Nothing sours an employee on the company medical plan quicker than large unexplained medical bills following a serious health crisis. Often while trying to recover from a surgery or other traumatic health event, employees find themselves weeding through endless medical bills they don’t understand. Financial worries on top of health concerns can impact productivity and lower morale.
Often these large medical bills are a direct result of what’s known in the health insurance world as “balance billing”. In recent years balance billing has become such a significant problem it has caught the attention of politicians across the country.
Here in Arizona, in response to constituent complaints about surprise medical bills, a group of Arizona politicians came together back in 2017 and introduced Bill 1441 to the State Legislature.
The new law, which went into effect on January 1st, 2019 offers a much-needed avenue for Arizonians to challenge unexpected medical bills by having the Arizona Department of Insurance intervene in cases where patients believe they’re being charged unfairly.
Bill 1441 was co-sponsored by:
Before employees can avoid balance billing they need to first understand what it is. It can be a complicated topic to tackle but teaching employees how to avoid large medical bills can be one of the most valuable components of your benefit communication strategy.
Over the years I’ve had a lot of success using various analogies to help employees understand balance billing and why it occurs.
Here are some of the ways employees can be made to understand balance billing:
A physician who has no contract with an insurance company is like a basketball player without a contract in the NBA – he is a free agent. He is not bound by a contract with your insurance carrier and therefore he is free to charge you whatever he wants for his services. The majority of physicians contract with insurance carriers, particularly those performing routine services.
However, there are 4 categories of physicians who notoriously operate as free agents in the world of health insurance. They are:
These medical professionals provide services that are crucial to the healthcare delivery system. No one else can do what they do. If you are involved in a severe auto accident you will want to be taken to an emergency room. If you need surgery you are going to want anesthetic. More and more these non-contracted medical professionals find their way into procedures like colonoscopies, emergency room visits, and surgeries.
These guys have their own fee schedule (what they charge for services), and your insurance company has another (what they pay for services). The difference between those two amounts often generates what’s called a “balance bill” and the employee is caught in the middle.
Imagine you check into a luxury hotel for the weekend. You drive up to the front door and the valet attendant parks your car for you. You check in at the front desk where you learn the nightly rate is $250.00 and you hand over your credit card. An attendant then helps you with your luggage. Once you arrive at your room you kick your shoes off and order some room service. Next you decide to order a movie on Pay-Per-View. It’s a great weekend. A couple of days later you check out and head home.
Weeks after you return home you start receiving additional bills – one from the guy who parked your car, another from the guy who carted your luggage up to the room, another from the person who delivered food to your room, and another from the cable company that streamed the movie. You mistakenly assumed that all of those individuals were employees of the hotel and that their services were included with your hotel bill. Instead you learn that the hotel contracted those services to a number of different private business owners and now those vendors want to be paid.
This scenario is basically what happens when you visit the hospital. Patients frequently receive a number of “balance bills” in the weeks following release from hospital or an Emergency Room.
So you’re scheduled for a routine surgery following a sports injury. A few weeks following surgery you are at home recovering and opening mail. You open a bill from an anesthesiologist for $10,000.00. Next you open a check from the insurance company for anesthesiologist services in the amount of $2,000.00. What the heck happened?
I will tell you what happened. The hospital performing the surgery hired an anesthesiologist to assist during the procedure. Remember, anesthesiologists typically don’t enter into contracts with insurance companies. So the anesthesiologist billed the insurance company $10,000 for his services. Upon receipt, the insurance company issued a check for the amount they WOULD have paid if your anesthesiologist had been contracted with them – which is typically much less. In this example, it is $2,000.
Some insurance companies won’t send payments to non-contracted medical providers. They instead send payments to the patient and then it’s the patient’s responsibility to forward the payment to the medical provider.
If the anesthesiologist turns around and bills the patient for the difference between $10,000 and $2,000 ($8,000) – that is called a balance bill. You’re being billed for the remaining balance.
To assist employers with employee education I’ve developed a series of training modules aimed at eliminating surprise medical bills, particularly those bills exceeding $1,000. In designing these modules we take complex topics and present them in a non-threatening, simple format using anecdotes and analogies similar to those shared in this article.
We offer the following training presentations at no cost for clients and a nominal fee for non-clients.
When employees are equipped with the information they need to understand and avoid common problems with medical insurance they not only have a better opinion of the company medical plan, but they are also less likely to be preoccupied with the financial worries associated with medical debt.
If you are interested in scheduling one of the training sessions listed above as part of your overall financial wellness strategy, contact my office at 602-903-4047 or email: firstname.lastname@example.org
To determine eligibility for Arizona’s Department of Insurance Surprise Out-of-Network Bill Dispute Resolution program, visit: https://insurance.az.gov/soonbdr
Joanna Morrow is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU). Joanna is a senior partner at Arizona Benefit Consultants in Phoenix.