A Surprise We Can't Afford

By David Osborne

As the coronavirus pandemic peaks in communities across the country, thousands of patients who have been treated for the virus and safely discharged are returning home to their families -- relieved to be out of the hospital and grateful for the heroic efforts of frontline healthcare workers.

Then the bills arrive.

With hospitalization for COVID-19 costing $30,000, on average, for stays of a week to 20 or more days, and as much as $100,000 for catastrophic cases, even those with generous employer-based coverage can find themselves facing thousands of dollars in unexpected medical charges for services not covered under their plans. In one case from early March, a New York man was diagnosed and hospitalized with what was thought to have been pneumonia (but was likely coronavirus). Fortunately, he recovered but is now dealing with a $3,800 bill for out-of-pocket expenses that his insurance may or may not cover.

In another reported example, college professor Michael Cencini returned home from a work trip to New York City with fever, tiredness and difficulty breathing. After a trip to the ER where he was tested for the virus and treated, he is now facing over $2,000 in bills he can barely afford on his $54,000 salary. While the coronavirus test was free, thanks to federal legislation passed in mid-March, his visit to the ER and other labs and tests were not.

While the current crisis is bringing more of these stories of surprise bills and ensuing debt to light, they are not new. In fact, more than 1 in 5 Americans have received a surprise medical bill for a service they did not -- and, in many cases, could not -- know their insurance wouldn’t cover. With the majority of Americans lacking sufficient savings to cover a single unexpected expense of $1,000 -- a situation rapidly worsening as tens of millions lose their jobs -- one surprise medical bill is all it takes to push many over the financial edge.

A 2019 study published in the American Journal of Public Health found that 530,000 American families file for bankruptcy each year due to medical bills they can’t pay. According to the researchers, nearly 60% of all personal bankruptcies in the U.S. are related to medical bills. Much of this stems from health care policies that are riddled with loopholes, exceptions, exclusions, copayments and deductibles.

One of the largest, and most damaging, of these loopholes is surprise billing. Anyone who has received an explanation of benefits, or EOB, for a medical visit knows these documents appear designed to obfuscate what one owes or why. I am always curious why I get that 4 page document with the watermark “This is not a bill.” Between deductibles, copayments and coinsurance, making sense of one’s financial responsibility for even a carefully planned procedure can be impossibly complex. Surprise medical bills, however, are not just difficult to anticipate and budget for. They’re completely unknowable, which is the problem.

Surprise medical bills typically occur when patients receive out-of-network care at an in-network facility. In an emergency, for example, a patient admitted to an in-network hospital may be transported by an out-of-network ambulance, or be put under by an out-of-network anesthesiologist -- all without knowing or having a choice. Hospitals routinely contract with consulting doctors and outside staffing agencies to supplement their own medical staff. Have you ever been consulted about your anesthesiologist? When my appendix was removed a few years back, I don’t recall my primary doctor giving me a choice about this rather important medical professional. When the anesthesiologist introduced himself, he certainly didn’t say, “By the way, I am an out-of-network doctor and you are going to get a large bill for this.” Or maybe he mentioned it after he gave me that first injection as I was being rolled into surgery? Who knows!

When a patient receives care that is out-of-network for their health plan, it is billed at a much higher rate than the negotiated in-network price, and the patient must pay the difference. In the case of emergency room physicians and anesthesiologists, out-of-network charges can be five times higher than Medicare rates. Another study released just this month found that 71% of all ambulance rides resulted in a surprise bill averaging $450 for ground transport and over $20,000 for air transport. No longer an anomaly, surprise billing is becoming more prevalent as employers shift to “narrow network” or high deductible plans to contain rising costs.

How many of us would purchase a commercial airline ticket or a car without knowing the cost of the flight or car up front? Can you imagine booking a flight, only to receive a bill months later informing you owed more than what you already paid, or getting an unexpected bill from the airline for “out-of-network” flight attendants? Sounds absurd, but it’s become standard practice for healthcare. At Virgin Pulse, we live by three foundational pillars: we want our members to Be Well, Choose Well, and Buy Well when it comes to their healthcare. We believe transparency is the key to making smart personal choices when it comes to their health, wellbeing and healthcare and have built solutions to make it easier for people to understand and use their benefits. But no tool can help people choose or buy well when it comes to surprise billing.

How can people avoid surprise bills? Access to digital-first health literacy tools and information can help people make informed choices possible. On this front, we recently launched two new offerings -- Virgin Pulse Navigate and Virgin Pulse Navigate for Health Plans -- to help members better find and pay for healthcare services according to their specific needs and preferences. The complexity and fragmentation of the US healthcare system isn’t going to be resolved anytime soon, but people can be better equipped to navigate it and avoid the likelihood of unplanned medical expenses.

Secondly, the healthcare industry needs to continue pushing for greater price transparency. The current Administration’s price transparency rule finalized last fall requiring hospitals, doctors and insurers to disclose their negotiated prices for procedures was a step in the right direction. Among the requirements, which are set to go into effect next year, hospitals must post a list of prices for 300 “shoppable” services, with all the ancillary costs included. With the cost of the same MRI, for example, ranging from $365 to $1385 in the same city -- as one analysis found -- consumers have the right to know what they’re getting into so they can shop based on cost and quality.

Finally, we need to eliminate surprise medical billing once and for all. After bipartisan discussions to curtail the practice stalled in Congress over the winter, the COVID-19 crisis seems to have re-energized efforts to address the issue. As $50 billion in emergency funding is being rolled out to hospitals and providers to help alleviate the financial losses they have suffered in the pandemic, the Department of Health and Human Services has inserted fine print in the fund documents that explicitly prevents recipients from billing COVID-19 patients higher than in-network costs for care. The form providers must sign then stipulates that “every patient” in their care should be regarded as a potential COVID-19 case. While ambiguous, the language seems to bar surprise billing for any provider accepting the federal payout.

While these latest requirements are both welcome and promising, they represent a short-term fix to a long-term structural problem. Whether at the height of a global pandemic, or during normal times, no individual who has already suffered from serious illness should be blindsided by surprise medical bills. No one should have to declare bankruptcy or start a GoFundMe campaign to avoid financial ruin due to illness. For Americans to be well physically, emotionally and financially, we must first be able to choose and buy well.