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Why Many Have Difficulty Paying Medical Bills Even With Health Insurance
Despite having health insurance, many Americans still experience difficulty paying medical bills primarily due to
excessive out-of-pocket expenses and uncovered services. Failure to be able to meet one’s cost-sharing portion of
covered benefits can be due to illness(s) requiring extensive utilization of health benefits, selection of the
wrong insurance plan, or utilization of out-of-network health benefits. Uncovered services on the other hand can be
the result of not knowing what benefits are excluded from coverage, failure to comply with the contractual rules
and regulations of the plan, or obtaining out of network services.
According to a recent study conducted by NerdWallet Health, medical bills are the number one cause of bankruptcies
in the United States with almost 2 million people expected to have filed in 2013. Besides bankruptcy, it is
estimated that 56 million adults between the ages of 19 and 64 will struggle with bills related to healthcare, and
of that number 10 million will be adults with year-round health insurance.
The medico economic difficulties that are experienced by many, despite having health insurance, are unavoidable
because of expensive chronic illnesses or injuries requiring large amounts of care, but in other cases the
out-of-pocket costs are burdensome because individuals chose health plans with very high deductibles, high
coinsurance, and/or high copayments in an attempt to minimize premiums. On other occasions, the use of
out-of-network benefits in order to receive treatment from a preferred physician or at a preferred hospital or
other facility, also results in significantly higher deductibles, copayments, and/or coinsurance. In some
instances, depending on the plan, the out-of-pocket costs may be as much as four times higher for-out-of-network
benefits versus in-network ones. Additionally, out-of-network expenses are not counted toward the
In receiving out-of-network services the increased patient portion of the cost sharing is oftentimes compounded or
even overshadowed by the fact that out-of-network provider charges are not limited by the allowable charge
stipulation in the patient’s insurance policy. What that means is since providers outside of the network do not
have contractual relationships with a patient’s insurance company, they are not required to discount their charges
to the amounts stated in a patient’s policy, and thus don’t have to write off any difference between their usual
charges and the charges a patient’s plan agrees to pay network physicians. Since in most states doctors are not
required to have the same charges for all patients, it is very common for their customary charges to be higher than
those for managed care plans. Thus, if a provider is not willing to lower his or her customary charges for
out-of-network patients, patients with indemnity plans, or even patients without insurance, it essentially amounts
to penalizing those patients. Although some doctors will lower their charges in those situations, other providers
such as large hospitals that don’t have a personal relationship with the patient are usually not so benevolent. In
fact some years ago, one large hospital published that the degree of aggressiveness it used in pursuing outstanding
debts for hospital bills depended upon whether not the debtor owned a house valued at $200,000 or more.
A scenario in which patients are surprisingly faced with unexpected medical bills is one in which the patient is
unfamiliar with the exclusions and limitations of his or her health plan and learns after the fact, that certain
services received were not covered benefits. Another scenario in which additional but unnecessary expenses are
incurred is failure to follow the policy guidelines such as those requiring a referral from a PCP before seeing a
specialist or obtaining precertification or prior authorization before a particular service, as stipulated in the
policy. Many times this scenario plays out unwittingly on the patient’s part. For example, a patient’s primary care
physician might consult a specialist during hospital care, but does not know the specialist is not a part of the
patient’s provider network. Another example is when the primary care physician fails to obtain precertification or
prior authorization for certain services.
Arguments are being waged, and rightfully so, that the Affordable Care Act is not a panacea for the problem and
will not cause medical bankruptcy filings and medical indebtedness to go away, but hopefully, increased public
education regarding health insurance and the provisions within Obamacare will at least stem the
Victor E. Battles, M.D. is a board-certified internist with 30 + years of patient contact. He has been a principal
investigator in several clinical research trials and is the founder of Proactive Health Outlet. Additionally, he
has worked in the areas of quality assurance and utilization review.
Victor E. Battles, M.D.
December 13, 2013
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