Why Are Your Employees Getting Hit with Surprise Medical Bills?

Why Are Your Employees Getting Hit with Surprise Medical Bills?

If you're a seasoned employee benefits professional, here's a story that may sound familiar to you.

Bob has medical insurance through his employer. One day, Bob wakes up with a sharp pain in his back. He heads to the emergency room at a local hospital, which he knows to be in-network for his insurance company.

The ER doctor runs some tests, and the results lead her to suspect something serious is going on. She tells Bob he needs to be hospitalized immediately for further tests. Thankfully, the tests come back negative. It turns out Bob just has kidney stones - painful, yes, but relatively easy to treat. He goes home with some good pain relievers and directions to drink lots of water. 

But Bob's short stay at the hospital ultimately leaves an impression lasting much longer than that of having to pass the kidney stones: thousands of dollars in surprise medical bills. 

Despite choosing an in-network hospital, the ER doctor who treated Bob wasn't in-network. Neither was the anesthesiologist who worked on those additional tests. Combined, their bills totaled more than $3,000. Understandably upset, Bob goes to his company's benefits manager and demands an explanation.

Inadvertently Out-of-Network

Bob is by no means alone in his plight. A recent survey from the Kaiser Family Foundation finds that among insured, working adults struggling with medical bills, surprise charges from out-of-network providers were part of the problem about a third of the time. And nearly 70 percent of people with crippling out-of-network medical bills were unaware that the provider was not in their health plan's network when they received care.

Surprise medical bills typically arise in an emergency situation, when the patient is unable to select the emergency room, doctors or ambulance providers. Sometimes, as in the case of Bob, the patient receives initial care from an in-network provider (e.g., the hospital), but other providers brought in to help are out-of-network. These can include anesthesiologists, radiologists, pathologists, surgical assistants and more. There are even cases where an entire department within an in-network facility may be run by subcontractors who aren't in-network. And the patient most often has no clue.

So why is this happening?

Narrow Network Effect

Since the implementation of the ACA, employers and health insurers have pushed to reduce costs while still providing affordable coverage. These efforts have led to the development of health plans with narrower provider networks, which limits the in-network options for insured patients, albeit at a cheaper premium. Theoretically it's a great system, as long as patients stay in-network. But that's getting harder and harder to do - because while patients are encouraged to stay in-network, providers aren't.

Traditionally, in-network providers accept a contracted payment rate and are prohibited from "balance billing" (billing patients the difference between what the health insurer has paid and what the provider normally charges), although patients are responsible for any co-payment and deductible prescribed by their health plan.

Out-of-network providers, on the other hand, can not only bill for the co-payment and deductible, but also balance bill the patient. Many providers choose to be out of network because they believe the in-network contracts provide them insufficient reimbursement and because they feel they lack the negotiating power to get a fair fee schedule. So, as insurers continue to narrow their networks, even fewer providers are participating in them. It's no wonder our friend Bob got slapped with those surprise medical bills.

So what can you, as a benefits professional, do to prevent your narrow-network health plans from blindsiding your employees?

Fighting Surprise Medical Bills

Unfortunately, providers don’t always advertise which health care networks they participate in, and insurers don’t always give adequate notice to their subscribers about non-covered services. But with the right tools, you're in a great position to be part of the solution.

It starts with helping your employees make informed decisions when they enroll in their benefits. Through a strong pre-enrollment communication plan that utilizes targeted messaging and educational video, you can explain the ins and outs of your plan offerings in a way that will resonate with your employees - so they're more likely to choose the plans that fit their unique health and financial needs. Then, with an engaging enrollment experience that enables employees to compare plan details and project their expenses, they can be more confident in their ability to navigate their health care without ugly surprises. 

Still, we've seen just how easy it is to inadvertently get expensive care from out-of-network providers. To take your surprise-prevention efforts a step further, you can harness the power of online health care transparency tools. By providing comprehensive cost and quality information on medical procedures, provider facilities and other related services, these tools can empower your employees to take charge of their health care experience, enabling them to make the most cost-effective use of a narrow-network health plan.

It's worth noting that legislators in California, Florida and New York have recently adopted measures designed to protect consumers from the pitfalls of narrow networks. These state laws essentially throw back all surprise medical bills onto the insurers and providers to negotiate a settlement. Time will tell if more states follow suit, but in the meantime, education and empowerment are crucial to keeping your employees from finding themselves in a situation like Bob's.

Learn more about how you can protect your employees and your organization from surprise medical bills. Watch the free webinar, A Closer Look at ACOs and Narrow Networks, featuring special guest Healthcare Bluebook!