A Honolulu man in his 50s felt fine before he was diagnosed with prostate cancer. Although his father had died in his 60s from the disease, this guy thought he had at least half a decade before he had to be concerned.
But when he saw his doctor for a routine exam, he had an enlarged prostate. Subsequent testing revealed an elevated PSA, or prostate specific antigen, and a biopsy revealed cancer.
The next step was surgery. Given his family history, he decided to go to the place that had treated his dad, a major center on the mainland, close to where he grew up. He packed his bags and flew off for his evaluation.
If you have an emergency, you may have no choice but to receive services from a provider who doesn’t participate in your insurance plan. Or you may just want to choose a nonparticipating specialist. Either way, your unreimbursed expenses may be shocking.
Cory Lum/Civil Beat
He knew that his medical insurance did not participate with the mainland center, but he decided to go anyway. This was his life, after all, and besides, how much could it cost? His insurance would pay the same amount for his care there as if he had it done here, and that should cover most of it, right?
He hadn’t heard about balance billing. When a medical center doesn’t accept the reimbursement that is offered by an insurance company, it is called “nonparticipating,” or nonpar. The center can charge what it wants, and whatever the insurance company doesn’t cover is billed to the patient directly.
If he had stayed in Hawaii, his care would have been covered. Should the cost be five times higher just because he had a procedure done somewhere else?
In some cases, it is just a few hundred dollars. In this man’s case, it was $60,000. Within a few weeks of coming home, he was sent the bill.
How could care on the mainland cost that much more than what he would receive here?
The charges were more than his annual salary. He had no idea how he was going to pay for his care, and was already living paycheck to paycheck.
If he had stayed in Hawaii, his care would have been covered, and the amount paid by his insurance would have been sufficient to cover the cost. Should it be five times higher just because he had a procedure done somewhere else?
Patients blame insurance companies for not covering their care. Insurance companies blame medical centers that charge whatever they want. If the center is participating with the insurance plan there are prearranged fees. If not, there is no limit to what they can charge.
No matter who is to blame, one thing is clear. Something has to be done to fix it.
There are several proposals in the works. One would force any provider working at a participating hospital to participate in its insurance agreements as well.
This can help avoid some of the surprise bills, but not all of them. If a patient had an emergency and needed to be seen, they don’t have a choice if the doctor is not participating with their insurance plan. In that case, the doctor would have to accept the fees that have been arranged by the participating hospital, and not charge more.
Another proposal would force negotiations between insurance companies and medical facilities, leaving the patient out of the equation but potentially putting them at risk for the bills that remain. If the dollar amount that was finally agreed upon was not the full amount, then patients might still be responsible for the balance.
Perhaps an easier way to fix the balance billing problem is to look at the usual rates for services in the area and the usual reimbursement by local insurance companies near the medical center to find an appropriate charge from nonpar facilities. If the center would accept an average of $30,000 for a surgery from their participating insurance plans, then the max they could charge for nonparticipating plans would be that plus an additional percentage, like 10%.
In that situation, if the Honolulu man chose to go to a mainland center, he might still be responsible for some of the bills, but the maximum amount the medical center could charge would be much less. After all, if all of the other insurance companies arranged to pay a certain amount, that usually reflects the actual cost of the care provided. Charging 10 times more than that to patients with a different plan just doesn’t seem fair.
It would be great to have all medical centers participate with insurance plans, and for all plans to pay rates that would satisfy the center. In the real world, that’s not how things go.
Something has to be done to protect the patients who are just trying to deal with their illness, and don’t need the additional stress of being balance-billed thousands of dollars.
The Honolulu man is still trying to figure out how to handle his charges, and might have to declare bankruptcy. He’s not alone, as two thirds of Americans do that have unresolved medical debt.
In that case the medical center doesn’t get paid at all, and the guy’s credit is ruined — not a good solution for anyone. Capping the charges at a small percentage higher than what other insurance companies pay is at least a start.
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Kathleen Kozak, M.D., is an internal medicine physician at Straub Clinic and Hospital. She is also a part-time medical director for UHA Health Insurance and is the host of “The Body Show” on Hawaii Public Radio.