Drew Calver’s heart involuntarily pinned him to the bedroom floor just minutes after he took out the trash. Calver, a 44-year-old high school history teacher, swim coach, and triathlete living with his family in Austin, Texas, was having a heart attack. His neighbor rushed him to St. David’s Medical Center. Emergency medicine physicians admitted him to the hospital’s cardiac unit, where physicians implanted four stents in one of his coronary arteries.
The hospital charged Calver $164,941 for the operation and four-day hospital stay, of which Aetna, his insurer, paid just $55,840, since St. David’s was out of Aetna’s network. While he was relieved to be out of the hospital, the calm didn’t last long. The hospital soon mailed him a bill for the remaining balance: $108,951.31, nearly double his annual teaching salary. He has been fighting the charges of the bill with the hospital and its debt collector for over a year and even refused to fill out financial-assistance paperwork because he did not believe the charges were appropriate or justified.
Kaiser Health News first reported Calver’s story in August and commented on the exorbitant line-item costs of some of the health care services that Calver received, including near-$20,000 charges for two of the coronary stents, which cost hospitals a median price of just $1,153. St. David’s defended its prices and blamed Aetna for covering a narrow network of health care providers. (An Aetna spokeswomen’s comment was limited to: “We are actively working to rectify the situation on behalf of the member.”)
The problem of landing in an emergency department that doesn’t take your insurance and receiving an enormous bill afterward is not limited to Drew Calver’s story. While patients can, in most instances, choose to visit emergency departments within their insurer’s network, the physician who sees them may be out of network and thus could charge more than double the price of an in-network physician for their services. Insurers may only pay a portion of out-of-network charges, leaving patients on the hook for the remainder, a practice known as balance billing. Two nationwide studies found that 20 percent of emergency-department visits and subsequent admissions at in-network hospitals involved care from out-of-network physicians.
A federal law, the Emergency Medical Treatment and Active Labor Act, or EMTALA, may partly be contributing to the problem. EMTALA requires hospitals participating in Medicare (nearly all of them) to screen and stabilize patients who visit the emergency department. While this law guarantees provision of emergency care when patients need it, it leaves non-Medicare patients exposed to balance billing.
Within hours of the story’s publication on Kaiser Health News and NPR, though, Drew Calver’s story came to a happy end: St. David’s offered to drop its charges to $782.29. Three days later, the hospital cut the bill even further, to $332.29. Calver paid the bill in total, over the phone. (The hospital still defended its initial charges as “reasonable and customary.”)
I’m glad that journalism’s ability to spotlight Calver’s story resulted in a positive outcome for him. It’s not even a unique story; it’s happened before. Journalists from Kaiser Health News, NPR, and Vox, among others, have been collecting and reporting on stories about exorbitant medical bills over the past year. Sarah Kliff, who reports on health care at Vox, has been collecting emergency-department bills from readers since October 2017, and to date, at least three of the patients she has reported on have seen their hospital bills waived entirely, whether the bill featured exorbitant costs, facility fees, or surprise and balance billing.
Digital ink has turned into America’s best defense against surprise health care costs. But 1 in 5 patients is affected by balance billing. Does journalism spotlighting these problems help the patients who are unable to have their stories shared in national media? If nothing else, these narratives and the results they’ve gotten have surfaced a compelling argument for the necessity of accountability and transparency in health care. Six-figure hospital bills vanishing within earshot of a headline illuminates current health care prices and billing practices as arbitrary, poorly regulated, and prone to worsening as hospitals consolidate and increase their market power. While journalists are doing incredible work investigating these bills and holding health systems accountable for inflated billing practices, it is the responsibility of policymakers and health systems to effectively prevent unethical billing for everyone.
There is a way to do this: About 40 percent of states, red and blue, already have laws to address out-of-network billing. Most of these states stipulate that patients cannot be charged more than usual in-network prices and cost-sharing amounts during emergencies, known as a hold harmless provision. To determine how much an out-of-network hospital should be paid, most states will peg payments to a certain percentage of Medicare payments for the same services or “usual and customary” payment rates, which are also a predetermined percentage of average charges for a given service. New York tried a different approach by implementing a “baseball rules” arbitration process to determine how much an insurer should pay for out-of-network costs. Insurers and hospitals each develop reasonable payment rates for a given service, explain how it was calculated, and describe how they compare to usual and customary rates. A neutral third party then determines which payment amount should be paid. (It’s known as “baseball rules” arbitration because it is the same process that arbitration-eligible Major League Baseball players and their teams use to negotiate a player’s salary.) Yale researchers found that the New York law lowered the incidence of out-of-network billing by 34 percent and reduced out-of-network rates by 6.8 percentage points relative to other New England states.
However, due to the Employee Retirement Income Security Act of 1974, states are unable to regulate the 100 million people in private insurance plans that are self-funded by their employers. Under ERISA, employers who self-fund insurance plans are not deemed to be insurance companies or engaged in the business of insurance, and as a result are not under the jurisdiction of state insurance laws. Americans on these plans remain vulnerable to surprise and balance billing, even in states that have passed laws banning the practice. While there is both bipartisan consensus from lawmakers and agreement from health care providers, insurers, and policymakers that these practices should not happen, there are many complex reasons why they still do, which means patients may find themselves on the end of a surprise bill nonetheless.
Health care economists at the Brookings Institution and Yale have independently proposed possible policy solutions that show promise in preventing surprise and balance billing. Researchers at Brookings propose a federal ban on any balance billing by health care providers for emergency and ambulance services and suggest that hospitals could require that their physicians belong to the same insurance network as the hospital. They also advocate for establishing a federal dispute-resolution process, similar to New York’s model, with the ability for states to opt in to their own arbitration process as long as it meets minimum federal standards. This federal requirement could be mandated as EMTALA is, a condition for health care providers participating in Medicare.
The researchers at Yale propose regulating hospitals rather than insurance. Either states or the federal government should require hospitals to sell a package of emergency medical care, which includes both hospital and physician services, to insurers. As a result, hospitals would have to purchase emergency physician services in a local labor market, which would maintain competition, and submit a single bill to insurance companies rather than the current practice of separate prices for hospital services and physician services. When patients choose an in-network emergency department to receive care, they resultantly choose this package of emergency services and are shielded from surprise billing.
Unlike many challenges in health care policy, preventing surprise billing is a problem that both sides of the aisle agree on, and where solutions exist. In late September, a bipartisan group of senators released draft language for a bill that provides nearly comprehensive federal protections from surprise out-of-network billing. Policymakers have the opportunity to concretely solve a problem that currently victimizes patients and vilifies physicians. They should take it—journalists may have an unlimited supply of ink, but they shouldn’t have to keep spilling it to remedy what is an obvious injustice.
