Surprise billing law leaves loophole big enough for ambulance
One night in September 2019, just after dinner, Michael Schwab’s 1-year-old daughter suddenly started convulsing, her tiny back arching as her eyes rolled back in her head.
Terrified, he and his wife called 911. Soon, an ambulance arrived at their west Houston home.
The emergency workers did a quick examination, but by then the seizure had passed and she showed no sign of distress except a fever. Still, as a precaution, the child and her mother rode by city ambulance for the 6-mile trip to Texas Children’s Hospital in Katy for a thorough exam.
Whatever she needs, Schwab told himself. He wasn’t thinking about cost when his daughter’s health was at stake. Besides, he had good health insurance through work.
Then the ambulance bill arrived from the city: $1,976.92, all out-of-network from his Aetna plan.
Months of overdue notices followed as Schwab tried to navigate the system. Eventually the bill was turned over to collections. It must be amistake, he kept thinking.
It was no mistake. In the nation’s fourth-largest city, all city-run ambulance services are out-of-network for all insurers, leaving the door wide open for high, unexpected bills.
It is happening with private ambulance companies, too. By the industry’s own estimate, up to 90 percent of its ambulance services in Texas are outside at least some major insurance networks, if not all, according to the president of the Texas Ambulance Association.
Up to 90 percent of ambulance services in Texas are outside at least some major insurance networks, if not all.
To have near zero chance of innetwork ambulance coverage in Texas during a medical crisis is “unbelievable,” said Stacey Pogue, a senior health care policy analyst at Every Texan, an Austinbased advocacy group.
It also stunned Schwab, who now knows the odds of what could happen if he ever calls 911 again.
“I am embarrassed for my state,” Schwab said.
A large loophole
Last year, Texas passed a sweeping consumer protection law to curb surprise medical bills in emergency situations or when patients have no choice in who treated them. The law, which enjoyed national acclaim, also removed patients from the middle when providers and insurers battle over money.
It was designed to fight a business practice called balance billing, where out-of-network doctors and health care facilities can charge significantly higher amounts than the in-network negotiated rates and then shift whatever the insurer does not pay onto patients.
But there was a notable exception to the new law: ambulances.
“It’s one of the big loopholes that remains,” said JackHoadley, a research professor emeritus at the Health Policy Institute of Georgetown University who studies medical billing. “It’s something we need to get fixed.”
In an emailed statement, the Houston mayor’s office acknowledged city-owned ambulances, run by the Houston Fire Department for 911 calls, are outside insurance networks. But because emergency fees are set by city ordinance, it has no ability to lower them if an insurer pays less than the billed amount, the statement said.
“Having in-network contracts would require the City to-write-off (reducing debt) any unpaid balance after receiving the in-network rates from the insurance company and co-pay/deductible from the patient. Under the State of Texas Constitution, Article III, Section 55, the City is prohibited from reducing the debt amount,” the statement said.
Private ambulance companies similarly tend to avoid joining insurance networks because they say insurers offer in-network rates too low to be sustainable for their businesses, said Gerard O’Brien, CEO and founder of ORION EMS, one of Houston’s largest private ambulance companies and president of the Texas Ambulance Association.
O’Brien said his ambulance company is in-network with some insurers, but out-of-network with others.
Negotiating insurance contracts can be a power struggle between insurers and providers. It is especially difficult in the ambulance industry because there are so many variations in ownership, operations and pricing, health experts said. It becomes even more fraught when rates are set by local governments and bound by statute, they added. The complexity is one of the main reason ambulances have been excluded from a growing number of state patient protection laws across the country, according to health policy analysts.
In Houston, for example, there are 88 licensed ambulance companies, which typically handle non-emergency calls, such as transfers between hospitals or nursing facilities. That’s in addition to the city-run fleet, which responds to emergency 911 calls.
“What are you supposed to do,” asked Pogue, the health policy analyst, “negotiate with the 911 operator?’
COVID-19’s impact
As part of the federal government’s COVID-19 relief package, health care providers were prohibited from surprise billing as part of the bailout. But not all health care companies, including some ambulances, took the money, health policy experts said.
It is too early to knowif the staggering number of COVID-19 hospitalizations or the many transfers of patients between facilities will lead to an increase in ambulance balance billing. “I think there’s reason to be worried,” said Blake Hutson, associate state director of AARP Texas.
For instance, Community Health Choice, a regional insurer in Houston, said its overall ambulance claims are downfrom2019— but the dollar amount of out-of-network ambulance claims have been steadily rising in recent months.
“It’s not clear why the increase but it’s very concerning,” said Lisa Wright, CEO of Community Health Choice, who had her company’s claims data analyzed for the Chronicle.
In July, during the worst of the summer spike of COVID-19 cases in the Houston region, the average out-of-network charge for a ground ambulance was $2,063 — the highest it has been in the past two years and 33 percent higher than the previous July, the data shows.
‘Glorified Uber ride’
When Ivy Jay Arroyo opened his eyes on April 10 in an intensive care bed at Baylor Scott & White Medical Center in Temple, his doctors marveled at his sudden, against-the-odds recovery from COVID-19.
Arroyo, 58, had no memory of his past 15 days on a ventilator nor how close to death he had come. Just days before the doctors told his family to consider funeral plans. Now they were talking about discharge.
Arroyo would continue his recovery at Encompass Health Rehabilitation Hospital in Round Rock nearer his Pflguerville home. He had no say in what ambulance company was called on April 16 for the 50-mile transfer during which he said he received no medical treatment. “A glorified Uber ride,” Arroyo later called it.
While the hospital in Temple and the rehab facility in Round Rock were both within his Blue Cross and Blue Shield of Texas health plan, the ambulance service by Lone Star Ambulance was not.
He was billed $3,565 from its parent company, Allegiance Mobile Health. Insurance paid about a third and Arroyo was stuck with the $2,228 remainder.
He tried calling the ambulance company but said he got nowhere. He wrote to Blue Cross Blue Shield in July. “I am a COVID-19 survivor,” his email plea began, “please pay this immediately so that it does not ruin my credit score.” Arroyo’s ambulance bill was turned over to collections in August.
On Oct. 23, Arroyo tried calling the ambulance company again and was told since his bill was in collections there was nothing more that could be done.
Then, after AARP Texas and the Houston Chronicle began making inquiries into Arroyo’s plight, he received an updated invoice from Allegiance dated Nov. 11: zero balance.
Allegiance’s website said it is “the largest Texas-based provider of medical transportation and 911 emergency services throughout the state,” operating more than 200 vehicles and managing 25 stations. Emails, phone and text messages to the company’s president for comment were not returned. Blue Cross and Blue Shield said it could not comment on an individual member’s case.
Arroyo is relieved but angry. His health remains precarious as the virus has done lasting damage, he said. His blood pressure is high and his balance is off. He has to hold onto something to stand. He may eventually need a lung transplant. His doctors told him to try to avoid stress.
“You’re kicking a person when they are down,” he said of the ambulance company. “If you’re going to save lives, you can’t screw the people you’re saving.”
Battle not yet over
Texas’ balance billing law was 10 years in the making.
In 2019, with the passage of SB 1264, Texas went from having one of the worst records for surprise medical bills to having some of the toughest patient protection laws in the nation.
State Sen. Kelly Hancock, RNorth Richland Hills, has championed the fight against balance billing since 2009. He has likened the effort to a game of whack-a-mole, where every time he thought he had solved a problem, a new one would pop up.
Ambulance service was not included in the 2019 protections, Hancock said, because therewere not a lot of complaints filed with the Texas Department of Insurance. He saw more pressing priorities, such as the exorbitant bills from-out-of-network doctors at innetwork hospitals.
He added, though, that he and other lawmakers were willing to look at ambulance billing when the next legislative session convenes in January.
Still, it could be a heavy lift. Even as more than a dozen states have passed varying prohibitions against balance billing, ambulances remain conspicuously absent. At the federal level, Congress appeared poised to pass legislation to prohibit balance billing before the effort stymied. But it, too, excluded ambulances.
Only Colorado and Maine have recently included some ambulance services in their patient protection laws.
O’Brien with the Texas Ambulance Association said he knows there are probably some billing problems in his industry and is open to working with lawmakers to review current pricing practices. But he added he would want to make sure any proposal was “reasonable” for his members and the industry at large.
An emotional strain
In the end, Michael Schwab knows he is lucky with how things turned out. That doesn’t mean he is happy about it.
The best news, he said, is his daughter is healthy. After the ambulance took her to Texas Children’s Hospital, the wait to be seen was so long that he and his wife simply drove her to a nearby walk-in clinic for tests and an exam. Her pediatrician later said she probably had roseola, a common childhood viral infection marked by a sudden fever accompanied by a febrile seizure that is typically harmless.
As far as the ambulance bill goes, Schwab caught a break there, too. Boon-Chapman, the company that administers his employer’s health plan, has launched a special programto flag certain claims based on medical codes that are suspiciously high. Thecompany then steps in to lend its heft to fight the bill.
Nyle Leftwich, CEO of Boon-Chapman, said “99.8 percent of the time” the provider settles, usually agreeing to take some percentage of the federal Medicare rate for the treatment.
Schwab’s last collection notice from the city was Oct. 14. Boon-Chapman said in a letter Oct. 28 that he no longer owed anything other than $392 for his deductible. The city of Houston did not comment on the case.
Still, it has all been hard for the family to shake the experience. “It’s been an emotional strain on us for an entire year,” Schwab said.
It has also left him distrustful of the system: “I’m not sure if I was ever in an emergency I would call an ambulance again.”