy Oechsner.

"Until we figure out a completely different way of doing business," said Oechsner, "I agree with you it's a real problem for patients, for consumers — and we need to come up with a set of rules that are going to do the very best to protect consumers."

Oechsner said his agency has advocated for requiring insurers to cover out-of-network doctors when patients use them because no in-network doctor was available.  When the insurance department proposed such a rule as part of a package of health care legislation, the insurance industry got the provision stripped from the final bill.

But some changes are underway. Two years ago, New York Attorney General Andrew Cuomo, now the governor, reached a settlement with more than a dozen insurance companies on the issue of reimbursement rates. Under the settlement, the insurance companies agreed to abandon the database they used for years to determine their reimbursement rates for out-of-network claims — that is, how much they'll pay for a given procedure performed by a doctor not in your insurance network.

Cuomo alleged that the old database, run by insurance giant United Health, had systematically low-balled doctors' fees. The new system - called FAIR Health - is gathering data on how much doctors charge for different procedures, region by region, and it will use that data to set what it hopes will be reality-based reimbursement rates.  Perhaps more doctors will then choose to take more insurances.  And some insurers are excited about the system, because they believe that as FAIR health collects data on what doctors are charging, it will unmask price-gouging doctors.

There are concerns: if the FAIR health system significantly jacks up reimbursement rates, insurers may pass on the costs to employers, who may in turn pass them on to employees. We'll just have to see - FAIR Health says its database will be up and running early next year.

Also, the national health care reform law championed by President Obama has an effect on one aspect of this issue: surprise bills when you get emergency treatment.  My $500 pathology bill for minor surgery is one thing, but there are cases in which insured people go to a hospital for emergency treatment, doctors not in their plan are called in to save their lives, and then the patients get bills for thousands of dollars.  A provision of the health reform bill that goes into effect this year mandates that emergency care at any hospital must be considered in-network by the insurer.

What can you do to protect yourself against surprise out-of-network bills for non-emergency treatment?

  •  Ask lots of questions.  If you're having surgery with an in-network doctor, ask what other doctors are likely to be involved - anesthesiologists, radiologists, pathologists - and make sure they all take your insurance.  Ask for a breakdown of costs, and talk to your insurance company beforehand to make sure you understand what's covered.  You can also ask your insurance company to point you to a hospital where all the specialists you're likely to need participate in your plan.
  • If you get a surprise bill even after you've done your due diligence, or after emergency care, appeal it to your insurance company - and do it quickly, as a lot of plans have a limited time window in which they accept appeals.  File a complaint with the state Insurance Department.  And call your doctor and see if you can work something out.  After my appeal to my health plan was denied, Dr. McCormick's office agreed to knock about $100 off my bill and said I could pay in installments if I wanted.  And if you need help, ask for it.  The Community Service Society of New York, for instance, has a managed care consumer assistance hotline.


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Comments [13]

drg from Chicago

My son went to an in-network hospital and had a bone marrow biopsy. He was never told that the pathology department in the hospital could not do the biopsy. The hospital sent out the biopsy to an out-of-network lab, and he received a bill for $7800. His insurance paid only a small amount. An appeal knocked off $2000 from the bill. Now we are attempting to negotiate with the out-of-network lab to knock off another 30% or so, by explaining the situation. Basically, our strategy is, I will offer them immediate payment if they will give a generous discount, otherwise, they will not receive anything from him. I believe they will prefer to receive something rather than nothing.

Illinois now has a law on the books against out-of-network balance billing, but it only applies if the out-of-network provider operates out of an in-network facility. In the case where biopsies are sent out to an out-of-network lab, the law doesn't apply.

Aug. 19 2013 10:11 PM
Susan from Saratoga Springs, NY

I work for a diagnostic company who does not balance bill patients for services rendered out-of-network. In other words, if you receive diagnostic services from us, we will accept in-network amounts, and patients will only be responsible for the amount that they would pay if they were in-network, in 49 states with the EXCEPTION OF NEW YORK! This practice hurts elderly and sick patients in the pocketbook, and the lobbyists from the insurance companies just don't care. Unfortunately, I am the face of the company, and the providers and patients think it is our company that is overcharging or bilking for services. Unfortunately, I was unaware of this diabolical practice until I started working for this company. As an insurance holder, and as a middle aged person with elderly parents, I am appalled at what happens in our legislature without the knowledge of the people that it hurts the most. I for one will not be retiring in NY. My husband and I are going to spend our hard earned retirement income in another state. This was the last straw....

Aug. 15 2011 08:13 PM
J. Bao from Fort Lee, NJ

This is an excellent article, which I shared with friends.

Lately and rightly, the focus of discussion has been on people without health insurance, but I really wish more articles will be written, advising those of us with coverage. I don’t always get reimbursed by the insurance company, at least not smoothly. Each year, I spend months talking to my insurance company and this year is no exception.

My insurance company is “great” in taking their time to resolve an issue (e.g., 78 days for an appeal, after waiting weeks of each resubmission). I couldn’t find anyone telling me anything other than “it’s in process”. For the latest issue, I first called the insurance company on 11/1/2010. I most likely will get a letter from a collection agency before I get a ruling from the insurance company.

By the way, I am relatively healthy.

Mar. 07 2011 01:05 PM
Leah McCormack, MD, President, Medical Society of

Insurers to Blame for Out-of-Network Billing Labyrinth

Isaac-Davy Aronson’s report, “Navigating the Labyrinth of Out-of-Network Health Care Billing” (originally aired 2/16/2011), correctly highlights that a major cause of this “labyrinth” is malfeasance by health insurers.

Some physicians choose not to participate with some health insurance companies
due to care authorization hassles imposed by many health plans and unfavorable insurer payment policies grounded in secrecy and deception. As the report notes, when Attorney General, now-Governor Andrew Cuomo exposed the grossly misleading system health plans used to determine payment for out-of-network care. Insurer payments were based upon a manipulated database operated by a wholly-owned subsidiary of United Healthcare that systematically discarded higher charges, resulting in much higher out-of-pocket costs for patients. As a result of the exposé, the companies agreed to contribute tens of millions of dollars to create a new database, called FAIR Health. It will accurately collect charge data and provide a transparent and fair system that will allow patients to estimate out-of-pocket costs.

The purpose of the FAIR Health database is not to artificially inflate payment, but to do what health plans should have been doing all along in paying out-of-network claims-- setting payments based upon the true charges of physicians by specialty and practice location. This is what employers, government payors and patients expect when they purchase health insurance policies that permit coverage for out–of-network care.

At this time, we do not know what the FAIR Health database will show. However, patients and their physicians will have assurance that the system is accurately determining payment. More importantly, payment will not knowingly be fixed at an artificially low amount that limits health insurers’ obligation to cover patients’ out-of-network care.

Leah McCormack, MD
Medical Society of the Sate of New York

Mar. 02 2011 12:25 PM
Julianna from NJ

Excellent article. Familiar situation,unfortunately. last July I had to undergo an ER brain tumor surgery. I didn't even know who's who in neurosurgery field. Got a $95000 bill from dr's office (just before Xmas) but saw online,that almost the double was claimed from the insurance.Of course the doctors are out-of-network. Part of it was already paid by insurance after several re-processings.But there's still amount to be paid,which is currently under appeal. I have to go for check-up and MRI every 3 month. The doc is still out-of-network,trying to negotiate the visit $. The MRIs are part of deductable. (that sucks...)

Feb. 24 2011 04:24 PM
Katya from Brooklyn, NY

I was recently charged over $1300 in fees for a simple physical by an out of network lab. Even though I went to an in-network doctor. Apparently this is something patients are supposed to know. Yet somehow I feel totally scammed. HELP!!! We need health care reform now!

Feb. 22 2011 02:11 PM
davidaw100 from Weston, CT

What about the hospital's role in this? The current system seems like it has a built in monopoly: how come they only have 1 pathologist that docs can go to? What is their interest (or lack thereof?). Why does your doc HAVE to use that pathologist. Seems like the legislation has set up a one-sided situation in favor of docs, not patients: requiring pathology, but not setting any pricing requirement or competition requirements....

Feb. 22 2011 09:33 AM
Patrick from New York

Prior to sinus surgery, I was dilligent about trying to ascertain total costs. After multiple trys, the doctor's office could give me no information, nor could my insurance company. I asked both representatives, "Would you purchase a car like this"?

Is it time for a Twitter Health Care Revolution here in the United States?

Feb. 22 2011 08:44 AM
Tracy A. Prout from NYC

Great story! How about another piece on how hard it is for mental health providers to actually get "in network"? I'm a psychologist who has been trying to get on insurance panels for some time now. I have patients who have Aetna, UBH, Cigna, etc. I call the insurance companies and they say, "The panel is closed in NYC. Call back in 6 months." I've called back. It's never open. I finally asked a representative, "When's the last time the panel was open?" He stated, "I've worked here over 6 years and it's never opened in NYC for psychologists." Pretty hard to provide in-network care when you can't become in-network.

Feb. 22 2011 08:04 AM
Ed from Chicago, IL

How awful that the onus was on you to ask the questions ("Where is this tissue going?"; "When that person touches it, will I be charged because that doctor is out of network?"). The insurance system is monstrous in its inefficiency, made even more harmful by companies to collude on keeping costs high. Any sane health care reform would have stripped the ability of insurers to make a profit...or better still, abolished them altogether. They are a cancer on the financing of the health care system and deserve to be excised and sent to history's pathologists. They help to keep Americans sicker and hound them into bankruptcy. Universal Medicare efforts in other states (California, Vermont, Minnesota) are gaining a foothold and should also be reported on...

Feb. 16 2011 11:30 AM
Jack Hughs from NYC

Boy sounds like you got 2 thieves fighting about thier county...

I have yet to meet a doctor that's not autistic that makes less then 250K a year. Most easily clear 7 figure pay days.

And the insurance companies get insane amounts sent to them every month..

Patients are just loosers that they millk... you are a dummy for paying full price for a procedure that probably took the Dr about 5 minutes to do... NEGOTIATE BEFORE YOU PAY NEXT TIME

Feb. 16 2011 11:03 AM
Paul from Manhattan

Excellent article. This underscores the need for a systematic approach to health care reform--derisively called Obama care--not the "repeal and defund" campaign that the GOP is pursuing.

Feb. 16 2011 11:00 AM
kinglaura from us

The "Wise Health Insurance" is quite popular in California and New York. For example it offers the low income health plan. Also offers health insurance for individual with pre-exisiting conditions.

Feb. 16 2011 02:24 AM

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