Why Medical Bills Are a Top Cause of Bankruptcy

Life’s little surprises often come when you’re at your most vulnerable… like in emergency situations or when your doctor/facility used out-of-network providers (according to a national study by Johns Hopkins University). For example, you can get treatment at an in-network emergency room, but that doesn’t mean the doctors treating you are in your network. The opposite can also happen: your doctor is in the network, but you are receiving treatment at an out-of-network facility. How could you know that?

400,000 doctors surveyed

The study suggests that because you don’t select doctors, you don’t know ahead of time if they accept your insurance. This surprises those who receive bills for hundreds or even thousands of dollars, months after treatment, from providers unknown to them!

Surveyed 400,000 physicians in the US to rank the difference between the amount Medicare reimburses physicians for treatment and the amount charged to patients covered by other insurance, no coverage, or out-of-network treatment .

Medicare fee schedules were used as a reference because insurance companies use those rates as a starting point when calculating out-of-network patient reimbursement. The typical doctor charges about 2.5 times the amount Medicare pays. However, the highest margins came from physicians not selected by the patient.

What doctors charge

The typical anesthesiologist, ER doctor, pathologist, neurosurgeon, ambulance, and radiologist are paid at least four times the Medicare reimbursement (anesthesiologists are paid six times the amount on average).

The lower margins are used by the doctors that people usually see more of. These include general practitioners, immunologists, dermatologists, psychiatrists, family physicians, and allergists. Your charge is less than twice the Medicare rates. Regional differences were also observed. For example, doctors in Alaska and Wisconsin raise patient costs at about twice the rate of doctors in Hawaii and Michigan.

It is getting worse

As the health care system becomes more complicated, insurance companies may lower reimbursement rates for contracted physicians (and facilities), which may cause physicians (and facilities) to opt out of participating in the insurance network at the expiration of the contract. So the doctor (and facility) that was in your network is now out of network.

As of spring 2016, 23 states were working or already had consumer protections. Check your state Department of Insurance website for additional information.

steps you can take

The best protection against an unexpected balance on a medical bill is prevention and defending yourself by taking action before a bill ends up at a collection agency.

1. Research, plan and prepare before an emergency situation.

2. For non-emergency care, confirm that treatment will be provided by network providers.

3. When providing your insurance information, always refer to your plan by its full name. Most major insurers have secondary plans that may or may not include in-network providers.

4. Maintain a documentation record of communications.

5. Ask for the names of the providers (or facilities) that will be involved in your care. Check with your insurance and the providers themselves to determine if they are in network or not. covered by your insurance.

6. Check your state’s insurance regulation information to determine what consumer protections exist against unexpected medical bill balances.

7. Your insurance may indicate that you do not owe a balance; however, if there is no contract between your insurance and the provider, you may still owe the balance (if state law does not apply).

8. If you find that you owe the balance, you may be able to negotiate with the provider to reduce the balance. Find out what the average cost of the procedure is in your area.

9. If your insurance is through your employer, talk to your human resources department.

10. Verify that the provider is not really in your insurance network.