When Your "Free" Annual Check-up Isn't Free

A good reminder from the Kaiser Family Foundation (and broadcast on NPR's "Morning Edition" today: The ACA requires that insurers pay for an annual physical with no out-of-pocket payment by the insured patient, but that doesn't cover "extra" services that are offered during the same visit.

What's "extra." Like so much in health care, it depends.

One patient, Christine Rogers, answered her doctor's screening questionnaire honestly when it asked about depression. Her mother had unexpectedly died in a nursing home 13 hours away, and she answered the questionnaire with "It was a horrible year. I lost my mom." That triggered a 5-minute conversation about depression and an additional charge - not covered by her insurer - of $76.06.

Ms. Rogers felt a bit betrayed by a screening process that depends upon honest answers to questions about a patient's physical and emotional condition and then adds to her bill at the rate of $912.72 an hour.

The hospital and physician group stood behind the charge but -- perhaps to avoid being highlighted by KFF and NPR -- wrote off the extra charge.

The take-away: The ACA guarantees you one free physical per year, but what's included in that free service may vary from provider to provider, with precious little guidance to constrain billing practices.

Caveat emptor, indeed.

Is Common-Law Contract Theory Superior to the No Surprises Act?

A new article from David Orentlicher et al.:

"Limiting Overall Hospital Costs by Capping Out-of-Network Rates" [Free Download]
Annals of Health Law, Vol. 32, No. 2 (2023)

DAVID ORENTLICHER, University of Nevada, Las Vegas, William S. Boyd School of Law
Email: david.orentlicher@unlv.edu

KYRA MORGAN, Nevada Department of Health and Human Services

BARAK D. RICHMAN, Duke University, School of Law, CERC, Stanford Univ. School of Medicine
Email: richman@law.duke.edu

Abstract:

Contract theory offers a simple and wildly effective solution to surprise bills: Hospital admissions contracts are contracts with open price terms, which contract law imputes with market rates. This solution not only obviated the costly, time-consuming, and complicated (and still unimplemented) legislative fix in the No Surprises Act, but it also is a superior solution since it introduces superior incentives to disclose, compete, and economize. 

Using data from the Nevada Department of Health and Turquoise Health, this paper explores the theory and empirics of employing contract law's solution to hospital surprise bills and its superiority over other legislative interventions.

Provider Screws Up its Bill to Medicare, Tries to Stick Patient with 100% of Charge

Today's featured Surprise Bill of the Month (KFF Health News, NPR (July 27, 2023)) involves a 74-year-old gentleman who needed vascular surgery in his leg to relieve pain caused by low circulation. He got the surgery, and it provided him with some relief. The relief was short-lived, though, when a collection agency started sending notices of delinquency in pay for the anesthesia services to the tune of $3,000. The patient is on Medicare and is a long-time owner of a supplemental policy from Humana. His reasonable expectation was that Medicare would be the primary payer and Humana the secondary, and that his out-of-pocket payment would be $0.

After much effort, the patient -- his wife, actually, who worked tirelessly to get a little justice -- discovered that the anesthesiology firm (private-equity-owned North American Partners in Anesthesiology, with thousands of providers in 21 states) failed to bill Medicare until 17 months after the surgery. Medicare requires all bills to be submitted within 12 months and refused to pay. Humana's supplemental policy doesn't pay if a service isn't covered by Medicare. Also, the bill submitted to Medicare, in addition to being late, show that a nurse anesthetist and an anesthesiologist were both present for the entire duration of the surgery, which is a red flag for Medicare and required explanation before Medicare will pay. According to the story, "A [Medicare] quarterly summary notice said while the time limit for filing the claims had expired, [the patient] also could not be billed." That should have been the end of it, right?

Instead of simply eating the charge, NAPA billed the patient for the full $3,000. (The patient says the first he knew of the bill was when he was contacted by a collection agency.) To noöne's surprise, the "News & Insights" page on NAPA's website has no mention of this national story. Meaning no disrespect for Mom-and-Pop businesses everywhere, this is the kind of screw-up that you might expect from a small, family-owned practice that struggles to keep up with the paperwork demands of a busy medical practice. But NAPA is one of the big boys. It has computers and presumably employs billing specialists to keep track of its "thousands of providers in 21 states." 

Price Transparency Rules: 2/3 of Hospitals are Not Complying

According to a recent story from The Hill, Patient Rights Advocate.Org (PRA.Org) has issued a report (July 20) that details a shocking (but not surprising?) level of noncompliance with the requirements of the No Surprises Act, which was intended to eliminate surprise medical bills, with a particular focus on disputes arising from the use of out-of-network providers. (I've posted on this subject here (2021), here (same), and here (2023).)

According to the report -- the fifth semi-annual report published by PRA.Org -- compliance has improved steadily since CMS issued its final rule implementing the Act in August 2022, but 64% of the 2,000 hospitals and health systems surveyed remain partially or totally out of compliance. 

One might expect the largest providers to have the resources to implement billing reforms, but the results among that group are pretty dismal:

Compliance varied widely among the largest hospital systems we reviewed. 

•  None (0%) of the hospitals we reviewed which were owned by HCA Healthcare, Tenet Healthcare, Providence, Avera Health, UPMC, Baylor Scott & White Health, and Mercy were found to be fully compliant.
•  Consistent with prior reports, none of the hospitals owned by the largest hospital system in the country, HCA Healthcare, were found to be in full compliance, with a significant amount of its hospitals posting illegible, nonconforming files.
•  Substantial improvements since our last report include: 88% of hospitals owned by CommonSpirit Health, 97% of hospitals owned by Community Health Systems, and 98% of hospitals owned by Kaiser Permanente were found to be in full compliance. 
• Forty hospitals exhibited 'backsliding,' with an assessment of Noncompliant in the current report after having been assessed as Compliant in our prior report. 

Surprise medical bills, 'junk' insurance - new proposals from Biden administration

We've been hearing about "surprise medical bills" for years. A colleague of mine had surgery over a decade ago and did everything humanly possible to avoid an unpleasant surprise, including checking with the anesthesiology group to make sure the assigned anesthesiologist would be an "in network" physician -- that is, would be covered by our insurance plan. "No problem," said the group's manager. Come the day of the surgery and a last-minute schedule change for the assigned anesthesiologist led to a substitution in the OR and guess what? The substitute anesthesiologist, despite being under contract with the group, was "out of network." As a result, instead of a bill for anesthesia services in the hundreds of dollars, the actual charge -- 100% of which was my colleague's responsibility -- was in the thousands. Surprise!

NPR and Kaiser Health News produce a monthly feature entitled "Bill of the Month." The stories would be comical if they weren't soul-crushing. 

The stories persist, though, even after January 1, 2022, the effective date of the federal No Surprises Act (part of the previous year's omnibus appropriations bill). And even after reams of analysis and guidance from HHS/CMS, Brookings, the Commonwealth Fund, the Consumer Financial Protection Board, the Department of Labor, the Federal Trade Commission, and of course Kaiser Health News.

So, as reported by Becker's Payer Issues, "the Biden administration is issuing guidance to end the abuse of 'in-network' designation, according to a July 7 White House news release." [President's remarks; fact sheet] 

The White House fact sheet provides impressive detail that describes steps to address the following problem areas:

• "New proposed rules would close loopholes that the previous administration took advantage of that allow companies to offer misleading insurance products that can discriminate based on pre-existing conditions and trick consumers into buying products that provide little or no coverage when they need it most."
• "New guidance will help stop providers from gaming the system by evading the surprise billing rules with creative contractual loopholes that still leave consumers with unexpected costs."
• "For the first time in history, the Consumer Financial Protection Bureau, HHS, and Treasury are collaborating to explore whether health care provider and third-party efforts to encourage consumers to sign up for medical credit cards and loans are operating outside of existing consumer protections and breaking the law."