By Carl Lachman, MBA, CFP®

Emergencies Are Not Planned

            We don’t plan to have a medical emergency. Rather, something happens and we need to rush to the emergency room of a local hospital. We have a medical problem and we need help fast, which is why ERs exist. Most of the time, we get the help we need and the dire problem is solved by doctors and nurses who live every day helping people who need immediate assistance.

            But what also usually happens is that a couple of months pass and then we get a surprise billing for some part of that ER visit that we did not expect. Wait a minute, isn’t that hospital in-network with my health plan?!? I know I checked that when we got our health insurance! Why is this doctor sending me a huge bill? I don’t think they even bothered to check with my health insurance company! What is going on?

Not a Happy Surprise

            You have unfortunately discovered that one or more of the doctors in the emergency room are not in-network with your health insurance. Emergency room doctors are needed by people who do not have the time to pick and choose an in-network doctor since they are having an emergency. So, doctors who work in emergency rooms have generally stopped going through the annual struggle to negotiate with health insurance companies about what they should be paid for their emergency expertise. They don’t have to be in-network because in an emergency no one has the time to shop around for a good emergency room doctor. So, most ER doctors are out-of-network.

Same for Ambulance Companies

            The same is true for ambulance companies. Do you have the time to check which ambulance companies are in-network when an emergency strikes? No. If you need an ambulance, you need one quickly and out of the blue. So, again, why should ambulance companies go through the hassle and pain of trying to negotiate their rates with huge health insurance companies? They don’t have to be in-network.

Heartless and Greedy?

            You may think that these ambulance companies and ER doctors are heartless and greedy, taking advantage of others’ misfortune, but I don’t think that is the case. After all, they were there for you in your time of need, and they used their skills and expertise in a stressful, dire situation, even ready to save your life. I am confident that the vast majority of doctors and ambulance companies are good ones and that there are only a few bad ones.

            And frankly, if you or I worked as an ER doctor or owned an ambulance company, I think we would actually do the same thing: stay out-of-network. If we could skip the annual hassle of negotiating our rates with mammoth health insurance companies, I think we would. I don’t know if ER doctors and ambulance companies actually make any more money doing it this way. Maybe some do, but others don’t. I do think that skipping the hassle of an annual in-network negotiation is a big win, though.

The Health Insurance World Is What It Is

            So, back to your surprise bill. We are not going to change the health insurance system before your bill is due, so what should you do? With a little research, you will find out that you do have options.

            A few years ago a family member ended up in the emergency room and we received a large bill from an ER doctor. I tried contacting the doctor and their billing department, but no one was willing to discuss the bill. I have contacted providers and billing departments for maybe a hundred medical bills over the last 30 years and generally had good experiences, but I found the billing department for this particular doctor to be particularly irritating and rude, so I started to do some research. I discovered there were some rules about surprise ER bills in our state of California that seemed to apply to my situation. When I brought this to the attention of the doctor’s billing department they played very dumb and claimed to have never heard of the rules I was quoting to them. But, in my research, I also discovered that the State of California’s Department of Insurance had a complaints department that was willing to help me out.

There is Consumer Protection Available

            Insurance is regulated on a state-by-state basis, so I am unsure what your state offers, but the State of California’s Department of Insurance is ready to help. You can go to it’s website right now and start reading here: Consumer Protection from Surprise Medical Bills.

            In my case, I filed a complaint and I received a personal email from a real person at the Department of Insurance just a few days later. Then, within about two weeks of getting help from one of the Compliance Officers at the Department of Insurance, the surprise ER doctor bill was cut down by about half. I was surprised, grateful, and heartened that my state’s massive bureaucracy was able to go to bat for me so quickly.  

The Laws and Regulations are Changing

            Some laws and regulations are slowly changing this surprise medical bill situation. I don’t think it is fully implemented and not every situation is covered, but a lot more is being done than just a few years ago.

            When a family member recently had to be moved in the middle of the night from one hospital to another, there wasn’t a choice on medical transportation and the hospital got the first available ambulance. A couple of weeks later, long before I received a bill from the ambulance company, my health insurance sent me a letter telling me what to do if the ambulance company sent me a bill. My insurer’s letter explained that the ambulance company was going to send me a huge bill, but I couldn't ignore it. My insurer wrote that the ambulance company was out-of-network, was going to be paid the correct amount by the plan, that I did not need to pay the ambulance company any additional amount, and told me to ignore bills from the ambulance company.

            Sure enough, I received a very large bill from the ambulance company a month later saying there was still a large amount due. The company continued to send me a bill every 6 months for several years. I never paid any additional amount and they finally gave up after about 5 years. I guess many people don’t know about this situation and just go ahead and pay the bills, but with a little information you can avoid falling for this.

Your Rights and Protections

            In the last two weeks, I received an explanation of benefits from my health insurance company and they included a page with the heading, “Your Rights and Protections Against Surprise Medical Bills.” This single page says many of the same things I am explaining with this article and you can read what my insurance company says online here: https://www.uhc.com/legal/federal-surprise-billing-notice

            You will note that this surprise medical billing notice is a “federal” notice, so what is written might not apply in every situation in every state. But I think it will be worth it for you to do a little research when you get one of these surprise bills. At the federal level, the “No Surprises Act” went into effect on January 1, 2024, and in California, Governor Newsom recently signed a bill to end surprise ambulance billing for Californians. So, maybe these problems are soon going to be solved.

Does Your Financial Advisor Look Out for You?

            Our fee-only financial firm doesn’t sell health insurance. We don’t sell any sort of insurance or annuity. But, insurance is a big part of financial planning and our clients pay us for advice in all areas of their financial lives, from investments, taxes, estate planning, retirement, and insurance. So, we study, research, and attend seminars every year on these varied topics and areas of expertise, including health insurance.

            In my case, I have personally gone through a couple of different surprise billing situations and found out how to deal with them from personal experience, but this is the sort of subject that our financial advisors are also exposed to each year in our reading and continuing education. Not every financial advisor has to complete the amount of continuing education that our advisors have to complete each year. So if you are thinking about using a new financial advisor, you might want to inquire about how they stay sharp and keep growing in their expertise.

You also should find out how your financial advisor gets paid. Are they compensated in such a way that they will put your interests before their own? Or, are they paid a commission and only looking for the next sale?

If you schedule a free meeting with me and let me tell you more about Eclectic Associates, I will be happy to answer any health insurance questions that might have been prompted by this article. Click here to schedule an appointment.