One year ago this month, my wife Elizabeth had to have her gallbladder removed. It’s a very common surgery – the sixth most common in the U.S., more frequent than appendectomy – and it went without a hitch. She came home the same day, was fully recovered within a few days and didn’t have any complications. We made sure to preclear the procedure with our insurance company, and it was performed at an in-network hospital by an in-network surgeon.
I bet you can guess where this is going. A few weeks later, we got a letter from our insurance company saying we owed $32,000:
As it was later explained to us, the hospital was in-network, and the surgeon was in-network, but during the operation, a physician’s assistant who wasn’t in-network was called into the OR to assist. $32,000 was the rate this person billed for an hour or so of work, which our insurance company was proposing to pass along to us.
I don’t know a single American who doesn’t have a story like this. Our health care system is a national disgrace. We pay more, for worse coverage, than any other country in the industrialized world. Obamacare improved this somewhat by ending the most predatory tactics (like rescission, where insurance companies would take your premium payments for years and then retroactively cancel your policy as soon as you made a claim), but it didn’t solve the problem of costs spiraling out of control. And many of those out-of-control costs come in the form of absurd surprise bills like this one.
For months after we got that $32,000 bill, Elizabeth spent hours on the phone filing appeals and navigating a labyrinth of bureaucracy. In one Kafkaesque episode, the member services department of her insurance company told her that we didn’t have to pay the PA’s bill, but the provider services department of the insurance company told her just a few minutes later that we did. Bills, appeal forms and explanations of benefits arrived in the mail seemingly at random. Sometimes we got multiple EOB forms in the same envelope, each one listing different reimbursement amounts for the same procedure.
Every time we got one of these mailings, I felt my anger building at the American health care system that permits this kind of incomprehensible stupidity. Imagine if you got married, and you paid the catering company $10,000 for the buffet at the reception – only to find out, months later, that the guy running the roast-beef carving station was an out-of-network subcontractor who didn’t agree to the fee scheme and was demanding an extra $5,000 for his work.
My family’s experience isn’t unique. According to a study in Annals of Internal Medicine that was covered in this article from Reuters, fully one-third of healthcare costs in the U.S. – more than $800 billion each year, or around $2,500 per American – are eaten up in administrative overhead. Hospitals and insurance companies both employ armies of medical coders whose only job is to volley bills back and forth, like an outrageously expensive game of hot potato.
The Reuters article says:
It’s because the insurance companies and health care providers are engaged in a tug of war, each trying in its own way to game the system, [Dr. David] Himmelstein said. How a patient’s treatment is coded can make a huge difference in the amount insurance companies pay. For example, Himmelstein said, if a patient comes in because of heart failure and the visit is coded as an acute exacerbation of the condition, the payment is significantly higher than if the visit is simply coded as heart failure.
This upcoding of patient visits has led insurance companies to require more and more paperwork backing up each diagnosis, Himmelstein said. The result is more hours that healthcare providers need to put in to deal with billing.
“(One study) looked at how many characters were included in an average physician’s note in the U.S. and in other countries,” Himmelstein pointed out. “Notes from U.S. physicians were four times longer to meet the bureaucratic requirements of the payment system.”
This is an object lesson in why a free market doesn’t work for health care. When the market approach does work, it’s only among people who have relatively equal amounts of informational savvy and bargaining power – and if you have a health crisis, it’s not as if you can afford to take your time and shop around for the best price. Nor are most people in a position to argue when a doctor tells you what you need to have done, or to choose in a la carte fashion which extras you do and don’t want. (More pain relief or less? One night in the hospital or two? Laparoscopy or open-incision surgery?)To be clear, I’m not asking for sympathy. I’m aware that my wife and I are privileged: we have jobs that come with excellent insurance coverage and give us the flexibility to spend time on the phone during the day resolving problems like this, and we have the education to know what the law says and what rights we have. Plus, we live in New York, which has a law that grants strong protection against these surprise bills. But if this can still happen to us, with the advantages we have, is anyone safe?
As part of New York’s law for handling surprise bills, the $32,000 charge went to arbitration, where it was reduced to $800 (!) – itself a demonstration of how hospital prices have no relation to reality – but the insurance company still wanted us to pay that $800, which it deemed an out-of-network charge.
We could have afforded it, and it was tempting just to pay and put this ordeal behind us. But after so long feeling like we were being ground between the gears of the hospital and the insurance company, this had become a matter of principle.
Elizabeth called her insurance company one more time, and actually had to quote the section of the law which says that surprise bills must be handled as if they’re in-network. She shouldn’t have had to do that; I don’t believe for a second that the insurance company didn’t know what the law says. It was clearly a tactic on their part, playing dumb and hoping that we’d give in because we didn’t know what rights we have.
In the end, this worked, although not the way we had intended. Because of our prodding, the insurance company took the nuclear option: they contacted the hospital, demanding proof that Elizabeth had consented to out-of-network services (she didn’t), and threatening to claw back their entire payment if the hospital couldn’t provide that proof.
We both felt a little bad about this. Her surgeon was a good doctor who did right by her, and we didn’t want him to lose out on the fee he earned for his work. It was only the extra, outrageous charge from a third party that we objected to. However, the hardball tactic paid off: the hospital caved and said that they were “rebilling” the entire procedure. Since then, we haven’t gotten any more demands for payment, and I’m hoping we’ve heard the last of this.
Although this story has a “happy” ending, it shouldn’t have been so hard to achieve. The insurance company did represent our interests, eventually, but we had to push and prod them every step of the way. In a rational system, the payer – whether it’s the government or a private insurer – would pay a single, prearranged, flat fee for each procedure, and the doctor and the hospital could agree among themselves on how to divide it up. Boom, done. That would have saved months of wrangling and stress and I can only imagine how many person-hours of wasted time and effort at both the hospital and the insurance company. (As proof of this, the paper I cited earlier points out that single-payer systems like Canada’s spend only one-fourth of what we do on overhead.)
The U.S. healthcare system serves no one. Every interaction I have with it leaves me more convinced that we need to throw it all out and start over from scratch. Sadly, the best solution isn’t always the achievable one, especially when one of America’s two major political parties isn’t only not trying to fix it, they’re actively trying to make it worse. With a newly right-wing Supreme Court agreeing to hear yet another case about the constitutionality of Obamacare, even the slight and hard-won improvements we’ve made are in jeopardy.
I don’t understand how there isn’t already a massive bipartisan groundswell demanding reform, but that’s not how our society has responded. Instead, there are millions of red-state voters who are eager to wreck their own health and finances, just as long as they get to sabotage a Democratic achievement. The huge majority of young voters who support single-payer gives me hope that this country will eventually come to its senses – but in the near term, I feel it’s likely that our broken system may have to get even worse before there’s a chance of it getting better.
If you have a health-care horror story of your own, share it in the comments. Let’s commiserate and dream of burning down the system together.