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The Real Culprit Behind Surprise Medical Bills

By Dr. Brian Dixon

|Jul 2, 2019

Texas State Senate Bill 1264 is a bipartisan piece of legislation that takes a hard and necessary stance against surprise medical bills in Texas.

This begs the question: What is a surprise medical bill?

These “surprises” are exactly what they sound like. A Texas resident goes to an in-network medical facility, only to receive an astronomical out-of-network bill from the hospital weeks later.

We’re talking hundreds of thousands of dollars in many cases.

As the Texas Tribune defines it, “Surprise medical bills… result when insurers and health care providers can’t agree on the price of a medical treatment, leaving the patient to make up any costs the insurer won’t pay.”

Or you can take NPR’s explanation: “When patients, through no fault of their own, are treated outside their insurers' network of hospitals, the result can be a surprise bill. Other times, insurers won't agree to pay what the hospital charges, and the patient is on the hook for the balance.”

It’s terrifying. But in my professional opinion, Senate Bill 1264 isn’t the answer for Texas healthcare.

While it’s nice to see some cross-the-aisle teamwork in politics these days, as a working physician, I disagree with the bill’s foundational premise.

Why? Because Senate Bill 1264 once again protects insurance companies instead of patients and physicians.

What the bill does right

Surprise medical bills are a shared fear for many Americans. Patients worry that despite paying exorbitant fees for medical insurance, they’ll somehow land in a situation that forces them to fork over their life savings or drown in medical debt.

Why do patients worry? Because we’ve all heard the horror stories about insurance providers finding loopholes and excuses not to cover your medical expenses in times of need. “Patients are most at risk when they are also the most vulnerable,” reports the Houston Chronicle. Receiving a surprise bill is a reality for far too many Texans.

The good news is, this new proposed bill seeks to change state laws to make this process illegal.

But there’s a down side. The new bill forces medical facilities—not insurance companies—to eat these additional costs.

The big flaw in the medical bill

At the heart of surprise medical billing is an enormous flaw: insurance companies cause a problem that everyone else has to pay for.

The business model of insurance companies is to collect more money from people on their health plans than they pay out to those same people.

Thus every opportunity they have to avoid paying a medical bill, every balance bill that requires you to make up the difference, means more money in their pockets.

In other words: they find ways around covering their customers’ medical expenses, forcing the patient to incur the expense. Or, as proposed by Bill 1264, the hospital would have to cover the cost.

Often surprise bills can occur because a certain specialist at an in-network hospital—like an anesthesiologist—happens to be out of your insurance’s network. But when you’re going into surgery or need emergency care, sometimes you don’t stop to dot all your i’s and cross all your t’s.

Senate Bill 1264 empowers insurance companies above medical professionals and patients. Of course, it never looks this obvious.

In other words, this bill will punish medical facilities or patients instead of the real, expense-driving culprit: health insurance. It’s not a far cry to see that hospitals will need to raise their rates overall to cover the cost of this new liability.

Bring forth the politicians

"Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies." - Groucho Marx

It’s hard not to blame the hospital when surprise bills show up in your mailbox.

After all, it’s their address and name listed on the return envelope. But below the surface, I argue that it’s the underlying structure of modern U.S. healthcare that is truly deserving of our frustration. That underlying structure isn’t (in large part) built on healthcare providers.

The entire system is built on the insurance industry.

Insurance companies obfuscate the situation by convincing patients that the only cost of their doctor’s visit will be their co-pay. It's a brilliant sleight of hand that pits the patient against the physician.

The result: drama so bad we have to get politicians involved.

When this Bill suggests hospitals should eat the cost of some of their most costly treatments, overall medical bills will likely go up. Doctors expenses (office, staff, employee benefits, etc) will only increase because the organization must now cover the added risk incurred by every insured-person’s medical procedures.

Insurance companies will certainly not step in to fix this issue.

But likewise, politicians are the exact WRONG people to get involved because, like Groucho said, they have no idea what they're doing with healthcare financing.

How does "out of network" fit into this? Well, if a physician can't get a good contract with an insurance company, they are (by default) "out-of-network." Sometimes this occurs through contracted physicians in an ER. Other times it's as an independent physician in private practice.

Either way, the result is the same: insurance companies don't let doctors into the network with a reasonable contract and then use the mirage of the co-pay to make patients think they’re covered. When the bill comes due, patients get mad at the physicians because they expect to get paid.

Beyond network doctors and insurance plans: the direct pay method

Guess who doesn't have "surprise medical bills?" Direct pay physicians.

New models of care (direct primary care, direct psychiatric care, bundled ambulatory surgery centers) post their fees upfront and issue receipts when done.

Simple and easy. No need to pass a new law. No need to get politicians involved.

Just patient care as it was meant to be.

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About the author

Dr. Brian J. Dixon

With accolades spanning my career as a child psychiatrist, entrepreneur, writer, and public speaker, I advocate for a more sensible U.S. healthcare solution that appeals across all party lines. I am a Texan, born and raised. My psychiatry practice, Progressive Psychiatry, is based in Fort Worth.

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