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Sticker shock: Health insurance no guarantee of lower bills for some patients

News Article

April 10, 2016

The Arizona Republic

When Mark Holland sliced the palm of his hand at the pool of his north Phoenix home, the jagged cut was so deep, a simple bandage would not stanch the flowing blood.

He went to HonorHealth John C. Lincoln Medical Center, the hospital closest to his home. It was part of his health insurer’s network, so he didn’t think twice about what it might cost as a surgeon stitched his hand.

That changed 10 days later during a checkup with the surgeon, Dr. Edward Reece of the Arizona Center for Hand Surgery.

The Phoenix center’s administrative staff explained that Reece did not accept Holland’s insurance plan, Blue Cross Blue Shield of Arizona, as an in-network provider.

That puzzled Holland.

The hospital’s anesthesiologist and the hospital were both in his insurance plan’s network. Reece was the doctor dispatched to the hospital emergency room. And since Holland was sedated at the time, he was in no position to question which hospital staff members were part of what insurance network.

Over the following months, Holland tracked the letters, bills and benefits statements from his insurance company.

Although Blue Cross Blue Shield did not have a contract with the Arizona Center for Hand Surgery, the insurer and Holland agreed to pay $4,014 – or $660 more than Medicaid would pay for a similar surgery — according to court documents.

The Arizona Center for Hand Surgery wanted him to pay more than four times that amount.

When Holland declined to pay the entire billed amount, the surgery center’s medical-collection agency, Medical Society Business Services Inc., last year filed a civil lawsuit in Maricopa County Superior Court seeking payment of the bill’s balance of $16,639, plus 10 percent interest for each year the balance remained unpaid after the 2012 surgery.

“I have a long history of seeing doctors, and I have been in ERs many times. I have never had anybody come after me for more money after the insurance company paid them, let alone sue me.”

Mark Holland, patient

The medical-collections agency said in court documents that Holland “was enriched” by the medical care and that the Arizona Center for Hand Surgery was “impoverished because it had not been paid the reasonable value” for the surgery.

Holland couldn’t believe it. He chose the hospital, but not the surgeon. And he did not learn the surgeon was not part of his insurer’s network until 10 days later. After he learned the surgeon was out of network, he never returned. His wife removed the stitches from his surgically repaired hand.

“I have a long history of seeing doctors, and I have been in ERs many times,” Holland said. “I have never had anybody come after me for more money after the insurance company paid them, let alone sue me.”

But Holland is not the only patient sued by the Arizona Center for Hand Surgery through its collection agency. More than a dozen former patients have been sued by Medical Society Business Services Inc., also known as the Bureau of Medical Economics. The surgeons’ collection agency has filed its lawsuits after collecting payments from patients’ insurers that were less than the full amount sought by the medical practice, court records show.

The Arizona Center for Hand Surgery declined to discuss its billing practices with The Arizona Republic. A center representative said that, based on past media reports, it did not expect the newspaper to fairly portray the situation.

“An interview or providing you with any comments concerning your inquiries would be fruitless from our perspective as they would undoubtedly be twisted and taken out of context as they have been in the past,” Chief Financial Officer Katherine C. White said in an email.

“The issue and real story here is bigger than complaints that patients have about their bills. It goes to the heart of the failure of health care reform, social issues and the greed, and power of the commercial health insurance companies.”

 

SURPRISE MEDICAL BILLS

Tim Metzger was billed $24,777 for a surgery that he said lasted less than one hour.(Photo: Nick Oza/The Republic)

Consumers say they are frustrated because they’ve chosen health-insurance plans based on their network of providers, and when they go to an in-network hospital, they expect doctors and other medical providers there to be part of the insurer’s network.

But that’s not always the case, as Holland and other metro Phoenix residents have discovered. Hospitals must provide round-the-clock coverage for a range of medical specialties, but specialists such as hand surgeons often are not employed by the hospital.

Doctors can negotiate with health-insurance companies on contracts that establish a negotiated rate as full payment for medical services. Or they can choose not to sign contracts and set their own rates if they feel they are not paid fair rates.

The Arizona Center for Hand Surgery provides 24/7 coverage at hospitals across metro Phoenix. Their surgeons agree to be dispatched to bedsides across the region at a moment’s notice.

Representatives of some hospitals say they have encouraged the Arizona Center for Hand Surgery to accept contracts with more commercial health plans.

“We have met with the Arizona Center for Hand Surgery to encourage them to take more commercial contracts,” Scottsdale-based HonorHealth, which owns John C. Lincoln Medical Center, said in a statement. “While it will take some time for them to establish contracts with the insurance companies, we have and will continue asking them to make this change. Furthermore, we have asked them to fully evaluate their collection processes to best serve patients.”

Banner Health said specialists who don’t contract with major health insurers are of increasing concern and a “new area of focus as we credential providers at our facilities.”

But Banner, the state’s largest health network, said that it can’t risk losing doctors, particularly specialists who are in short supply, by requiring them to sign contracts with insurance plans.

Lawmakers in some states, California and Texas among them, have introduced legislation to address surprise medical bills that consumers receive from out-of-network doctors or hospitals. At issue is the practice of “balance billing,” when out-of-network doctors or providers who collect payments from insurance companies seek to recoup the balance from the consumer.

A March 2015 survey of 2,202 privately insured adults by the Consumer Reports National Research Center found that nearly one-third of adults had grappled with a surprise medical bill over the previous two years. Most of those adults said the billing dispute was not resolved to their satisfaction, with the largest share of those people paying full charges.

Consumer complaints are mounting nationwide from patients billed for out-of-network charges during emergency-room visits, said Betsy Imholz, special projects director for Consumers Union, the nonprofit policy and advocacy arm of Consumer Reports magazine.

Consumers expect their bills to be largely covered if they receive care at a hospital that has a contract with their insurance plan. Health plans typically require a consumer to pay some costs, such as a copayment or deductible.

“Everyone is pointing their finger at everyone else. Nobody is taking the responsibility, and the consumer is left holding the bag.”

Betsy Imholz, Consumers Union

But consumers nationwide are surprised to learn that even though a hospital is part of their insurance plan’s network, doctors such as emergency-medicine specialists, radiologists, anesthesiologists or hand surgeons may not be covered as an in-network provider, Imholz said.

“It is very complicated for consumers — and, we think, unfair,” she said. “Everyone is pointing their finger at everyone else. Nobody is taking the responsibility, and the consumer is left holding the bag.”

Imholz added that some doctors and medical providers may feel emboldened by an Affordable Care Act requirement that insurance plans cover emergency services even if a provider is not part of the plan’s network. Gilbert Hospital, for example, has chosen not to sign contracts with many commercial health insurers, citing the health-care law’s emergency-services clause as a factor.

The Florida Legislature last month passed legislation aiming to ban surprise medical bills from doctors or hospitals that don’t have a contract with the patient’s insurer. The legislation would require health insurers, doctors and hospitals to negotiate a fair payment amount, through a mediator if necessary.

 

IN A RABBIT HOLE

Tim Metzger is one of several patients sued by a medical collections agency for Arizona Center for Hand Surgery. He filed a countersuit against the center’s bill collector.(Photo: Nick Oza/The Republic)

Arizona law doesn’t address surprise medical bills. Consumers who have lodged complaints with Arizona regulatory agencies about bills from the Arizona Center for Hand Surgery’s billing practice say they’ve had little luck getting them resolved to their satisfaction.

In July 2014, Laura Weissman’s hand was injured while Weissman was trying to separate two fighting dogs. She showed up at Banner Desert Medical Center’s emergency room in Mesa because the hospital was part of her insurer’s network. At the hospital, the Arizona Center for Hand Surgery’s Dr. Steven Bastian performed surgery on her left hand.

During a follow-up visit with Bastian three days later, Weissman learned the surgeon was not contracted with her insurer, even though the hospital was. The Arizona Center for Hand Surgery charged her $11,557.

Weissman eventually settled her charges for a lower amount. She paid about $3,700, and her insurer remitted about $2,500 in payments.

“I felt like I was in a rabbit hole,” Weissman said.

Still, the process irked Weissman’s father, Roger Weissman, a Gilbert lawyer. He contacted or filed complaints with several state agencies, including the Arizona Attorney General’s Office.

In response to Roger Weissman’s complaint, the Arizona Center for Hand Surgery’s representative said in a letter to the Attorney General’s Office that its doctors must provide emergency care to patients whether or not they pay. The result is that on-call doctors “deliver a considerable amount of uncompensated care” and must charge higher fees to make up for the unpaid bills.

Roger Weissman said he was frustrated for his daughter because she had no warning that her surgeon was out of network.

Others who fought billings in court have had more luck.

Tim Metzger, a general contractor, was cutting a baseboard at a Phoenix home he was remodeling in February 2012 when the power saw raked across his left hand. The saw cut a tendon and an artery. He wrapped his hand and went to Maryvale Hospital before he was transferred to St. Joseph’s Hospital and Medical Center, where a surgeon from Arizona Center for Hand Surgery repaired his hand.

“We already paid what insurance told us to pay. We said, ‘No, we’re going to fight this.’”

Tim Metzger, patient

Metzger was billed $24,777 for a surgery that he said lasted less than one hour. He paid $1,056 to his surgeon, and his insurance company paid $4,223. The insurer refused to pay a larger share of the bill despite multiple appeals, and Metzger felt he paid his fair share.

“We already paid what insurance told us to pay,” Metzger said. “We said, ‘No, we’re going to fight this.’”

Metzger refused to pay the balance of nearly $19,500. The Arizona Center for Hand Surgery, through its bill collector, sued him and his wife in March 2015 in Maricopa County Superior Court. The lawsuit included a document Metzger signed acknowledging that he was financially responsible for the bill.

Metzger enlisted the help of a longtime attorney friend, Bryan Murphy, who filed a countersuit against the Arizona Center for Hand Surgery’s bill collector, alleging Murphy was misled when he signed the financial-responsibility paperwork indicating that he’d only have to pay an out-of-network deductible.

Murphy argued in court documents that the Arizona Center for Hand Surgery billed Metzger about six times the amount that Medicare would pay for a similar surgery.

He said those billed charges were not supported by Affordable Care Act rules for the amount the out-of-network doctors or hospitals could charge for emergency services.

“This is the kind of stuff that bankrupts people. To charge five times what Medicare charges, it’s greedy and immoral.”

Tim Metzger, patient

In January, a court-appointed arbitrator ruled that the Arizona Center for Hand Surgery’s collection agency could collect only an additional $1,261, and the agency had to pay all of Metzger’s attorney fees. The two sides settled the case with no money exchanging hands, Metzger said.

“This is the kind of stuff that bankrupts people,” Metzger said. “To charge five times what Medicare charges, it’s greedy and immoral.”

Phoenix resident Holland and his lawyer were preparing for a court-appointed arbitrator to hear their case when the hand surgeon’s medical-bill collectors offered a “walk away” settlement. The collectors agreed to drop the suit without pursuing further collection. The court approved the lawsuit’s dismissal in February. Holland said he paid his own attorney fees.

Some aren’t as lucky. The Arizona Center for Hand Surgery, through its medical bill collector, has sued more more than a dozen former patients over the past two-plus years, seeking amounts ranging from $11,583 to $51,596. The court issued judgments against patients in at least nine cases. Other cases were settled or dismissed.

Retired police Detective Reeve Rickard of Burbank, Calif., is paying off a balance of more than $12,000 in past-due medical bills, attorney fees and court costs from a Maricopa County Superior Court judgment last year. The amount is less than what the medical-bill collectors initially sought.

In 2011, Rickard’s then-minor daughter pricked her finger on a cactus, and it became infected. She was sent to a hospital, where a hand surgeon operated on her infected hand. Rickard now must pay $300 a month until the balance is paid.

“It’s a blow financially and still a debt we will be paying for quite some time,” Rickard said.