Balance billing and the US health care swindle

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Due to a bout of acute appendicitis, I recently underwent emergency surgery at Duke University Hospital, where my experience was overwhelmingly positive (notwithstanding the severe abdominal pain). Without exception, I received excellent care from everyone on the medical staff at Duke – orderlies, technicians, nurses, physician assistants, medical students, residents, attending physicians, anesthesiologists and surgeons. In less than 24 hours, I was diagnosed, had surgery and was able to walk out of the hospital – truly a testament to the miracles of modern medicine.

However, my subsequent interaction with Duke’s billing department was perhaps worse than the illness itself. Like many Americans, I had the misfortune of visiting the emergency room at a hospital considered out-of-network under my health insurance policy. I went to Duke because I needed immediate medical attention, and Duke happens to be the closest hospital to my house. At the time, I was in so much pain I could barely move, so the list of hospitals in my insurance network was about the last thing on my mind.

You may be thinking that the insurance company turns out to be the bad guy in this story, but not so. My insurance provider, Blue Cross Blue Shield of North Carolina, covers all emergency medical procedures at in-network rates, even if care happens to be provided at an out-of-network facility. Blue Cross properly fulfilled its obligation and adjusted my bill according to the more favorable in-network rate, which Duke approved. Outrageously, Duke then had the gall to charge me the remainder of the bill at the much higher out-of-network rate, in an all-too-common process known euphemistically as “balance billing.” Consequently, my bill from Duke was almost double my out-of-pocket limit under my policy through Blue Cross and nearly as high as it would have been if I had no health insurance whatsoever.

Shamefully, Duke and other nonprofit hospitals employ these convoluted billing procedures simply to get paid more quickly and to make more money. Duke receives a direct payment from the insurance company only if the charge is billed as in-network; moreover, Duke allows large insurance companies to pay in-network rates for emergency procedures like mine because insurers have sufficient leverage. Meanwhile, Duke forces its patients – who have no clout whatsoever as individuals – to pay the remaining balances at out-of-network rates, which are really just arbitrarily inflated prices that allow the supposedly nonprofit hospital to make obscene profit margins. This process is confusing, unfair and deceptive.

Excessive hospital charges and balance billing are not unique to my situation but rather a universal phenomenon. Nonprofit hospitals, which until recently constituted charitable organizations devoted to the improvement of public health, have gradually mutated into a perverse form of reverse wealth transfer from under- and uninsured patients to fat-cat financial executives.

Many nonprofit hospitals, supposedly organized to serve the common good, are now more like monopolistic toll-collectors with profit margins often equal to or greater than those of major corporations in the S&P 500. Without any shareholders to account for, nonprofit hospitals instead distribute their outsize earnings to members of the C-suite: In particular, Duke’s executive VP and CFO both receive more than $1 million in annual compensation.

Whether conservative or liberal, most of us can likely agree that the state of privatized health care in the United States is an abomination compared with the rest of the developed world. Although the Affordable Care Act has benefited consumers by fostering competition in the health insurance marketplace, further reform is badly needed to counteract the increasing consolidation of health care providers, which is causing prices to spiral out of control.

If nonprofit hospitals would rather behave like for-profit monopolies, then their tax-exempt status should be automatically revoked. Furthermore, either hospital monopolies should be dissolved by regulators or these monopolies should be forced to justify charges to a public commission, similar to electric utilities. Balance billing, which is illegal in most developed countries, ought to be banned in all 50 states under all circumstances.

Lobbying and campaign contributions by oligarchs in the healthcare industry may be able to temporarily forestall such actions, but costs will eventually rise to levels so unsustainable that comprehensive health care reform becomes inevitable. Hospitals can volunteer to reform themselves now, or the public will force them to later. Health care monopolies can’t continue to swindle us forever.

Matthew Aitken, Ph.D., of Durham is president and executive director of the nonprofit Greener Change.