Michigan Association of Health Plans

Surprise Billing: Another Healthcare Market Failure

Patients often assume that their health insurance will cover emergency care or major procedures. They’re caught by surprise when they find out that they’re not fully covered.

Of all the euphemisms in U.S. healthcare billing practices, so-called “balance billing” may take the cake. Balance billing, better known as surprise billing, happens when a patient receives care from a doctor or hospital outside of her insurer’s network. Subsequently, the doctor or hospital bills the patient for the amount insurance didn’t cover. Needless to say, these bills can be hefty. They add insult to injury, tormenting the American consumer of healthcare.

Surprise bills are symptomatic of the extraordinarily complex ways in which healthcare prices are set in the U.S. Supposedly, balance bills reflect the difference between in- and out-of-network costs to the insurer. The often unchallenged assumption is that health plans contract with doctors, hospitals, and pharmacy networks to reduce the costs of care and keep premiums low for consumers. While undoubtedly in-network contracts save money for insurers, it’s unclear whether and how much of the savings are passed on to the consumer. Since when did your premiums go down, or your out-of-pocket costs for that matter, even if you had all your care done in-network?

There is bipartisan support to end surprise billing. Last month, representatives Frank Pallone (D-NJ) and Greg Walden (R-OR) jointly released a draft bill that would prevent patients from facing surprise charges after emergency room visits, or even after receiving non-emergency medical care.

Full transparency for consumers requires piecing together the cumulative cost of treatment, and the portion covered by the insurer. Additionally, there needs to be timely communication on billing between healthcare providers and insurers.

To carry out what is in the executive order and draft bill may, however, need an assist from an intermediary. Waystar, for example, is a platform that processes healthcare payments. As a platform that handles billions of transactions annually for hundreds of thousands of healthcare providers, Waystar offers cloud-based technology that automates, simplifies, and unifies the revenue cycle.

Waystar CEO Matt Hawkins believes the anticipated executive order from the White House on healthcare transparency is a crucial first step, while the House bill is another. However, “both won’t benefit the patient until healthcare providers also have an accurate way to take insurer estimates into consideration,” Hawkins said.

Streamlining healthcare payments may result in lower administrative costs for insurers and providers, and “most importantly, patients will be better informed and relieved of the burden of exorbitant surprise bills.”

This article was originally published in Forbes.