A surprise bill is a charge a patient receives after being treated at an in-network hospital by a doctor who is out-of-network.

The patient gets an expected bill from their in-network hospital, which is covered according to their insurance plan. Then, however, they get a second, surprise bill, that can often much larger, from the out-of-network doctor.

It is a highly confusing and unfair situation for patients, but just because a doctor works at a hospital doesn’t mean the doctor works for the hospital.

Why is this happening?

Hospitals sometimes “outsource” a few of their services such as emergency care and anesthesiology.

This means hospitals contract with staffing firms who employee thousands of ER doctors or anesthesiologists. Those staffing firms then place their doctors into your local hospital.

For example, you go to an in-network emergency room, but the ER doctor who treats you isn’t in network because he doesn’t work for the hospital. Instead, he works for a national staffing firm and simply practices at the hospital.

This situation allows for surprise billing because there is no “agreed to” payment rate between the ER doctor who treats and your insurer.

When a doctor is in-network, it means they have “agreed to” a set payment rate with your insurer. However, when a doctor is out-of-network, there is no “agreed to” payment rate and they can charge you anything they want.

A Substantial Problem

1 in ten Americans have been a victim of a surprise medical bill received from an out-of-network provider.

There are horror stories of extreme cases where an assistant surgeon charged $117,000, or where a single dab of glue racked up a $1,700 charge.

Upwards of 30 percent of ER trips in North Carolina result in a surprise bill.

Surprise medical billing drives up health care costs by roughly $40 billion a year. This means “everyone’s health care premiums — for both employers and patients — are higher, even if one hasn’t received a surprise bill.”

North Carolina Law Exacerbates the Problem

There is a loophole in North Carolina law that allows certain providers to use the threat of surprise billing to extort higher payments from businesses and insurers.

The law reads:

“No insurer shall penalize an insured or subject an insured to the out-of-network benefit levels offered under the insured’s approved health benefit plan… unless contracting health care providers able to meet health needs of the insured are reasonably available to the insured without unreasonable delay.”

On its face, the law makes sense.

Let’s say you live in Charlotte, and you are at the beach on vacation. You’re in an accident and need emergency care, but your in-network ERs are back in Charlotte. In this instance, the law should protect you from a high out-of-network bill because an in-network ER isn’t “reasonably available” without “unreasonable delay.”

If everyone acted with honest intentions, then this would be a commonsense consumer protection.

But that’s not happening.

Certain provider groups have manipulated the law in two ways.

First, they deliberately refuse to accept your insurance. Take anesthesia, for example.

You are headed into surgery at your in-network hospital. Of course, you are going to need anesthesia. But the anesthesiologist practice at the hospital does not work for the hospital.

Therefore, they are not bound by the in-network contract the hospital has with your insurer. But since the anesthesiologist practice is the exclusive provider of anesthesia at the hospital, they know they are the only one “reasonably available.” By simply refusing your insurance, they can charge any amount they want, and the law guarantees they’ll be paid it.

This, of course, causes premiums and out-of-pocket costs to skyrocket.

The second, and more common way the law's loophole is exploited is through contract extortion. Provider groups will use the threat of going out-of-network to extort huge payments from your insurer. They know insurers have no negotiation power. A provider can stay out-of-network and charge whatever they want. Or your insurer can agree to a take-it-or-leave-it rate.

What happens? The insurer agrees to a vastly inflated rate. After all, for example, it is better to pay an extorted $5,000 for a $1,000 service than an out-of-network $10,000 charge.

What’s being done to fight it?

The good news is that commonsense consumer protections can stop surprise billing.

We’ve seen legislation introduced at the General Assembly that would have set a fair, reasonable limit for out-of-network charges.  

The Affordable Healthcare Coalition of North Carolina will continue to advocate for reforms that protect consumers from high healthcare costs and surprise bills.

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