A hidden charge health insurance bait and switch
Ayoung mother struggles to get her infant to breastfeed, but he’s tongue-tied, meaning he can’t protrude his tongue adequately to latch on. The pediatrician refers the infant to a plastic surgeon for an easy, quick procedure. To ensure coverage, the mother calls her insurance company which approves the referral.
When she gets the bill, she is shocked that insurance rejected the claim because the procedure was done in a hospital-based outpatient department, which looked all the world to her like a regular office building, miles away from a hospital. She now faces a nearly $2,000 fee, for a procedure that would have cost one-quarter that amount in a private office.
Bait and switch
This type of bait and switch occurs more and more frequently as hospitals acquire private practices or create their own ambulatory practices. Although it’s legal to charge more for “hospital-based outpatient” care than for privately owned practices, this has created huge financial barriers for many patients, and has exacerbated rising healthcare costs in the U.S.
This problem has been getting worse as health care mergers surge. When a hospital buys up independent practices, patients who had seen their doctor for years now find themselves getting charged more money to see the same provider. They will likely check in with the same receptionists, undergo a previsit with the same medical assistant or nurse, and undergo the same tests they always have.
The difference after a merger: The once-independent doctor’s office has now been branded with the large hospital system’s logo. And along with this new logo come mysterious higher prices.
Hospitals are designating these offices and freestanding facilities as “hospital outpatient departments,” which allows them, legally, to insert higher charges into patients’ medical bills. Prices for identical clinical lab tests, such as blood tests, are three times higher in hospital outpatient departments than the prices of those same tests in a physician office or independent laboratory.
Seeing a doctor who is part of a large hospital system costs as much as 26% more compared with an independent physician, according to a Harvard University study that also found no evidence of better quality and reduced costs when hospitals merge, despite health systems’ claims to the contrary.
In my practice, I heard my patients all too often say they might skip a procedure or test I recommended because they’re concerned about the cost and had to make the difficult decision whether to buy food for their families or take care of their own health. People with diabetes are shying away from treatment that can help them better manage their chronic condition and live healthier lives because they’re afraid that where they go for a checkup or test might inadvertently lead to an extra charge on their medical bill.
Site-neutral reforms
Patients shouldn’t have to worry about this. They deserve to feel confident that they will pay the same price for the same service, regardless of where that care takes place. They should not feel they have to skip care out in fear they’ll be charged more than they can afford, just because of the place they got the care.
Lawmakers can help rein in skyrocketing medical bills by leveling the field: costs of care outside of the hospital should be the same whether the provider is hospital-owned or private. “Site- neutral payment” measures at the state or federal level would ensure families pay the same price for the same services and aren’t stuck with inflated, unnecessary fees.
Late last year, the U.S. House passed bipartisan legislation, the “Lower Costs, More Transparency Act”, which could provide relief for patients and their families by increasing transparency around hospital pricing and advancing site-neutral payment reforms. By passing similar measures at the federal or state level, our lawmakers can provide real relief to patients who have been stuck with higher prices they shouldn’t be paying.