When ‘out of network’ doesn’t quite mean out of network
It was the first day of her family’s vacation in the San Juan Islands last June when Danielle Laskey, who was 26 weeks pregnant, thought she was leaking amniotic fluid.
A registered nurse, Laskey called her OB-GYN back home in Seattle, who said to seek immediate care. Staff members at a nearby emergency department found no leakage. But her OB-GYN still wanted to see her as soon as possible.
Laskey and her husband, Jacob, made the three-hour trip to the Swedish Maternal & Fetal Specialty Center-First Hill. Laskey had sought the clinic’s specialized care for this pregnancy, her second, after a dangerous complication with her first: The placenta had become embedded in the uterine muscles.
Back in Seattle, doctors at the clinic found Laskey’s water had broken early, posing a serious risk to her and the fetus, and ordered her immediate admission to Swedish Medical Center/ First Hill. She delivered her son after seven weeks in the hospital. Though she was treated for multiple postpartum complications, she was well enough to be discharged the next day. Her son, who is healthy, went home a month later.
Hard choices
Laskey soon developed a fever and body aches, and she was told by her OBGYN to go to Swedish’s emergency department. She said doctors there wanted to admit her when she arrived Aug. 20 and scheduled a procedure for Aug. 26 to remove a fragment of placenta that her body had not eliminated on its own.
Laskey, who had already spent weeks away from her 3-year-old daughter, chose to go home. She returned for the procedure, which went well, and she was home the same day. Then the bills came.
THE PATIENT >> Danielle Laskey, 31, was covered by a state-sponsored plan offered by her employer, a local school district, and administered by Regence BlueShield.
Medical Service: In-patient hospital services for 51 days, plus a one-day stay that included a second placenta removal procedure.
SERVICE PROVIDER >> Swedish Medical Center/First Hill, part of Providence Health & Services, a large, nonprofit, Catholic health system.
TOTAL BILL >> Swedish, through Regence, billed about $120,000 in cost sharing for Laskey’s initial hospitalization and about $15,000 for her second visit and procedure.
WHAT GIVES >> The specialized clinic caring for Laskey before her hospital admission was in her insurance plan’s network. The clinic’s doctors admit patients only to Swedish Medical Center, one of the Seattle area’s only specialized providers for Laskey’s condition — which, given that connection, she assumed was also in the network.
So after being urgently admitted to Swedish, Laskey believed her bills would be largely covered, with the couple expected to pay $2,000 at most for their portion of in-network care because of her plan’s out-ofpocket cost limit.
It turned out Swedish was out of network for Laskey’s plan and, at first, Regence determined that Laskey’s hospitalizations were not emergencies. In November, a Regence case manager initially told Jacob that Laskey’s lengthy hospitalization was an emergency admission and outof-network charges would not apply. But then she called back and said the charges would apply after all, because Laskey had not come in through the emergency department.
Not in the know
Both Washington state and federal laws prohibit insurers and providers from billing patients for out-of-network charges in emergency situations. The couple said neither Swedish nor Regence told them before or during the two hospitalizations that Swedish was out of network, and that they never knowingly signed anything agreeing to accept out-of-network charges.
Jacob, who works as a psychiatrist at a different hospital, said he mentioned the surprise-billing laws to the case manager, but she replied that the laws did not apply to his family’s situation.
It was only after Regence was contacted by KHN that the insurer explained its reasoning to the reporter: Regence said the Swedish hospital, while out of network for Danielle, had a broader contract with the insurer as a “participating provider” and so the insurer was not in violation of surprise-billing laws by approving Swedish’s outof-network coinsurance charges.
The broader contract allowed Swedish to bill members of any Regence plan who receive out-of-network services there 50% coinsurance — the patient’s portion of the overall cost the insurer allows the provider to charge — with no out-ofpocket maximum for the patient.
What’s the difference between a hospital that’s “in network” and one that’s a “participating provider”? In this case, by contracting with Regence as an out-of-network but also participating provider, Swedish straddled the line between being in and out of network — designations that traditionally indicate whether a provider has a contract with an insurer or not.
Setting the terms with an insurer for providing its members emergency or other care appears to allow hospitals to sidestep new surprise-billing laws that prevent out-of-network providers from charging high, unpredictable rates in emergencies, according to government and privatesector medical billing experts.
Experts said they had not heard of out-of-network providers evading surprise-billing laws by being contracted as “participating providers” until KHN asked about Laskey’s case.
Ellen Montz, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services, said that under the federal No Surprises Act the definition of a “participating” emergency facility that’s subject to the law’s surprise billing protections depends on whether the facility has a contract with the insurer specifying the terms and conditions under which an emergency service is provided to a plan member.
‘Weird’ gray area
Matthew Fiedler, a senior fellow at the University of Southern California-Brookings Schaeffer Initiative for Health Policy who studies out-of-network billing, said Laskey’s case seems to fall into a “weird” gray area of the state and federal laws protecting patients from out-of-network charges in emergency situations.
If there had been no contract between Regence and Swedish, the laws clearly would have prohibited those charges. But since there was a contract specifying a 50% coinsurance rate when Swedish was out of network for a particular Regence plan, those laws legally may not apply, Fiedler said.
After he declined to apply for the hospital’s financial assistance program, Jacob said Swedish also notified the couple in November that they had two months to pay or be sent to collections.
Natalie Kozimor, a spokesperson for Providence Swedish, said the hospital disagreed with “some of the details and characterizations of events” presented by the Laskeys, though she did not specify what those were. She said Swedish assisted Danielle with her appeal to Regence.
“We had no luck with Swedish taking any role or responsibility with regard to our billing or advocating on our behalf,” Jacob said. “They basically just referred us to their financial department to put us on a payment plan.”
The Resolution: In December, the couple appealed Regence’s approval of Swedish’s out-of-network charges for the 51-day hospitalization, claiming it was an emergency and that there was no in-network hospital with the expertise to treat her condition. They also filed a complaint with the state insurance commissioner’s office.
The office told KHN that the “participating provider” contract does not override the laws barring out-of-network charges in emergency situations. “Danielle had an emergency and Regence acknowledges it was an emergency, so she cannot be balance-billed,” said Stephanie Marquis, public affairs director for the Washington state Office of the Insurance Commissioner.
On Jan. 13, Regence said it would grant the Laskeys’ appeal to cover the first hospitalization as an in-network service, erasing the biggest part of Swedish’s bill but still leaving the family on the hook for the $15,000 bill for Danielle’s second visit and procedure.