In theory, no price is too high for timely treatment of head trauma. At least, that’s what Kayvon Tehranian thought before visiting the emergency room in 2018 after he passed out at the gym and hit his head on the floor. As Heather Knight tells it in the San Francisco Chronicle, when Tehranian named Barack Obama as the current president after his fall, a fellow gym member quickly drove him to the nearby Zuckerberg San Francisco General Hospital (ZSFGH).
Over the next two hours, Tehranian was put through a bevy of tests and then diagnosed with a concussion. He went home the same day. His gym incident might have ended there if the hospital had not sent him a bill for $7,183.36. “The hospital billed the 33-year-old tech worker’s insurance company, Anthem Blue Cross, $12,393,” Knight reports. “The insurance company informed him it would pay $5,209.64,” leaving Tehranian on the hook for the balance of the bill.
Shocking emergency room bills like Tehranian’s are not uncommon in San Francisco, where last year some 1,700 privately-insured patients received large bills from ZSFGH for common treatments. Some of those bills reached into the tens of thousands of dollars. Sarah Kliff explains in Vox that this is because the hospital is “out-of-network for all private coverage — something that academic experts and patient advocates describe as an extremely unusual billing practice.” Without contracts with private insurance companies to temper this balance billing, hospitals are entitled to charge patients for whatever unpaid balance the insurer hasn’t covered. ZSFGH bills insurers the list price for a service, insurers pay whatever they want, and patients get a bill for the difference.
California Lawmakers Consider Changing Billing Formulas for Emergency Services
In response to Kliff’s reporting about the cost of emergency care, California Assemblyman David Chiu and State Senator Scott Wiener, each representing a part of San Francisco, announced AB 1611. The bill would limit the cost of out-of-network emergency care for which patients in California could be held liable. The legislation would cap patients’ emergency room charges at the same copay or deductible their health plan would pay at an in-network hospital, and it would tighten the formula for the maximum price hospitals could charge for a particular episode of emergency services.
“No one who is going through the trauma of emergency room care should be subsequently victimized by outrageous hospital bills,” Chiu told Kliff.
Chiu and Wiener’s proposal also addresses research that suggests regulating hospital rates is an effective way to reduce spending on privately insured patients in an increasingly consolidated health care market. A study in the February issue of Health Affairs analyzed growth in physician and hospital prices from 2007 to 2014 and found that “a majority of the growth in payments for inpatient and hospital-based outpatient care was driven by growth in hospital prices, not physician prices.” A National Institute for Health Care Management Foundation blog post about the study (that foundation was a funder of the study) emphasized the conclusion that hospitals appear to have greater bargaining power with private insurers than physicians do. It concluded, “Much more active antitrust review and enforcement should be considered as a top policy response to this growing consolidation. Policymakers may also want to introduce hospital rate regulation, particularly in markets that are already highly concentrated.”
The Consolidation Factor
In Modern Healthcare, Harris Meyer reports that growing enthusiasm for policies like Medicare-for-all and all-payer rate setting is predicated on price regulation as a way to control health care spending. Health care industry groups warn that such policies could threaten quality of care and patient access, and they advocate for boosting market competition instead. But Christopher Koller, president of the Milbank Memorial Fund and a former Rhode Island health insurance commissioner, told Meyer, “We can’t make the market work better in consolidated markets.”
A 2018 report (PDF) published by the Nicholas C. Petris Center at UC Berkeley found that 44 of California’s 58 counties have highly concentrated hospital markets and six others have moderately concentrated hospital markets. Multiple studies have shown that “market concentration is important because it is well known that as health care markets become more concentrated, prices and premiums for consumers increase,” the report said.
Concerns over provider consolidation in California are driving policy discussions that are broader than Chiu and Weiner’s legislative proposal. State Assembly Health Committee Chair Jim Wood recently introduced AB 910 to provide additional scrutiny of hospital mergers.
The problems of balance billing and provider consolidation are of course not limited to California. California Healthline reports that protecting patients from surprise medical bills is a top priority of the Trump administration, and lawmakers on both sides of the aisle have been working to draft legislation addressing anti-competitive practices. Health policy experts say that federal legislation is likely necessary to protect all patients given that large self-insured employers are regulated at the federal level.
Have you received a shocking emergency room bill? Tell me about it — email me.
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