By BOB HERTZ

We Need Legal Assaults On The Greediest Providers!

When a patient is hospitalized, or diagnosed with a deadly disease, they often have no choice about the cost of their treatment.

They are legally helpless, and vulnerable to price gouging.

We need more legal protection of patients. In some cases we need price controls.

In the final part of this series, I discuss how we need to empower patients by allowing them to challenge their medical bills in courts.

Assault Phase Four – Binding Arbitration of Medical Bills

 We must allow patients to challenge their medical bills in expanded ‘Health courts.’

Patients should be able to contest any bill over $250,  especially if they have not given ‘informed financial consent’ to the provider.

Such ‘consent’ would require that if a procedure can be scheduled in advance, it can also be quoted in advance. If the patient requests an estimate, they must be notified in writing at least seven days in advance. This would allow the patient to request a different provider, or to investigate other alternatives. If an estimate is requested but never produced, the patient has no liability. (That will shake up the providers rather quickly.)

 The  Health Courts will be staffed by ex-physicians and active judges. All court costs will be paid by the government, and the patient will not always need an attorney. There will be a free ‘ombudsman’ service (as Medicare already has) to provide guidance to patients.

A padded bill of $1500 may be financially significant to a patient, but too small for an attorney to take on the patient’s case, and perhaps too insignificant for the state’s attorney general to pursue. 

The courts can rely on the following principles:

• If a patient is insured and their care is in-network, no balance billing is allowed without informed consent.
• If the care is out-of-network, they can only be charged a ‘reasonable and fair fee.’ Generally this will be equal to the provider’s average reimbursement from insurance companies.
• If an insurance claim is denied, the patient is not necessarily liable. Under Medicare, if an insurance claim is denied and the patient could not have been expected to know this in advance, then the health care provider suffers the economic loss.

The case law is ready and waiting to apply.  Arbitrators can cite numerous rulings that have required providers to accept ‘reasonable charges.’

Right now, small claims courts are used mainly by providers to collect their own billiings. We would open them to patients, to challenge their bills.

Here is a sample of  potential Health Court cases :

• Extra billing for ‘facility fees’ (i.e higher charges for outpatient care done in hospitals)
• Outlandish charges for simple diagnostic tests (i.e. $5000 for an echocardiogram)  
• $50,000 in charges for an air ambulance trip
• $35,000 for an artificial knee that costs about $700 to produce 
• $20,000 for a pacemaker that costs about $6,000 in the US, and $1,000 in India
• $4,000 for a drug infusion that costs $500 in Britain, France, or Germany
• $12,000 for an “operating room” to conduct a 20 minute surgery
• $15,000 for a ‘Trauma Activation Team” to help with an ER admission
• $20,000 for an anti-venom inoculation that costs the hospital about $200.
• Extra charges because a doctor inadvertently referred you to a non-network provider
• Extra charges because the provider used a higher “severity” code when coding the claim.

(You can still go to Health Court even if you are insured. For example, if your high-deductible insurer approved $4000 for a simple echocardiogram and left you with a bill for $2000, you still have a grievance. For that matter, insurance companies can even use Health Courts when they are being gouged by providers.)

  All bill collections will be suspended while a patient is waiting for a hearing in health courts. We do not care if thousands of medical bills wind up sidetracked in health courts. Hospitals will claim that their insurance reimbursements are ‘confidential’, but this must be overturned. Sometimes it takes a few bad results to wake up a complacent and powerful industry.

This is not really “a terrible expansion of state power.”  Remember that doctors and hospitals are fiduciaries, because patients are medically at their mercy. Charging patients more if they are  unprotected  flagrantly exploits the patient’s  vulnerability.

 Price gouging will not go away overnight — there are always loopholes, and some providers will always persist in financial exploitation. They figure they have nothing to lose.

The goal of health courts is that greedy providers should lose money, due to fines and attorney costs.

 (In a competitive market, they would also lose reputation for gross overcharges. But people may only use a hospital or specialist once in their lives, so predatory billing goes almost wholly unpunished.)

It is ridiculous that  some hospital stays require virtually a fresh negotiation every time — starting with the hospital bill, and then the patient going to the media and hiring a lawyer and/or going to Health Courts.  All states would benefit from a binding fee schedule for all hospitals, versus the current free-for-all.  One virtue of a single-payer system would be that hospitals would get one check a month from the government, and not need to recover all their expenses from patients.

In fact, in the words of Adam Gaffney:

“Hospitals shouldn’t have prices at all, any more than public schools, parks, or libraries. For one thing, the very meaning of per-user “prices” in social institutions is murky. We could attempt to attribute the costs of maintaining Central Park to distinct visitors, I suppose, based on how long they spent lounging on the Great Lawn, whether they circle the reservoir once or twice, whether or not they ask for directions from park staff, and so forth. But it would be a very crude, and perhaps intrinsically fraudulent, effort. Regardless, it would necessitate a major diversion of park resources into a bookkeeping apparatus with zero social value.”

Final Note

Medicare patients have been protected against balance billing, surprise billing, claims-denial liability and ER overcharges for over 50 years. This level of decency should not be restricted by age.

The reforms described here will require relatively little in new taxes — at most about $40 billion for ER subsidies and ambulance funding. This is less than one percent of payroll, if funded by an increase in Medicare taxes.

What these reforms  require is public officials who not beholden to the medical industry. We must build on what Elizabeth Rosenthal called “Nine Rights Every Patient Should Demand” in the New York Times (4-27-2018)

All economic systems ultimately run on fear and greed. Some  health care providers now need a good dose of fear to bring them under control. ‘Charging what the market will bear’ is no longer acceptable.

Bob Hertz is a retired insurance broker. He learned about health care from Uwe Reinhardt, Joseph White, Dr. Robert Evans, and George Halvorson a fellow Minnesotan.