One of the most difficult aspects of controlling costs in our healthcare system is the lack of connection between the users of healthcare (patients) and the payers for these services (the insurance plan and in many instances with self-insured employers, this is the employer). High deductible plans with savings account features – such as health savings accounts and health reimbursement accounts – attempt to solve for this by aligning interests. If the patient is spending their own money, perhaps they will be more cost conscious. It’s a great idea; however, there are many barriers which get in the way. The first is healthcare literacy. Our healthcare system is so complex that the average American, especially when faced with a dire medical need, is unable to process the variables which go into making the best choice. After all, purchasing services for your health is not like buying a television. Also, plans have out-of-pocket maximums, so in the event of a serious medical condition, cost-sharing limits are exceeded and the patient no longer has financial skin in the game.
These variables get even more complex with out-of-network benefits or reference-based pricing plans. With these arrangements, the patient authorizes the purchase of services and the provider bills their prevailing rate. The plan assesses whether this bill is reasonable according to its terms and makes reimbursement based upon the way the plan determines the “allowable” charge. Enrolled members are told that they can be balance billed, but to many this is a complete mystery. The balance is often significant since the charges are frequently 300% or more of what Medicare might allow. Patients can be left with thousands of dollars of uncovered charges of which they may have been only vaguely aware they would be facing. These balance billings result in many bankruptcies in this country – and hospitals and providers face substantial uncollectible receivables which further heighten their financial issues.
Providers have learned that the best way to collect may very well be to sue the health plan. Often included in the stack of papers that patients are asked to sign prior to receiving services, is an assignment of the patient’s rights under their insurance plans to pursue a claim under ERISA on behalf of the patients. These suits have begun to clog the courts and have created unexpected liability for employers. Savvy employers have been adding anti-assignment provisions to their plan documents to prevent these actions. (And every plan should include this provision.) And with these provisions, the balance billing collections are falling back to the patients.
The providers, nonetheless, continue to pursue collections. The Washington Post reported recently that the University of Virginia Health System and its doctors have sued former patients for more than $106 million of unpaid medical bills between 2012 and 2018. And they have won a lot with wage garnishments and other enforcement provisions.
Something has to give here. There must be a way for excessive charges by providers to be controlled and to avoid balance billings. The court has made a least one ruling on the validity of reimbursing an amount determined to be reasonable by the health plan and disallowing excessive and sometimes arbitrary billing by the provider. If the healthcare eco-system can’t come up with an answer for this – this may be the default answer. This is a no win battle for everyone.