Monday, September 26, 2016

Out-Of-Network Sneaky Pricing

Seventeen years ago Peter Shenkin had a 4,500 pound live oak tree fall on him while his high school class was camping by the American River near Sacramento. Without the air mattress he was sleeping on and being teased about by his classmates, he would probably have been killed. 

Thank God he wasn't. Instead, he was transported to the nearest officially-designated trauma center, Sutter Roseville Hospital. I'll skip the bad parts of his care – the surgeons kept him waiting for hours before operating and let regularly scheduled operations proceed, they failed to preserve a kidney – and skip straight to the billing. 

Pete was fully insured by Blue Shield, the hospital was a participating provider, but amazingly (if you didn't know how these things work) the trauma surgeons, appointed as such by the hospital, were not Blue Shield preferred providers! That is, they were not “in-network.” Doctors sign up to be “in-network” so that they get more patients and accept a lower fee for doing that, and the insurance demands much less out of pocket payments from the patients. The trauma doctors saw no advantage to themselves by signing up, so they didn't. How a hospital could be in-network, and be a state-designated trauma center and yet allow the doctors to be out-of-network – well, let's just say that state law is sometimes deficient in their protection of the public.

So our insurance paid for the hospital, but we were expected to pay the full (very full) fees of the surgeons above what Blue Shield covered. That's what is now called a “surprise out-of-network billing.” Of course we didn't accept it, and Blue Shield eventually paid it. But law and insurance being what it is, can you believe when Peter got his settlement for the law suit we brought for various malfeasances that led to the accident, Blue Shield claimed tens of thousands of dollars of the settlement for their own payment for medical services rendered? It's just hard to believe. Despicable, really.

That was 17 years ago. You would think that even the slow-moving governmental system would have fixed the problem by now. Nope. It's just gotten worse, since insurance companies have adopted “narrow networks” as their preferred method of keeping costs down, which means offering very low payments to providers and seeing who will sign up at those low levels, and since only a few will sign up, the chance of being out-of network has been magnified. So imaginative of the insurance companies.

Here is what Peter wrote to me about a friend last week:

(My friend) had apparently reached his annual out-of-pocket maximum according to his health insurance, and Sutter continued providing him care for his ulcerative colitis. Sutter, though, did not inform Mike that the infusion treatments being provided to him were 'Out of Network' and he would be assessed a $399 charge each time. In fact, I am fairly certain that Sutter even went as far as to promise that there would be no charges for the infusions.”

Then just a few days later, Lola and I were up at John Muir School with her old friend Yuval, as much as a 6 ½ year old can have an old friend – they met at the “Nanny Park” in Berkeley as 2 or 3 year olds. Yuval came up with an unusual case of liver cancer, and has been well and successfully treated, thank God. He's now fine, although hearing-impaired from the treatment. Indeed, his father, Justin, said that they had just had their valedictory visit to Lucile Packard Hospital; after this, no more annual visits, just cured. It was a visit that lasted two hours, during which he received an ultrasound exam and a blood drawing for alphafetoprotein, nothing terribly special. Great, all negative.

Then came the bill. The bill. The bill was $12,000 for the visit. $12,000. $6,000 an hour? But, being the forgiving institution it is, Packard cut it down to $8,000. I wonder if they said “Just for you!” And – you've been waiting for this – when the bill came, that was when Justin discovered that Packard was now “out-of-network.” So the family is expected to pay the balance of the bill. Surprise!

He will protest, he's a sophisticated guy, and I'll bet he won't pay. But can you believe it? It's bad enough to raise the price to the patient right in the middle of the process, but adding stealth?

So, what is the basic issue here? To my mind, a big part of the problem here is the confluence of health care and business. Clearly, health care has to think about business economics. The past is horrendous. As my old attending pediatrician Henry Shinefield said, medicine was given an unlimited budget and they exceeded it. Medicine needs to be more mindful.

But mindful how? There is not just one way of being “business-like.” There is the stolid, thoughtful, rigorous costing and pricing and economizing and making efficient activities of any business. The Main Street Ethic. Good! That's what we need.

On the other hand, there is also the Wall Street Ethic. What is the ethic of Wall Street? Lying, cheating, stealing, and charity balls. They have elevated this into “the American way of business,” as though this has always been true, which it hasn't. They have even exported it. Talk about obnoxious. Talk about rationalization. Talk about Trump as the apotheosis, even though he doesn't have their “class.” Or pretensions, better said. Or maybe he does.

The WSE says do whatever you can or whatever you want, greed is good – yup, it's still with us. I won't go on, the reader will have his or her own examples up the wazoo, certainly from the newspapers, possibly directly from one's own life. WSE is exemplified by the generic pricing scandal. If it's not illegal, why not do it, if you will make more money? And maybe it doesn't even have to be legal. Wells Fargo customers are no doubt checking their statements.

The question, then, is which form of business will medicine be adopting? Will trauma surgeons at a trauma hospital be forced to accept preferred provider status, or something similar? Will out-of-network charges be capped and applied to the insurance companies rather than the patients? These are governmental decisions at some level. In California AB-72 is on Governor Jerry Brown's desk. It would limit out-of-network payments to 125% of Medicare, with some other provisions, I guess. It is patient-generated legislation.

It's too bad that this legislation had to be patient-generated. At another level, isn't this something the medical profession itself should be taking on?

Do we want to be stealth pricers? Do we want to countenance prices like $12,000 for two hours of work? Or do we want to voluntarily construct a system that eschews the WSE and adopts the MSE instead, where pricing is both fair and transparent, where efficiency is a goal, where patient service is a goal, where the patient is treated with respect?

If medicine is silent and accepting of how others structure our profession, if medicine does not stand up for righteousness, the business of medicine will contaminate the profession of medicine, and trust and respect will be further eroded. There is no Chinese Wall between business and practicing medicine. The medical profession should be standing up. The medical organizations should be standing up.

They haven't so far. But will they? That's really the basic question.

Budd Shenkin

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