May 06, 2020
Today I'm writing about a man, a man named Steve. Steve is married, has health insurance, and works for a local movie theater. One morning, Steve goes to work and his life takes a deep dark turn for the worse, because while showing the movie Dennis the Menace, Steve has a stroke. Thankfully, one of his coworkers calls for an ambulance to take Steve to the emergency room at his local hospital, where he is admitted to the intensive care unit. Steve's wife meets him in the ICU and finds him conscious, but his speech so slurred that it sounds like he's having a procedure at the dentist. The movie theater owner just purchased health insurance through "ABC Insurance" for Steve and the other employees, but Steve is his only employee at the time. As you can imagine, Steve's wife, Brenda, is going to be asking a ton of questions.
Questions like, "How will the hospital bill be paid?" The hospital bill will be paid by ABC Insurance. The hospital is contracted with ABC Insurance Company and the contract calls for the medical bill to be paid at 120% of the Medicare allowable. The contract with ABC Insurance is an HMO and there is no balance billing for Steve.
The emergency room doctor who saw Steve in the ER and ICU is also contracted, but with XYZ Insurance-not ABC Insurance. Their contract is also paid at 120% of the Medicare allowable.
Steve's wife goes to the Florida Medicare website where the website has the fee schedule available. The CPT code billed by the emergency room doctor is code 99285. The Medicare allowable for a 99285 is $179.47. The doctor is paid 120% of $179.47 or $214.80-that is the doctor's charge.
According to Steve's insurance, he must pay his copay of $20, his coinsurance which is 20% of $179.47 or $35.89, and his deductible of $100.
Therefore, Steve's total out-of-pocket costs are $155.89. Steve can manage that, and he has a credit card to pay those out-of-pocket expenses.
The problem isn't with the hospital, or with the emergency room doctor. The visit will be paid by his health insurance, which is based on the contract between ABC Insurance and the hospital, and XYZ Insurance and the emergency room doctor. The problem is the 2-minute ambulance trip from Steve's work to the hospital.
The ambulance company is not contracted with ABC insurance, which makes the ambulance company a "non-par" or non-contracted provider. While having his stroke, Steve had no say-so with the ambulance company, and Brenda, Steve's wife, wasn't there when it happened, so she couldn't call around to find if there were any ambulance companies that were providers for his insurance. Effectively, Steve's wife was being held hostage by the ambulance company.
Now, as a non-par ambulance company, they don't have to accept Steve's insurance. Even though Steve has an HMO policy, Florida has an HMO law, Florida Statute 641.3154, which states: If a health maintenance organization is liable for services rendered to a subscriber by a provider, regardless of whether a contract exists between the organization and the provider, the organization is liable for payment of fees to the provider and the subscriber is not liable for payment of fees to the provider.
Therefore, as a non-par provider, the ambulance company is not obligated to comply with the Florida HMO law, and as a non-par provider, the ambulance company can charge whatever they want, and this is when Steve gets a bill from the ambulance company for $500,000.
What happened to Steve is called Surprise Billing. Surprise billing occurs when an insured patient receives care from a provider that is out of the patient's insurance network.
With surprise billing, a patient can be billed for any amount that the out-of-network wishes to charge. The HMO contract is useless because there isn't a "contract" per se, but there is a contract that the ambulance company doesn't want us to know about that can help here.
What is that contract?
The contract I'm referring to is between the patient and their employer when the employer is not church or government. This all sounds familiar because it is also a Federal law, and that law is called ERISA.
When Steve obtained insurance through his employer with ABC Insurance, he received from them a health benefit manual, also known as a Summary Plan Description.
Under Steve's health benefit plan (which falls under ERISA since the movie theater is not a church or government organization), the health benefit for ambulance transportation defines the cost to Steve as $200 and not the $500,000 that the ambulance company wants to charge. As ERISA is a Federal law, the ambulance company is obligated to abide by that Federal law. Steve's health benefit manual documents the health benefit in the Federal ERISA regulation of 29 CFR 2560-503-1. Thus, the ambulance company now finds itself stuck with both a Federal law and a Federal regulation.
If the ambulance company wishes to keep pushing it, Steve can go to the ERISA Regulation 29 CFR 2560-503-1 where it provides him with an appeal of the ambulance charge of $500,000. 2560-503-1 states the following:
(b) Obligation to establish and maintain reasonable claims procedures. Every employee benefit plan shall establish and maintain reasonable procedures governing the filing of benefit claims, notification of benefit determinations, and appeal of adverse benefit determinations (hereinafter collectively referred to as claims procedures).
Steve is contacted by the ambulance company and they dispute any charge that is less than $500,000. However, Steve knows that the ERISA regulation states the following:
If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the claimant upon request;
(D) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits.
Steve can obtain a lawyer to sue the ambulance company if they don't comply with the information outlined in his health benefit. He can also contact his State and Political leadership that his ERISA rights are at risk of being violated and go on to contact State, local, and National TV and News companies that would be more than happy to publish how the ambulance company may be violating Steve's ERISA health benefit and appeal rights. This would be worse than when Kris Kringle was up before the New York State Supreme court in the movie Miracle on 34th Street when he was told he wasn't Santa Claus.
The ERISA law and regulations are very powerful. But Steve can also take this a step further if he contacts the hospital where he was taken to be treated. He can look to see if the hospital has an insurance contract with the ambulance company, and he can find out if the ambulance company was obligated to provide ambulance services through the hospital contract. The hospital may have had a contract with XXX Insurance and that contract documented ambulance services through the hospital. If the ambulance company is billing Steve for $500,000, that may be a breach of contract with the hospital. The hospital contract may establish that ambulance service is limited to a charge of $500; therefore, the ambulance cannot charge $500,000.
Last, but not least, the State of Florida may have a contract with the ambulance company to provide emergency services to the State, and if there is a contract with the State, is billing Steve for $500,000 a violation of the State contract? The contract to provide ambulance services in the State of Florida may be limited to $1,000.00.
As you can see, Steve has many options available to him. He has his ERISA health benefit which is $200. He has an ERISA appeal of the ambulance charge of $500,000. He has the hospital CEO contract, which the ambulance company is obligated to abide by per a charge of $500, and he has the State of Florida contract where an ambulance company can only charge $1,000.
The ambulance company may say they are out of network, and as an out of network ambulance company, they may say that they are permitted to charge Steve for the $500,000 for his ambulance service. It's Steve who has his ERISA health benefit that is contracted by Federal law and he has a Federal appeal through the ERISA regulation.
Important to note, research reveals that most of the surprise billing is performed by emergency department physicians. The ED physicians are not contracted or participating providers, resulting in their insurance not being contracted. State law cannot be used because there is no official contract, but in reality, there is, and that contract is the patient's personal ERISA contract. The patient with these ED providers has Federal ERISA appeal rights. The health benefit cost is all that the ED providers can charge the patient for. If the patient visit is a health benefit, and the cost of the benefit is $100, that is all the ED providers can charge the patient. They may want to charge $500,000, but they're stuck with the cost of the patient's ERISA health benefit.