Preventing Financial Rape Under Obamacare.

This article was first posted November 1, 2016.

As Obamacare's fourth year approaches, at least two challenges test the President's signature policy success. Premiums are rising and particularly punishing the small fraction of Obamacare participants at the upper end of the income scale that do not receive a tax subsidy. And as insurance networks continue to narrow, more people are suffering the financial rape of out-of-network bills that could be five times or more the Medicare reimbursement for a given procedure.

You're screwed if you let your income exceed 400% of the Federal Poverty Limit (FPL)

Nationwide, about 85% of Obamacare participants receive a tax subsidy and have their premiums (for the benchmark Silver Plan in their area) capped at 9.66% of their income. No matter how much Aetna or Blue Cross raises their rates, these folks won't pay more than 9.66% of their income in health insurance premiums.

If you earn more than 400% of the Federal Poverty Level (FPL), you pay the full premium. Earn one dollar more in income, and your monthly health insurance premium could double. That's been an Obamacare problem from the start. (See, Don't Get Stabbed by the Obamacare Spike (March 2013)). The only cure is to manage your income and try to keep it below the 400% FPL limit.

"Surprise medical bills" is the polite term for financial rape under Obamacare.

"Surprise medical bills" is the term used by the health care industry to describe an involuntary "out-of-network" bill when the patient seeks care at an "in-network" medical facility. Unfortunately, there is no Federal law that limits what an ethically-challenged doctor or hospital administrator can charge an "out-of-network" patient. Five times the usual charge is fairly common -- and news reports describing bills of 100 times the usual charge have made headlines around the country.

Once you check into a hospital, you have little control over who works on you -- especially if you're under anesthesia. (Anesthesiologists often top the lists of the biggest offenders with "surprise bills".)

For 2017, Obamacare is requiring insurers to reimburse patients at "in-network rates" for any "out-of-network" bills received at an "in-network" medical facility. Additionally, if you seek emergency care at an "out-of-network" hospital, Obamacare requires that you be reimbursed at "in-network" rates. That's an improvement, but only a few states have any limits on "balance billing". Which means that the medical provider can come after you for balance after your insurer reimburses him at the "in-network" rate.

New York State seems to have the model law protecting patients from "surprise bills". And while several other states are considering similar protections, it will likely take years before every patient gets relief without Federal action.

Obamacare has helped millions of Americans who were previously shut out of the health care system. But there are still some things that need to be fixed. Let's hope Congress and the next Administration can compromise on something useful.

Resources for more information

Despite setbacks, health advocates push for solutions to surprise, out-of-network billing. By Kellie Schmitt, USC Annenberg, Center for Health Journalism, October 01, 2015 , Dr. Arnold Milstein, a professor of medicine at Stanford University, offers an example of a typical surprise billing scenario that’s become increasingly common since the ACA’s passage: A patient signs up for an Obamacare exchange plan, enticed by lower premiums in exchange for a more selective provider network. The patient schedules a surgery at an in-network hospital. But, without his knowledge, an out-of-network surgeon is called in to assist, or the anesthesiologist doesn’t participate in the insurance plan.

Even though the patient has been conscientious about staying in their provider network, they still get a hefty bill, Milstein said, adding that anesthesiologists’ non-negotiated rates can be five times what Medicare pays.

Some Alaska medical specialists charge as much as 10 times more than doctors in Seattle. Because they can. Some specialist procedures cost 10 times as much in Anchorage as they do in Seattle, said Lori Wing-Heier, director of the Alaska Division of Insurance. A standard rate for a knee replacement is $2,042 in Seattle but $10,218 in Anchorage, according to data from Premera Blue Cross Blue Shield of Alaska.

New York State, Dept of Financial Services, Protection from Surprise Bills and Emergency Services New York State's model law provides its residents with the most robust protection against financial rape by medical provders.

Surprise Medical Bills Lead to Protection Laws: Health, By Caroline Chen, April 3, 2014, Bloomberg News Hospital patients in New York are the latest in the nation to gain legal protection against unexpected bills from doctors who won’t accept their insurance. New York this week extended patient protection laws to restrict out-of-network providers from “balance-billing” consumers for emergency care or when patients can’t choose their doctors. Balance-billing occurs when health workers who don’t accept a patient’s insurance try to collect the difference between their charge and the insurer’s reimbursement.

U.S. Proposes Obamacare Changes to Ease Shopping, Lower Bills, By Zachary Tracer, November 20, 2015, Bloomberg News The changes would apply to insurance plans sold on the Affordable Care Act’s marketplaces for 2017, the law’s fourth year of coverage. Consumers will buy those policies starting on Nov. 1, 2016. The rules are still in proposal form and will have to be finalized after a period of public comment. One proposal would cut down on what the government called “surprise bills” when a patient goes to an in-network hospital and gets care from a provider who isn’t in their insurance plan. That can result in paying higher, out-of-network rates that don’t count toward the maximum amount patients are supposed to have to spend out of pocket. The proposal would count some of those services toward the patient’s out-of-pocket maximums.

After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn’t Know. By Elisabeth Rosenthal, Sept. 20, 2014, New York Times -- Mr. Drier was prepared when the bills started arriving: $56,000 from Lenox Hill Hospital in Manhattan, $4,300 from the anesthesiologist and even $133,000 from his orthopedist, who he knew would accept a fraction of that fee. He was blindsided, though, by a bill of about $117,000 from an “assistant surgeon,” a Queens-based The biggest surprise was the bill from Dr. Mu, the assistant surgeon. Fusions generally require a second trained pair of hands, but those can be provided by a resident or a neurosurgical nurse or physician assistant employed by the hospital, for whom there is no additional charge.

NPR -- Model New York law offer balance billing protections to patients Under the New York law, patients are generally protected from owing more than their in-network copayment, coinsurance or deductible on bills they receive for out-of-network emergency services or on surprise bills. A bill is considered a surprise if, for example, patients at a hospital or ambulatory surgical center that's in their network receive services from a doctor who, without their knowledge, is out-of-network. In addition, if consumers are referred to out-of-network providers but don't sign a written consent form saying they understand the services will be out-of-network and may result in higher out-of-pocket costs, it's considered a surprise bill.