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

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.