The Rabbit Hole of Out of Network Insurance Benefits

AnnMarie Q. McIlwain

Years ago, standing in the lobby of Mount Sinai Hospital in the Bronx where the average family income is $45,000, my client pulled out his Platinum American Express card to pay his daughter’s $100,000 bill. I begged him not to while playfully swatting his hand. This medical bill advocate represents clients of all economic means ranging from Medicaid eligible to billionaires and everyone gets the same service. I told my client that he was crazy to pay this ransom price and he said, “but he saved my daughter’s life and I can afford it”. Ability to pay (which he did) was beside the point, this out of network doctor was exploiting his perch as a top surgeon and months later my client agreed. He wished he hadn’t been so willing to cave.

My client had out of network (OON) benefits and he was still being told he owed $100,000. For those who are not Medicare eligible, the quest for getting a PPO health insurance plan with OON benefits can seem as hard to come by as a winning lottery ticket.

What if it turns out that the prize isn’t as valuable as you thought it would be. What if you learned that the OON policy benefit could actually tank you financially, leaving you with bills in the tens of thousands.

That is exactly what my firm is seeing – a brick wall of EOBs that pay the doctors as little as 10% of their fees and denials for parts of surgeries that were preauthorized.

An out of network claim happens in two situations. The first is when you have a medical emergency and the hospital chooses the medical team for you. In those scenarios, you are covered – meaning the claim will be processed as an in-network claim thanks to the No Surprises Act. Your financial obligation will be the same as any other claim which is to say it will be paid after you have met your deductible and there might be coinsurance.

If, however, you choose to use an out of network doctor for an appointment or treatment, you may find when you receive your bill that your benefits do not stack up.

One of my clients, a thirty-two-year-old successful software engineer in Silicon Valley who developed a brain infection out of nowhere needed surgery to open his mouth. The family was unable to find an in-network doctor to perform it but were not concerned since they had out of network benefits. The insurer said the magic words in writing: “preauthorization is not required”. Of the $52,000 bill, only $5,000 was paid despite having maxed out both the OON deductible and OON out of pocket maximum with their Blue Shield of California plan.

Another client chose an out of network surgeon for her breast reconstruction surgery. Insurers are required by law to cover this surgery and the considerations for a woman can be very emotional. You want the best medical doctor and sculptor to restore the appearance of a natural breast. There is a lot at stake for a woman undergoing this surgery and the best doctors are frequently out of network. This client had out of network benefits, her doctor secured reauthorization and then the insurer (United Healthcare) reimbursed $5,600 for a several hour surgery that was billed at $57,000. This insulting level of reimbursement, many thousands of dollars less than the in-network reimbursement level, doesn’t begin to recognize the hours spent by the doctor writing lengthy appeal letters for a justifiable level of compensation, all to no avail.

It turns out that this new phenomenon that I am seeing in my practice is tied to middlemen in the healthcare industry who are now hired by insurers (United Healthcare and others) to adjudicate out of network claims. Revenue is tied to the amount of savings often resulting in the intermediary (Multiplan Inc. being one example) making more money than the doctor. This dynamic was recently uncovered by Chris Hanby of The New York Times in a front-page article. My comment on the article was one of five selected by The Times for recognition.

The other force driving this problem is the consolidation of healthcare providers in a given market, often due to private equity ownership, which drives up prices. That means we now have private equity firms creating the very pricing problems that other private equity firms are profiting from.

Not surprisingly, this new ecosystem has caused many out of network doctors to adopt a new policy of requiring patients to sign financial commitment letters ahead of procedures or pay upfront in full.

Is there a place for these middlemen? Sure. They can start by going after the bad actors like the aforementioned surgeon at Mount Sinai. Having said that, every doctor who doesn’t accept insurance is not out to milk the insurance company. They are choosing to avoid the morass called the health insurance industry and be paid what they are worth. As a former executive who managed businesses of several hundred million dollars, I would call that good business practice.

So where does that leave us – the regular people who are seeking the best medical care without being soaked by policies that are not transparent and can leave us footing a bill for tens of thousands of dollars?

My conclusion is that OON benefits are practically worthless. Insurers are not required to estimate reimbursement in advance, coverage can be measly, as low as 10%, and even if a family has reached the OOP max for OON spending, reimbursement is unaffected. Long way of saying, use of OON doctors for preplanned medical services can leave people vulnerable to potentially massive bills.
Don’t get left holding the check. Avoid the out of network rabbit hole. Let an independent patient advocate find you a great doc who won’t leave you financially scarred.

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