Archive for January, 2020

Loopholes Limit New California Law To Guard Against Lofty Air Ambulance Bills

This is a great example of a consumer in a healthcare prison.

Kathleen Hoechlin lost control as she crested a small jump on her final ski run of the day at California’s Mammoth Mountain two years ago. She landed hard on her back, crushing one of the vertebra in her lower spine “like a Cheerio,” she said.

An air ambulance flew Hoechlin, then 32, to an airport near Loma Linda University Medical Center in Southern California’s Inland Empire. There she underwent emergency 12-hour surgery to remove bone fragments and replace the crushed vertebra with a metal cage that was fused to the rest of her spine with rods and screws to provide structure and stability.

Hoechlin was still in intensive care when her husband, Matt, got the bill for the 300-mile air ambulance ride. The total: $97,269. The company wasn’t in their health plan’s network of providers, and the PPO plan they had through Matt’s job agreed to pay just $17,569.

The Hoechlins were on the hook for the $79,700 balance.

“It was just shocking,” said Hoechlin, who worked as a business analyst project manager in Highland, California. “I was just focused on, ‘Am I going to be able to walk again?’ I thought I was going to have a heart attack when he told me.”

A California law that took effect Jan. 1 aims to protect consumers from such enormous bills for out-of-network air ambulance services. The measure limits what consumers owe if they’re transported by an air ambulance that’s not part of their insurance network to the amount that they’d be charged if they used an in-network provider. The health plan and the air ambulance provider must then work out payment between themselves.

But the new law won’t protect consumers like Hoechlin, whose health plan isn’t regulated by the state. Matt’s employer pays its workers’ medical claims directly rather than buying state-regulated insurance, a common arrangement called “self-funding.” Self-funded plans are regulated by the federal government and generally not subject to state health insurance laws.

In this regard, the new air ambulance law is like laws in California and other states that protect consumers from surprise medical bills: They don’t apply to residents in federally regulated health plans. Those plans cover about two-thirds of people who get insurance through their jobs nationwide.

In California, that translates to nearly 6 million people.

Federal legislation is the best solution for those consumers, experts say. One of the leading bills before Congress to address surprise medical bills includes air ambulance charges. But that, and other measures, are up in the air, although members of Congress say they are working to reach an accord this year.

Another legal wrinkle affects even consumers with health plans the state does oversee. Under the federal Airline Deregulation Act of 1978, states aren’t permitted to regulate the “rates, routes, or services” of air carriers, including air ambulances. It’s unclear whether the California law, which doesn’t spell out a payment rate for a health plan, would be preempted by federal law if challenged in court, according to legal experts.

“It’s a very big step in balance billing, but it’s not a definitive one,” said Samuel Chang, a health policy researcher at the Source on Healthcare Price and Competition, a project of the University of California-Hastings.

Although people rarely need to be transported by a helicopter or airplane for medical care, it’s often an emergency when they do, and they’re unable to shop for an in-network provider, even if their health plan offers one. According to a federal Government Accountability Office analysis of air ambulance private insurance claims, 69% of air ambulance transports were out of network in 2017.

The median price charged in 2017 was $36,400 for a transport by helicopter and $40,600 by plane, according to the report. If an insurer doesn’t have a contract with an air ambulance provider, the air ambulance company may bill the consumer for whatever the insurer doesn’t pay, a practice known as balance billing.

“The air ambulance issue is such a big deal because it’s just such an eye-popping bill,” said Yasmin Peled, the policy and legislative advocate at Health Access California, a consumer advocacy group.

Air ambulance providers defend their charges, saying the rates offered by commercial insurance companies barely cover their costs. And public insurance programs often pay even less.

“Seven out of 10 of our transports are Medicare, Medicaid or uninsured,” said Doug Flanders, director of communications and government affairs at Air Methods, a large air ambulance company that provides services in 48 states, including California. Medicare pays Air Methods an average of $5,998 per transport, and Medicaid payments are typically half of that, Flanders said via email. That presents a “huge financial challenge,” he said.

In recent years, Air Methods has focused on joining the networks of some major insurers, including Blue Shield of California and Anthem Blue Cross of California, Flanders said. In addition to protecting patients, being in network “stabilizes operations and eases the administrative burden of the claims processing procedures created by insurers,” he said.

For the past several years, reimbursements by Medi-Cal, the state’s Medicaid program, for air ambulance services have been bolstered by funds collected from penalties for traffic violations. But the penalty was slated to sunset in 2020. Under the new California law, the state will extend supplemental funding of Medi-Cal payments for air ambulance services until 2022. Without that agreement, the rates would have reverted to much lower 1993 levels.

With the higher Medi-Cal rates, the industry supported the bill, including the prohibition on balance billing. In fact, the California Association of Air Medical Services sponsored the bill, although it didn’t respond to requests for comment.

In contrast, when other states have tried to prohibit air ambulance balance billing, the companies have often successfully challenged those laws on the grounds that the federal Airline Deregulation Act of 1978 prohibits state rate setting, according to Erin Fuse Brown, an associate law professor at Georgia State University who has studied air ambulance billing.

Legal experts say California’s approach may thread the needle where other states have failed.

“I do think the state has a pretty tolerable argument here that they are not regulating rates,” said Christen Linke Young, a fellow at the USC-Brookings Schaeffer Initiative for Health Policy. “They are telling the air ambulance providers who they can go to to get paid, but they’re ultimately not telling the amount that is getting paid.”

Kathleen Hoechlin and her husband, who now live in Riverside, California, eventually negotiated the amount they owed down to $20,000, arguing to the air ambulance firm that by tapping their savings and using money from a GoFundMe campaign, that was all they could afford.

She is now able to walk with only a slight limp. But she continues to deal with severe pain due to nerve damage. She recently underwent a fourth surgery to implant a spinal cord stimulator to interrupt the pain signal to her brain.

“When you look at the bigger picture, at the total amount, we’re feeling very fortunate,” she said.

This KHN story first published on California Healthline, a service of the California Health Care Foundation. COPY HTML

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For Her Head Cold, Insurer Coughed Up $25,865

WOW….consumers that are trapped in a healthcare prison.

Alexa Kasdan had a cold and a sore throat.

The 40-year-old public policy consultant from Brooklyn, N.Y., didn’t want her upcoming vacation trip ruined by strep throat. So, after it had lingered for more than a week, she decided to get it checked out.

Kasdan visited her primary care physician, Dr. Roya Fathollahi, at Manhattan Specialty Care just off Park Avenue South, and not far from tony Gramercy Park.

The visit was quick. Kasdan got her throat swabbed, gave a tube of blood and was sent out the door with a prescription for antibiotics.

She soon felt better and the trip went off without a hitch.

Then the bill came.

Patient: Alexa Kasdan, 40, a public policy consultant in New York City, insured by Blue Cross and Blue Shield of Minnesota through her partner’s employer.

Total Bill: $28,395.50 for an out-of-network throat swab. Her insurer cut a check for $25,865.24.

Service Provider: Dr. Roya Fathollahi, Manhattan Specialty Care.

Medical Service: Lab tests to look at potential bacteria and viruses that could be related to Kasdan’s cough and sore throat.

What Gives: When Kasdan got back from the overseas trip, she said, there were “several messages on my phone, and I have an email from the billing department at Dr. Fathollahi’s office.”

The news was her insurance company was mailing her family a check ― for more than $25,000 ― to cover some out-of-network lab tests. The actual bill was $28,395.50, but the doctor’s office said it would waive her portion of the bill: $2,530.26.

“I thought it was a mistake,” she said. “I thought maybe they meant $250. I couldn’t fathom in what universe I would go to a doctor for a strep throat culture and some antibiotics and I would end up with a $25,000 bill.”

The doctor’s office kept assuring Kasdan by phone and by email that the tests and charges were perfectly normal. The office sent a courier to her house to pick up the check.

How could a throat swab possibly cost that much? Let us count three reasons.

First, the doctor sent Kasdan’s throat swab for a sophisticated smorgasbord of DNA tests looking for viruses and bacteria that might explain Kasdan’s cold symptoms.

Dr. Ranit Mishori, a professor of family medicine at the Georgetown University School of Medicine, said such scrutiny was entirely unnecessary. There are cheap rapid tests for strep and influenza.

“In my 20 years of being a doctor, I’ve never ordered any of these tests, let alone seen any of my colleagues, students and other physicians, order anything like that in the outpatient setting,” she said. “I have no idea why they were ordered.”

The tests might conceivably make sense for a patient in the intensive care unit, or with a difficult case of pneumonia, Mishori said. The ones for influenza are potentially useful, since there are medicines that can help, but there’s a cheap rapid test that could have been used instead.

“There are about 250 viruses that cause the symptoms for the common cold, and even if you did know that there was virus A versus virus B, it would make no difference because there’s no treatment anyway,” she said.

(Kasdan’s lab results didn’t reveal the particular virus that was to blame for the cold. The results were all negative.)

The second reason behind the high price is that the doctor sent the throat swab to an out-of-network lab for analysis. In-network labs settle on contract rates with insurers. But out-of-network labs can set their own prices for tests, and in this case the lab settled on list prices that are 20 times higher than average for other labs in the same ZIP code.

In this case, if the doctor had sent the throat swab off to LabCorp ― Kasdan’s in-network provider ― it would have billed her insurance company about $653 for “all the ordered tests, or an equivalent,” LabCorp told NPR.

The third reason for the high bill may be the connection between the lab and Kasdan’s doctor. Kasdan’s bill shows that the lab service was provided by Manhattan Gastroenterology, which has the same phone number and locations as her doctor’s office.

Manhattan Gastroenterology is registered as a professional corporation with the state of New York, which means it is owned by doctors. It may be the parent company of Manhattan Specialty Care, but that is not clear in its filings with the state.

Fathollahi, the Manhattan Specialty Care physician, didn’t respond to requests for comment. Neither did Dr. Shawn Khodadadian, listed in state records as the CEO of Manhattan Gastroenterology.

The pathologist listed on the insurance company’s “explanation of benefits” is Dr. Calvin L. Strand. He is listed in state records as the laboratory director at Manhattan Gastroenterology, as well as at Brookhaven Gastroenterology in East Patchogue, N.Y. We tried to reach him for comment, as well.

Even though Kasdan wasn’t stuck with this bill, practices like this run up the cost of medical care. Insurance companies base premiums on their expenses, and the more those rise the more participants have to pay.

“She may not be paying anything on this particular claim,” said Richelle Marting, a lawyer who specializes in medical billing at the Forbes Law Group in Overland Park, Kan., who looked into this case for NPR. “But, overall, if the group’s claims and costs rise, all the employees and spouses paying into the health plan may eventually be paying for the cost of this.”

Marting said this is a common problem for insurance companies. Most claims processing is completely automated, she said. “There’s never a human set of eyes that look at the bill and decide whether or not it gets paid.”

Kasdan did pay her usual $25 copay for the office visit, and a $9.61 fee to LabCorp for a separate set of lab tests.

Resolution: “I made it very clear [to the doctor’s office] that I was unhappy about it,” Kasdan said. In fact, she told them she would report the doctor to the New York State Office of Professional Medical Conduct. Next, she reached out to “Bill of the Month,” a joint project of NPR and Kaiser Health News.

After a reporter started asking questions about the bill, BCBS of Minnesota stopped payment on the check it issued and is now investigating.

Jim McManus, director of public relations for Blue Cross and Blue Shield of Minnesota, said the company has a process to flag excessive charges. “Unfortunately, those necessary reviews did not happen in this case,” he wrote in an email.

The Takeaway: Surprise bills often arise when an in-network doctor or hospital involves another provider who isn’t in the patient’s insurance network, without the patient’s consent. But it is often nearly impossible for a patient to detect when that is occurring.

Patients can try to protect themselves from surprise bills by asking for details at their doctor’s appointments.

“I always ask where they’re sending my labs or where they’re sending my images [like X-rays], so I can make sure that’s in-network with my insurance company,” attorney Marting said.

They can also probe why a test is being ordered:

“It is OK to ask your doctor, ‘Why are you ordering these tests and how are they going to help you come up with a treatment plan for me?’” said Georgetown’s Mishori. “I think it’s important for patients to be empowered and ask these questions, rather than be faced with unnecessary testing, unnecessary treatment and also, in this case, outrageous billing.”

If you’re sitting on the exam table thinking, “I won’t ask. … How much could it be?” The answer could be a lot.

New York state has a law to protect patients from surprise bills. The law requires doctors’ offices to warn patients in advance that they are using an out-of-network provider and that patients may be responsible for excess charges. If a patient doesn’t consent to the involvement of an out-of-network doctor, then they must be financially held harmless for the bill. But it doesn’t prevent the out-of-network providers from sending a bill or collecting from an insurer.

Kasdan said she was not told that the throat swab was being sent out of network at the time of her appointment, though it’s possible one of the many papers she signed included a broad caveat that some services might not be in-network.

People who suspect a bill is the result of a violation of law can report that to state authorities. In this case, the New York State Department of Financial Services investigates complaints.

You can contact NPR science correspondent Richard Harris at [email protected].

When The Cost For Care Is Too High Even For Those Who Have Coverage, Patients End Up Gambling With Their Health

These are striking examples of consumer trapped in the healthcare prison.

Getting coverage can be just the first hurdle when it comes to navigating the high costs in the health industry. Many patients are delaying or even skipping care completely because they can’t afford it. In other news on health care costs and the industry: uninsured children, Medicaid payments, Oscar Health, the senior care-home industry, another Johnson & Johnson lawsuit, and more.

Cleveland Plain Dealer: ‘I Basically Have To Stay Sick:’ NE Ohioans Feel The Costs Of Delaying Health CareIn 7% of U.S. households, at least one person delayed medical care during the previous year because of worry about cost, according to results from the Centers for Disease Control and Prevention’s 2018 National Health Interview Survey. Delaying care can hurt health outcomes and result in higher health care costs.’Yet, for many, skipping treatment isn’t a choice. (Christ, 1/5)

Columbus Dispatch: Cause For Alarm: Thousands More Ohio Children Have Lost Health Insurance – News – The Columbus Dispatch Thousands more of Ohio’s youngest children had no health insurance coverage in 2018, reversing a multi-year decline in the rate of uninsured children younger than 6. The Buckeye State’s uninsured rate for infants, toddlers and preschoolers climbed to 5% in 2018 from 3.6% in 2016, a 40% jump that ranked as third-highest in the nation. Ohio had 41,642 children without health coverage, an increase of nearly 12,000 in two years, according to a recent study by the Georgetown University Center for Children and Families. (Candisky, 1/6)

Des Moines Register: Iowa Withholds $44 Million From Medicaid Insurer Over Unresolved IssuesIowa health officials are withholding $44 million from an insurance company that provides health coverage to Iowans under the state’s privatized Medicaid program, pointing to unresolved issues with payments to health providers. Iowa Department of Human Services staff told Iowa Total Care representatives Friday that the state will withhold about a third of the amount it would have otherwise paid the company this month. (Rodriguez, 1/3)

Modern Healthcare: Oscar Health Cuts Walgreens, Duane Reade Locations From Its NetworkOscar Health stopped covering Walgreens, plus some Duane Reade and Rite Aid locations, as part of its New York pharmacy network Jan. 1. Instead it is directing New York members to CVS as its preferred retail pharmacy and startup pharmacy Capsule, which it formed a partnership with last month. Its network also includes independent pharmacies. (Lamantia, 1/3)

Reveal: Lawmakers, Regulators Take On Senior Care-Home Operators Over Wage Theft, Worker AbuseRevelations about wage theft and abusive treatment of caregivers in America’s senior care-home industry have prompted tougher enforcement, a congressional hearing and plans for new state legislation in 2020. Responding to a series of stories by Reveal from The Center for Investigative Reporting, Rep. Robert C. Scott, D-Va., chairman of the House Education and Labor Committee, said he intends to hold an oversight hearing early this year in which he will press Labor Department officials to crack down on widespread exploitation in the booming industry. (Gollan, 1/3)

The New York Times: Johnson & Johnson Sued Over Baby Powder By New MexicoThe accusations in a new lawsuit against Johnson & Johnson sound familiar: The consumer goods giant knew for decades that its baby powder and other talc-based products were contaminated with carcinogenic asbestos, but continued to market the items. What makes this case different is that it was brought by a state. Hector Balderas, the attorney general of New Mexico, accused Johnson & Johnson on Thursday of misleading consumers, especially children and black and Hispanic women, about the safety of its talc products. (Hsu, 1/3)

The Hill: Delta Workers File Lawsuits Claiming Uniforms Causing Medical ProblemsHundreds of Delta Air Lines employees are suing Wisconsin-based clothing company Lands’ End, claiming uniforms made by the company have caused serious health problems. The first class-action lawsuit was filed in October, and the second was filed Tuesday in Madison, Wis., the Wisconsin State Journal reported on Friday. The filings allege that the uniforms — unveiled in May 2018 — caused multiple Delta employees to suffer from a variety of health problems, including skin rashes, hair loss, low white blood cell counts, migraines and breathing difficulties. (Johnson, 1/4)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Hospital Group Mum As Members Pursue Patients With Lawsuits And Debt Collectors Kaiser Healthcare News 12.28.19

WOW….This is a great example of a HEALTHCARE PRISON…...

American Hospital Association, the biggest hospital trade group, says it promotes “best practices” among medical systems to treat patients more effectively and improve community health.

But the powerful association has stayed largely silent about hospitals suing thousands of patients for overdue bills, seizing homes or wages and even forcing families into bankruptcy.

Atlantic Health System, whose CEO is the AHA’s chairman, Brian Gragnolati, has sued patients for unpaid bills thousands of times this year, court records show, including a family struggling to pay bills for three children with cystic fibrosis.

AHA, which represents nearly 5,000, mostly nonprofit hospitals and medical systems, has issued few guidelines on such aggressive practices or the limited financial assistance policies that often trigger them.

In a year when multiple health systems have come under fire for suing patients, from giants UVA Health System and VCU Health to community hospitals in Oklahoma, it has made no concrete move to develop an industry standard.[khn_slabs slabs=”790331″ view=”inline” /]

“There could be a broader message coming out of hospital leadership” about harsh collections, said Erin Fuse Brown, a law professor at Georgia State University who studies hospital billing. “It seems unconscionable if they are claiming to serve the community and then saddling patients with these financial obligations that are ruinous.”

Nonprofit hospitals are required to provide “community benefit,” including charity care in return for billions of dollars in government subsidies they get through tax exemptions. But the rules are lax and vague, experts say, especially for bill forgiveness and collections.

The Affordable Care Act requires nonprofit hospitals to have a financial assistance policy for needy patients but offers no guidance about its terms.

“There is no requirement” for minimum hospital charity under federal law, said Ge Bai a health policy professor at Johns Hopkins. “You design your own policy. And you can make it extremely hard to qualify.”

Practices vary sharply, a review of hospital policies and data from IRS filings show. Some hospitals write off the entire bill for a patient from a family of four making up to $77,000 a year. Others give free care only if that family makes less than $26,000.[protected-iframe id=”aedbfa0a85ef8039a3dd39243640d147″ height=”1006″ width=”660″ /]

The law does not substantially limit harsh collections, either. IRS regulations require only that nonprofit hospitals make “reasonable efforts” to determine if patients qualify for financial assistance before suing them, garnishing their wages and putting liens on their homes.

Gaping differences in both collections and financial assistance show up in the policies of health systems represented on AHA’s board of trustees.

This year, AHA board chairman Gragnolati’s Atlantic Health System, in northern New Jersey, sued patients for unpaid bills more than 8,000 times, court records show.

Atlantic Health sued Robert and Tricia Mechan of Maywood, N.J., to recover $7,982 in unpaid bills for treatment of their son Jonathan at the system’s Morristown Medical Center.

Three of the Mechans’ four children have cystic fibrosis, a chronic lung disease, including Jonathan, 18. Tricia Mechan works two jobs — full time as a manager at Gary’s Wine & Marketplace and part time at Lowe’s — to try to pay doctor and hospital bills that pile up even with insurance.

“I have bill collectors call me all the time,” Tricia Mechan said. “You’re asking me for more, and all I’m doing is trying to get the best care for my children. I didn’t ask to have sick children.”

She closed a savings account and borrowed money to settle Jonathan’s bill for $6,000. Another son with cystic fibrosis, Matthew, owes Atlantic Health $4,200 and is paying it off at $25 a month, she said.

Marna Borgstrom, CEO of Yale New Haven Health, also sits on AHA’s board. Yale almost never sues families like the Mechans.

“I have not signed off on a legal action since 2015” against a patient, Patrick McCabe, the system’s senior vice president of finance, said in an interview. “People are coming to us when they are at their most vulnerable, and we truly believe we need to work with them and not create any additional stress that can be avoided.”

Yale has treated Nicholas Ruschmeyer, 30, a Vermont ski mountain manager, for recurring cancer. He has been careful to maintain insurance, but a few years ago the hospital performed a $12,000 genetic test that wasn’t covered.

“Yale completely absorbed the cost,” said his mother, Sherrie Ruschmeyer. Yale is “wonderful to work with, not at all aggressive,” she said.

Atlantic Health bars families from receiving financial assistance if they have more than $15,000 in savings or other assets. Yale never asks about savings. Even families who own homes without a mortgage qualify if their income is low enough.

Atlantic Health’s policies including seizing patient wages and bank accounts through court orders to recoup overdue bills. Yale says it does not do this.

In some ways, Atlantic Health’s policies are more generous than those of other systems.

It forgives bills exceeding 30% of a family’s income in many cases, the kind of “catastrophic” assistance some hospitals lack. It also bills many uninsured patients only slightly more than Medicare rates. That’s far less than rates charged by other hospitals in the same situation that are substantially higher than the cost of treatment.

“Atlantic Health System’s billing policy complies with all state and federal guidelines,” said spokesman Luke Margolis. “While we are willing to assist patients no matter their financial situation, those who can pay should do so.”

After a reporter inquired about its practices, Atlantic Health said it “is actively engaged in refining our policies to reflect our patients’ realities.”

AHA also is considering changing its position on billing in the wake of recent reports on aggressive and ruinous hospital practices.

Previously AHA said billing offices should “assist patients who cannot pay,” without giving specifics, and treat them with “dignity and respect.” Queried this month, association CEO Rick Pollack said, “We are reevaluating the guidelines [for collections and financial assistance] to ensure they best serve the needs of patients.”

Kaiser Health News found that the University of Virginia Health System sued patients 36,000 times over six years, taking tax refunds, wages and property and billing the uninsured at rates far higher than the cost of care. Richmond-based VCU Health’s physicians group sued patients 56,000 times over seven years, KHN also found.

In Memphis, Methodist Le Bonheur Healthcare sued patients for unpaid bills more than 8,000 times over five years, ProPublica reported. In South Carolina, hospitals have been taking millions in tax refunds from patients and their families, an examination by The Post and Courier showed.

In response, VCU pledged to stop suing all patients. UVA promised to “drastically” reduce lawsuits, increase financial assistance and consider further steps. Methodist erased debt for 6,500 patients and said it would overhaul its collections rules.

Yale’s less aggressive policies also came in response to journalism — a 2003 Wall Street Journal report on how the system hounded one family. Yale still sends overdue bills to collections, McCabe said. But it balks at the last, drastic step of asking a court to approve seizing income and assets.

For patients with unpaid bills, he said, “if you’re willing to play a game of chicken, you will win.”

Hospitals say they see more and more patients who can’t pay, even with insurance, as medical costs rise, family incomes plateau and out-of-pocket health expenses increase. In particular, they blame widespread high-deductible coverage, which requires patients to pay thousands before the insurance takes over.

“More consumers pay far more with fewer benefits,” Pollack said.

Some states go beyond federal rules for charity care and collections. In California, patients with an income of less than $90,000 for a family of four must be eligible for free or discounted care. New Jersey requires Atlantic Health and other systems to give free care to patients from families of four with income less than $51,000.

The National Consumer Law Center, a nonprofit advocacy group, suggests all states adopt that standard for large medical facilities. Its model medical debt law also would require substantial discounts for families of four with income below $103,000 and relief for patients with even higher incomes facing catastrophic bills.

The AHA should consider similar changes in its own guidelines, NCLC attorney Jenifer Bosco said.

“I would be interested in seeing them taking a more active role in creating some standard for hospitals about what’s too much,” she said. “What’s going too far? Given that this is a helping profession, what would be some appropriate industry standards?”

KHN senior correspondent Jordan Rau contributed to this report.

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