Surprised by a medical bill? Here's what to do

Story highlights

  • On average, physician charges are 2.5 times higher than what Medicare pays, a new study finds
  • Individual states are enacting laws to protect patients from unexpected ER and out-of-network charges

(CNN)In 2013, Kelly A. Kyanko gave birth to her second son. During labor, her doctors became aware of "a very small complication," she said -- nothing too concerning, but doctors wanted a pediatrician in the room during the delivery.

"I'm not exactly going to say 'no' to that, right? Obviously I was in a lot of pain and it was a very stressful time so I wasn't in any position to be saying yes or no to the doctors around me and what they thought was best," said Kyanko, herself a doctor and an assistant professor at New York University School of Medicine.
In the end, she delivered a healthy son. But a few weeks later, Kyanko received a bill for about $600 from the pediatrician who had been called into her delivery room. Turns out, the pediatrician was out-of-network.
    "This was very shocking," said Kyanko, who has studied patients experiences with out-of-network charges. "It was an emergency, there was something potentially wrong with the baby and they needed someone there.
    "It was in the middle of the night, I was in no position to be picking the doctor who was going to be helping -- I was not going to be going on the United Health website or looking at my paper directory while I'm in between contractions."
    At the core of her frustration -- her anger, really -- is the fact that she had no choice.
    "For me, really understanding how incredibly vulnerable I was at that time -- how even the most highly educated people on this subject could still find themselves in this situation -- to me, it's a system problem," said Kyanko. "It wasn't me, frankly, it was a system's issue and something that really needed to be fixed by the hospital and regulators."
    Unexpectedly high medical bills upset and frustrate many patients. In fact, certain specialties are most likely to charge patients staggeringly high costs.

    Doctor's choice on what to charge

    On average, anesthesiologists, radiologists, ER doctors, pathologists and neurosurgeons charged more than four times the amount Medicare pays for the given medical services provided, according to a new study published in the Journal of the American Medical Association.
    And roughly a third of the priciest doctors practiced in just 10 regional health care markets.
    Expensive medical bills hurt many patients, according to Ge Bai, co-author of the study and an assistant professor of accounting at Johns Hopkins University.
    "Most patients don't ask if their anesthesiologist, pathologist, ER doctor, or radiologist are in their network before receiving care," said Bai. "It's especially frustrating for patients who deliberately choose an in-network hospital or in-network surgeon but find out weeks or months later that some clinicians involved in the treatment were out of network and the bills are large."
    Physicians have complete discretion when it comes to the amount they charge patients and nearly all physicians charge more than the Medicare program actually pays. Bai and her co-author refer to these as "excess charges," noting that the higher the excess charge, the more uninsured patients -- as well as privately insured patients using out-of-network physicians -- become financially burdened.
    For their study, the researchers examined Medicare data, including charges submitted by US doctors providing services to beneficiaries who submitted Part B claims during 2014. Data from 429,273 individual physicians across 54 medical specialties were included in the study.
    For each physician, the researchers defined excess charges as total charges divided by the total Medicare allowable amount.
    On average, physician charges were 2.5 times higher than what Medicare pays, according to the authors.
    Varying across specialties, anesthesiologists had the highest averages, while general practice physicians had the lowest. Of the 10,730 physicians with the highest excess charges, 55% were anesthesiologists compared to just 3% in general practice, internal medicine or family practice.
    The researchers also saw regional differences within the data. About one-third of physicians with high excess charges practiced in only 10 hospital referral regions: East Long Island and Manhattan, New York; Dallas and Houston; Milwaukee; Atlanta; Camden and Newark, New Jersey; Los Angeles; and Charlotte, North Carolina.
    "What the study highlights is that patients can face extremely large bills if they see an out-of-network physician," said Yale University economist Zack Cooper, who was not involved in the study. "Internists don't set high charges because they, for the most part, don't see patients out-of-network. However, for anesthesiologists, they set high rates because there's a decent chance they'll be able to get that rate from certain patients."
    Cooper's own recent study with Fiona Scott Morton, another Yale economist, reviewed claims from more than 2.2 million visits to hospital emergency rooms nationwide between January 2014 and September 2015.
    Despite choosing an in-network facility, one in five patients were treated by an out-of-network physician, Cooper and Scott Morton discovered, with the unexpected medical bills generally tallying more than $600.
    While, on average, in-network ER doctor rates were 297% of Medicare rates, the out-of-network ER doctor rates averaged 798% of Medicare rates.

    What patients can do

    One limitation in health care cost studies is that it's difficult to know what patients pay out of pocket because some people do negotiate their fee down, or badger their insurance companies to pay. Bai noted this in her study.
    When Kyanko saw the pediatrician bill from her son's birth, she knew one thing: There was no way she would pay for out-of-network services. She spent hours on the phone, a total of nine calls, and eventually the insurance company and the pediatrician reached an agreement.
    "I was not held liable for that bill but it took an incredible amount of work," said Kyanko, who understands that her own extensive work researching this subject is the reason why she was able to question that bill and get results. She knew she could handle an insurance billing battle because she was "relatively OK after the birth."
    "But you can imagine if I was chronically ill, if I had cancer, if I had medical bills coming in constantly or if I was very sick and didn't have the energy or the wherewithal to fight those bills I might not," said Kyanko. "And that was just one out-of-network bill."
    Still Robin Gelburd, president of FAIR Health, a national not-for-profit organization seeking transparency in health care costs, believes the new study implicitly suggests "that the Medicare rates are reflective of what should be the fees of physicians" when in fact Medicare rates incorporate federal policies and do not purport to reflect market rates.
    Bai said that Medicare pricing simply serves as a "useful benchmark" for comparison. "We are not saying that Medicare rate is the proper standard," said Bai. "Medicare rates simply serve to compare the extent of markup across specialty and region."
    FAIR Health's repository of 21 billion medical and dental claim charges better reflect the experience of over 150 million privately insured Americans, according to Gelburd.
    She added the study's built-in assumptions are "somewhat at odds with what is happening on the ground" -- namely, the new laws that protect patients.
    Facing a surprise medical bill, then, Gelburd suggests a patient first check "to see whether their states offer any protections with respect to surprise out-of-network bills or emergency bills."
    New York passed a law in 2014, which became effective in 2015, followed by Connecticut and California, which passed similar bills.
    "We've been called by many many states -- Idaho, Oregon, Florida, Texas -- all of these states are considering what statute is best for them," said Gelburd. "This is a very big issue that's making its way across the country."
    Patients can also speak directly to their health care plan and explain to a representative that they were surprised by a bill, said Gelburd.
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    "If they don't get relief there, they can try to work with the physicians themselves," said Gelburd. "A number of consumers look at our site to see what are typical charges in their area for out-of network services and use that data to have productive conversations with a provider to see if there's room for negotiation."
    Other than that, a patient can turn to other resources, any one of a number of organizations that offer guidance to patient-consumers, said Gelburd.
    Cooper said the most important thing a patient can do is always try to check if a physician is in-network or "ask hospitals to be paired with an in-network physician."
    "Finally, and I know it sounds trite, but they should email their elected representatives and ask them to fix this problem," said Cooper. "These problems really exist because certain doctors' lobbying groups are powerful."