Surprise Medical Bills are not fun!

There is a lot in the news these days about federal legislation to protect consumers from surprise medical bills. Essentially this is the circumstance in which an individual is hospitalized at a PPO (Preferred Provider Organization) facility that is covered by their health plan, but then is treated by a non-network provider (physician). This can result in a balance bill to the individual for charges above and beyond what the plan covers.

This is typically a big surprise to the patient who assumes that going to a covered facility will assure that they are not treated by someone who is outside of their health plan. A seriously ill patient and their advocates don’t have the ability to ask each care provider if they are in the plan. In fact, many times the patient has no control of who treats them.

Think about the anesthesiologist in a surgery. Typically you meet them right before you enter the operating room. Are you going to ask if they take your insurance? Further, the carriers now have multiple levels of network, so you can’t simply ask, “Do you accept Anthem?” Anthem has at least 4 different networks.

A law proposing to protect consumers from this sort of surprise would likely be welcome. But apparently not everyone feels that way. Physicians for Fair Coverage, a coalition formed by large companies — firms such as US Acute Care Solutions, U.S. Anesthesia Partners and US Radiology Specialists started running $1.2 million dollar worth of ads opposing this type of law.

According to Politifact, this organization believes that if these providers are not paid what they have billed, lower income patients who are served by “safety net” programs would not receive care. The group opines that the additional income from balance billing is used to offset the lower reimbursement rates of the safety net plans, and without it, they won’t be able to provide care to those folks. There is little evidence at this time to say that this opinion is accurate.

Fortunately we live in CA where a law protecting consumers from surprise medical bill was implemented in 2017. However, it is not without controversy. The CMA (California Medical Association) stated the following in a letter: “While patients in California have been protected from surprise medical bills, the rest of the law has not worked. Under California’s surprise billing law (AB 72, 2017), insurance company physician networks are diminishing, patient access to in-network physicians is declining, patient access to emergency physicians and on-call physician specialists is in jeopardy, patient deductibles for out-of-network care are increasing, and patient complaints about access to care have increased by almost 50%.”

Anthony York director of communications for the CMA states that there are no Anthem Blue Cross, Blue Shield of California, United Healthcare or Health Net contracted anesthesiologists within 30 miles of Children’s Hospital of Orange County.

Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy disagrees. “Despite what the medical association is saying, we don’t have any evidence on this question one way or the other. Of course there are anecdotes of contract cancellations, but contracts change over frequently.”

We have not had any recent cases of balance billing that we can show where a patient actually got stuck for additional charges, when using an in network hospital.

With medical out of pocket costs rising as well as medical bankruptcy, one reader asks, “How protected in California are 401k and 403b retirement accounts from health care debts? I understand 401k accounts are protected, but not so much 403b accounts.”

For the answer, I went to Michael Daquisto, local attorney and also a Redding City Council member. His reply, ““All situations are different and you should consult with an experienced attorney concerning your individual situation. Generally speaking retirement accounts, such as a 401(k) and a 403(b) are ERISA qualified. As such in a bankruptcy proceeding they are exempt from creditor claims under Federal law. In addition, virtually all states have exemption laws that provide the same protections.”

“HSA and MSA accounts do not have the same broad protections. In a decision from the 8th Circuit the court ruled that in the bankruptcy context there was no federal exemption that protected an HSA account from a creditor claim. Only a few states have laws that protect these accounts. At the moment California does not appear to have an exemption law that would specifically protect an HSA or MSA account from a creditor. But there may be pending appellate cases that bring this issue to the court for resolution.”

Margaret R. Beck

Margaret Beck CLU, ChFC, CEBS started her insurance practice in Redding in 1978. She founded Affiliated Benefit Services.

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