There was a story this morning about a teacher in Texas who had a heart attack and was flabbergasted at the financial impact his hospitalization would cost him. The teacher, Drew Claver was taking out the garbage one morning when he had a Heart Attack. His 7 year old daughter managed to contact his wife via cell phone and she arranged for an ambulance to take Drew to a hospital.
It was the run of the mill heart attack involving blocked arteries. The doctors at St. David’s Hospital in Austin, Texas quickly stabilized Mr. Calver and then implanted stents in the arteries to eliminate and prevent future blockages. He was discharged 3 days later and given his bill, $164, 941.
It was then the “fun” began. Drew Carver did not worry since he had good health insurance through the school district where he taught. Much to Carver’s surprise the insurance paid a little over $52,000 leaving Carver with a balance to be paid of more than $100,000 on a teacher’s salary. What went wrong? Let me count the ways.
First, St David’s was an out of network hospital so it could charge anything it wanted. Furthermore the doctors at the hospital were also out of network so their fees were also not controlled. Did Drew while riding in an ambulance even remember which hospitals were in network or out and in his painful condition could he have done anything about it even if he knew? Probably not.
To give you some idea of the mark up out of network hospitals can charge the stents that were implanted in Drew cost the hospital $1,000 each and they charged Drew $20,000 each and everything else done for Drew in the hospital had similar markups. After he was discharged he had to deal with payment requests and bill collectors. Drew thought he was safe in that Texas among other states has some very strict rules prohibiting price gouging for out of network services. However, all such states have a loophole in that self insured health plans like Drew’s teacher health plan are exempt from this law. About 70% of all consumers covered by health plans in the U.S. have self insurance plans. BIG LOOPHOLE.
The upshot is the newspapers got ahold of Drew’s story and as a result of the bad publicity St.Davids Hospital cut Drew’s balance billing from $108,951.00 to $782.29 if he would just sign a paper that he was too poor to pay the full bill.
The reason this story struck such a chord with me is I had a similar experience 25 years ago. I woke up one morning with a heart attack and my wife called 911. The ambulance showed up and off we went. I yelled at the driver –where are we going? They said Somerset Hospital and I told them to turn around immediately and go to Morristown Hospital. They resisted telling me Somerset was closer but I told them I did not give a damn, get me to Morristown.
Why in the middle of a heart attack was I instructing the ambulance where to go? Because I knew from my position of running Prudential’s healthcare system, Morristown was in network and Somerset was out of network. This something the average citizen is not going to know, especially under the circumstances. This is even more difficult since not all the doctors practicing at an in-network hospital are in-network doctors.
One by one as doctors approached me I would ask are you in-network for Pru. The usual answer is they did not know – only their billing people knew. I had my wife call up the VP of Pru’s managed care in NJ to get to the hospital with a bunch of blank contracts. I had the full support of the Hospital executives who were scared to death I would pull their in network contract if I did get my way and in New Jersey that would be a huge financial strain for hospital to lose Pru’s business.
Three days later and two stents heavier I walked out of the hospital owing a grand total of ZERO. What I did was unfair, taking advantage of my position for my own gain – but I did it anyway. It took 10 years of lobbying before New Jersey passed a law which helps with out of network and balance billing. Even with Pru behind me, every corporation and medical provider faught against it. Finally we got something passed but it is not very strong and it still has an ERISA exemption for self insured plans but it is a start.
I know what to do about America’s healthcare zoo is a controversial question. But the current system does not serve the average citizen well – it is too complicated and too expensive. In the future I will be releasing new essays with answers to this question that fall well short of Medicare for all which I don’t believe is possible in the current political environment.