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What is this "surprise billing" & "rate setting" I keep hearing about on the

I have recently heard many ads on TV mention "surprise billing". I think all healthcare bills are a surprise, a very unwelcome surprise actually. One of the biggest issues in healthcare today is the lack of price transparency. Try to find out what the cost of your procedure or your surgery will be in advance, it is nearly impossible! There are so many variables involved including but not limited to the physician, the facility, your insurance, whether it is "in network" or "out of network", your co-pay, your co-insurance, your deductible just to name a few. If you owe a healthcare provider money, you will know it, they will send you paper bills, email you, text you, call you & if you don't pay promptly, they will turn you in to collections. It is a sad state of affairs. I have even heard about individuals being sued & their wages garnished for unpaid medical bills. And sometimes you don't even owe that money.

I have found so many medical bill errors that I now have a system that I use to track them & i make 100% sure that I actually owe the money before I pay a dime. I recently received a bill from the hospital that I was sent to in an ambulance after getting the flu last March. The bill was for $702.47 and clearly stated that this was "my responsibility". Upon closer examination, I learned that $482.63 (68%) of the $702.47 had not been paid by the insurance company because we (the facility or myself) did not "pre-authorize" the admission. I was in acute respiratory distress, should I have called my insurance company from the ambulance? After multiple phone calls to the facility & the insurance company, I believe this issue has been corrected & that I owe $0 because I have already met my out of pocket for the year. Had it been paid initially, I would have owed only $219.94 as my 15% co-insurance payment. I have no doubt that many people would have just paid the $702.47 or set up a payment plan to do so. By the way, the bill for this 2 day stay in the hospital totaled $11,464.50, thank God it was an "in network" facility so the contracted rate with my insurance company brought it down to $1,466.35. Of which, they tried to dump $702.47 (48%) on me!

This is why insurance companies are making billions of dollars in profits. I'll give you another example, I received a bill from the physicians who took care of me during my 2 hospitalizations, it was for $1,439.50 and was clearly marked as "my responsibility",

it even said that my insurance had paid what they were going to pay. Upon closer examination, my insurance company had not paid anything at all & the reason why was because the physician practice had billed the wrong insurance company! Wow! At most I would have owed $215.92 but again I will owe $0 because I have already met my "out of pocket" maximum for the year. As a matter of fact, I have paid $5,905.23 out of pocket medical expenses this year. I wish I could have used this money for a nice family vacation or put it aside for my children's college. On the positive side, at least I'm not bankrupt. Did you know that 66% who people who claim bankruptcy attribute it to medical issues? That equates to more than 500,000 families a year here in the United States.

Let me get back on track here, so what exactly is "surprise medical billing"? Surprise medical billing really involves 2 things;

1) You receive a bill that is more than you expected. The primary reason for this is usually the way that the bill was processed.

"In network" providers are those that have a contract in place including fixed pricing with your insurance company. "Out of network" providers are those who do not have a contract in place with your insurance company & because of this, usually involve higher costs to you and the insurance company.

2) You receive a bill for the amount that your insurance did not pay, this is usually referred to as "balance billing".

This involves providers billing the difference between their "charges" and what the insurance company actually paid.

I'll give you an example of number 1 first. When I had my daughter, she spent a little time in the neonatal intensive care unit (NICU).

When the medical bills started rolling in, I got a bill from the neonatologist that was quite high. After some investigation, I learned that the neonatologist who took care of her was "out of network" so his services were covered at a lower rate & more of the bill got put on me. This can be a significant difference and is the reason most of us try to stay "in network" as much as possible. On my current insurance plan, services provided by "in network" providers are covered 85% by the insurance company & 15% by me (co-insurance). "Out of network services" are covered 50% by the insurance company & 50% by me. That is a BIG difference.

So my question is, when you are laying in that hospital bed, are you supposed to stop everyone that walks in the door and query them as to whether they are "in network" or "out of network"? In the case of my daughter & the neonatologist above, I never even saw that provider & had no idea he was even taking care of my baby. And I was at an "in network" facility and did not anticipate that they would have "out of network" providers working at an "in network" facility. I fought that bill & won. I have fought others like it since and the verbiage I use with the insurance company every time is "your contracts are not my business".

Balance billing can be legal or illegal depending on the insurance agreement in place. "In Network" healthcare providers & facilities have agreed to accept the insurance plan’s negotiated fees. Balance billing would not be permitted under an in-network agreement because the healthcare provider has agreed to accept the negotiated fees as payment in full plus any applicable deductible, coinsurance, or copay. In this situation, balance billing is NOT legal.

"Out-of-network" healthcare providers & facilities have not agreed to accept the insurance plan’s negotiated fees and could balance bill the patient. Without a signed agreement between the healthcare provider and the insurance plan, the healthcare provider is not limited in what they may bill the patient and may seek to hold the patient responsible for any amounts not paid by the insurance plan. In this situation balance billing IS legal, maybe not ethical, but legal.

Many states are currently enacting legislation to prevent "surprise billing". Here in Texas, senate bill 1264 was passed in June of this year and will become effective on September 1, 2020. The bill will require hospitals & insurance companies to work out among themselves when they don't agree on a price and leave the patient out of it. Unfortunately, not all Texans will be protected by the new law, which does not apply to people who have federally regulated plans. In Texas, federally regulated plans account for roughly 40% of the state's health insurance market. This is something to keep in mind when selecting insurance coverage.

However, Texas Senate Bill 1037 prevents a surprise medical bill from affecting all Texan's credit, regardless of whatever health insurance plan the person has and federal legislation to protect patients is probably not far off.

The TV commercials also mention "government rate setting". Government rate setting is limiting the amount healthcare providers & facilities can charge for "out of network" services. And in my opinion, this can't be bad for patients. I believe the numbers games have to stop, for example, billing $11,464.50 for a 2 night hospital stay and accepting 13% of that ($1,466.35) as payment but only if you are lucky enough to be "in network" is wrong. All patients should be able to obtain medical care for a fair price and we should be able to know that price before the services are rendered if time allows. This would allow all of us to be informed consumers.

To protect yourself from surprise medical bills, the Texas Department of Insurance suggests the following:

  • For planned procedures, find out in advance whether your providers are contracted with your health plan. This is especially important in the case of facility-based providers, such as radiologists, anesthesiologists, pathologists, and neonatologists. Even if a hospital is in your health plan's network, some doctors who provide services there might not be.

  • Call your health plan to make sure the services you will get are covered under your policy. If the services are not covered, you will have to pay the charges.

  • Texas law gives patients the right to request estimates of charges. Doctors and other providers and health plans have 10 days to give you the estimates, so you won't be able to get them in cases of emergencies. Some providers and health plans also have cost information on their websites.

  • Shop around. Use the The Texas Department of Insurance’s Healthcare Costs website to find average costs for common medical procedures in your area. Websites – such as,, and – also can help you estimate the prices of various procedures.

  • If there aren’t any contracted providers available, your health plan might be able to work out a discounted payment. You also might be able to ask your doctor or provider if they’ll accept payment options in advance. In some cases, the health plan may be required to make sure you aren’t balance billed.

If you believe you’ve been treated unfairly, file a complaint with the agency that regulates your provider or health plan.

  • File complaints against doctors with the Texas Medical Board.

  • File complaints against hospitals, ambulatory surgical centers, or other facilities with the How to File a Complaint - Health Facilities.

  • File complaints against licensed health maintenance organizations and health insurance companies with the Texas Department of Insurance.

The Content above is not intended to be a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical condition.

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