If you're a seasoned employee benefits professional, here's a story that may sound familiar to you.
Bob has medical insurance through his employer. One day, Bob wakes up with a sharp pain in his back. He heads to the emergency room at a local hospital, which he knows to be in-network for his insurance company.
The ER doctor runs some tests, and the results lead her to suspect something serious is going on. She tells Bob he needs to be hospitalized immediately for further tests. Thankfully, the tests come back negative. It turns out Bob just has kidney stones – painful, yes, but relatively easy to treat. He goes home with some good pain relievers and directions to drink lots of water.
But Bob's short stay at the hospital ultimately leaves an impression lasting much longer than that of having to pass the kidney stones: thousands of dollars in surprise medical bills.
Despite choosing an in-network hospital, the ER doctor who treated Bob wasn't in-network. Neither was the anesthesiologist who worked on those additional tests. Combined, their bills totaled more than $3,000. Understandably upset, Bob goes to his company's benefits manager and demands an explanation.
Unexpected Medical Expenses
Bob is by no means alone. A recent survey from the Kaiser Family Foundation finds that 65% of adults are worried about unexpected medical expenses.1 These unknown and unforeseen expenses are the top concern for a household budget. In fact, nearly one-third of insured adults 18-64 years old have had an unexpected medical bill in the last two years, one in six reported a surprise medical bill – a charge that stems from a patient unknowingly receiving treatment from an out-of-network provider.2 The cost of an unexpected medical expense may range from less than $100 into the thousands of dollars. According to the same poll, 11% of those reporting an unexpected medical expense, the cost was $1,000 or more. This represents a major concern since 45% of adults in the same working insured population would not be able to afford an unexpected medical expense of $500. In fact, the concern is not unfounded since studies show that 137.1 million Americans have faced financial hardship this year because of medical costs.3
Unexpected medical expenses, especially surprise medical bills typically arise in an emergency situation, when the patient is unable to select the emergency room, doctors or ambulance providers. Sometimes, as in the case of Bob, the patient receives initial care from an in-network provider (e.g., the hospital), but other providers brought in to help are out-of-network. These can include anesthesiologists, radiologists, pathologists, surgical assistants and more. There are even cases where an entire department within an in-network facility may be run by subcontractors who aren't in-network. And the patient most often has no clue.
However, unexpected and surprise medical expenses are being addressed by Congress. Almost three-quarters of the public wants Congress to take some sort of action that protects patients from the damaging long-term effects of these surprise medical bills.4 The effort to protect patients from surprise medical billing has bi-partisan support in the U.S. House of Representatives and the U.S. Senate. Following previous efforts in 2019 by the House Energy and Commerce Committee and the Senate Health Education Labor and Pension to draft bills with provisions that address those surprise bills, two other committees, the House Ways and Means Committee and the House Education and Labor Committee, stated in February 2020 that they are bringing up legislation that has bi-partisan support that protects patients from surprise medical bills.5
So, how do these unexpected and surprise medical expenses even happen?
Narrow Network Effect
Since the implementation of the ACA, employers and health insurers have pushed to reduce costs while still providing affordable coverage. These efforts have led to the development of health plans with narrower provider networks, which limits the in-network options for insured patients, albeit at a cheaper premium. Theoretically it's a great system, as long as patients stay in-network. But that's getting harder and harder to do - because while patients are encouraged to stay in-network, providers aren't.
Traditionally, in-network providers accept a contracted payment rate and are prohibited from balance billing. Balance billing is billing patients the difference between what the health insurer has paid and what the provider normally charges, although patients are responsible for any co-payment and deductible prescribed by their health plan.6
Out-of-network providers, on the other hand, can not only bill for the co-payment and deductible, but also balance bill the patient. Many providers choose to be out of network because they believe the in-network contracts provide them insufficient reimbursement and because they feel they lack the negotiating power to get a fair fee schedule. So, as insurers continue to narrow their networks, even fewer providers are participating in them. It's no wonder our friend Bob got slapped with those surprise medical bills.
So what can you, as a benefits professional, do to best equip your employees to navigate narrow networks and the potential for surprise expenses?
Fighting Surprise Medical Bills
Unfortunately, providers don’t always advertise which health care networks they participate in, and insurers don’t always give adequate notice to their subscribers about non-covered services. But with the right tools, you're in a great position to be part of the solution.
It starts with helping your employees make informed decisions when they enroll in their benefits. Through a strong pre-enrollment communication plan that utilizes targeted messaging and education, you can explain the ins and outs of your plan offerings in a way that will resonate with your employees – so they're more likely to choose the plans that fit their unique health and financial needs. Then, with an engaging enrollment experience that enables employees to compare plan details and project their expenses, they can be more confident in their ability to navigate their health care without ugly surprises.
Still, we've seen just how easy it is to inadvertently get expensive care from out-of-network providers. To take your surprise-prevention efforts a step further, you can harness the power of online health care transparency tools. By providing comprehensive cost and quality information on medical procedures, provider facilities and other related services, these tools can empower your employees to take charge of their health care experience, enabling them to make the most cost-effective use of a narrow-network health plan.
It's worth noting that legislators in several states have implemented balance billing protections designed to protect consumers from the pitfalls of narrow networks. These acts provide that the insured is protected from unexpected expenses with specific measures ranging from prohibiting out-of-network providers from billing enrollees for any amount beyond in-network level of cost sharing and requiring insurers to remove the financial liability of the insured for amounts beyond in-network level of cost sharing, to state provided resolution processes and the ability negotiate a settlement.7 This kind of opportunity for education, awareness and empowerment are crucial to keeping your employees from finding themselves in a situation like Bob's.
Get more effective health and benefits communication tips on the Benefitfocus Resource Hub.
1. Kaiser Family Foundation. Data Note: Public Worries About and Experience with Surprise Medical Bills. 2020.
2. Kaiser Family Foundation. A Polling Surprise? Americans Rank Unexpected Medical Bills at the Top of Family Budget Worries. 2020.
4. Kaiser Family Foundation. Data Note: Public Worries About and Experience with Surprise Medical Bills. 2020.
5. Peterson-KFF Health System Tracker. An examination of surprise medical bills and proposals to protect consumers from them. 2020.
6. National Association of Insurance Commissioners. What is Balance Billing? Knowing the Difference Between In-Network and Out-of-Network Providers Can Help You Avoid It. 2020.
7. The Commonwealth Fund. State Balance-Billing Protections. 2020.