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Hospital Bills Insured Woman $18k for Biopsy Procedure the Healthcare Provider’s Online Patient Payment Estimator Said Would Typically Cost Uninsured Patients $1,400

Though the No Surprises Act was enacted to prevent such surprise billing, key aspects of the legislation are apparently not being enforced

Dani Yuengling thought she had properly prepared herself for the financial impact of a breast biopsy. After all, it’s a simple procedure, especially if done by fine needle aspiration (FNA). Then, the 35-year-old received a bill for $18,000! And that was after insurance and though she had received a much lower advanced quote, according to an NPR/Kaiser Health News (NPR/KHN) bill-of-the-month investigation.

So, what happened? And what can anatomic pathology groups and clinical laboratories do to ensure their patients don’t receive similar surprise bills?

Yuengling had lost her mother to breast cancer in 2017. Then, she found a lump in her own breast. Following a mammogram she decided to move forward with the biopsy. Her doctor referred her to Grand Strand Medical Center in Myrtle Beach, S.C.

But she needed to know how much the procedure would cost. Her health plan had a $6,000 deductible. She worried she might have to pay for the entire amount of a very expensive procedure.

However, the hospital’s online “Patient Payment Estimator” informed her that an uninsured patient typically pays about $1,400 for the procedure. Yuengling was relieved. She assumed that with insurance the amount would be even less, and thankfully, clinical laboratory test results of the biopsy found that she did not have breast cancer.

Then came the sticker shock! The bill broke down like this:

  • $17,979 was the total for her biopsy and everything that came with it.
  • Her insurer, Cigna, brought the cost down to the in-network negotiated rate of $8,424.14.
  • Her insurance then paid $3,254.47.
  • Yuengling was responsible for $5,169.67 which was the balance of her deductible.

So, why was the amount Yuengling owed higher than the bill would have been if she had been uninsured and paid cash for the procedure?

According to the NPR/KHN investigation, this is not an uncommon occurrence. The investigators reported that nearly 30% of American workers have high deductible health plans (HDHPs) and may face larger expenses than what a hospital’s cash price would have been for uninsured individuals.

“We can very confidently say this is very common,” Ge Bai, PhD, CPA, professor of accounting at John Hopkins Carey Business School and professor of health policy and management at Johns Hopkins Bloomberg School of Public Health, told NPR/KHN.

Dani Yuengling (above) knew she had to take the lump in her breast seriously. Her mother had died of breast cancer. “It was the hardest experience, seeing her suffer,” Yuengling told NPR/KHN. Fortunately, following a biopsy procedure, clinical laboratory testing showed she was cancer free. But the bill for the procedure was shockingly higher than she’d expected based on the hospital’s patient payment estimator. (Photo copyright: Kaiser Health News.)

Take the Cash Price

In 2021, Bai was part of a John’s Hopkins research team that analyzed US hospital cash prices compared with commercial negotiated rates for specific healthcare services.

The team published its findings in JAMA Network Open titled, “Comparison of US Hospital Cash Prices and Commercial Negotiated Prices for 70 Services.”

“The 70 CMS-specified hospital services represent 74 unique Current Procedural Terminology (CPT) diagnosis related group codes (four services were represented by two codes),” the authors wrote. “Cash prices and payer-specific negotiated prices for the 70 services were obtained from Turquoise Health, a data service company that specializes in collecting pricing information from hospitals.”

They continued, “Cash prices can affect the cost exposure of 26 million uninsured individuals and concern nearly one-third of US workers enrolled in high-deductible health plans, who are often responsible to pay for medical bills without a third-party contribution and thus are interested in having access to low cash prices. In contrast with the commercial price negotiated bilaterally between hospitals and insurers providing insurance plans, the cash price is determined unilaterally by the hospital and might be expected to be higher than negotiated prices.”

However, the team’s research found otherwise. “Across the 70 CMS-specified services … some hospitals set their cash price comparable to or lower than their commercial negotiated price,” they concluded.

Bai advises patients to ask healthcare providers about the cash price before undergoing any procedure no matter what their insurance status is. “It should be a norm,” she told NPR/KHN.

Federal No Surprises Act is not Foolproof

Yuengling was charged an extraordinarily high amount for her procedure compared to other hospitals in her area. Fair Health Consumer estimates the cost of the procedure Yuengling received cost an average of $3,500 at other local hospitals. Uninsured patients likely pay even less.

A spokesperson for Grand Street Medical Center blamed the inaccurate estimate on “a glitch” in the payment estimator system. The hospital has since removed some procedures from the tool until it can be corrected. Yuengling initially disputed the charge with the hospital but in the end decided to pay the full amount she owed.

NPR/KHN recommends that insured patients consult with their health insurance company to get an estimate before any procedure. That is the purpose of the No Surprises Act which was enacted as part of the Consolidated Appropriations Act, 2021 (CAA).

The law requires health insurance companies to provide their members with an estimate of medical costs upon their request. The Act also empowers patients to file federal complaints about their medical bills.

This, however, is not a foolproof plan and patients may still be facing unexpected costs. Sabrina Corlette, JD, research professor, founder, and co-director of the Center on Health Insurance Reforms (CHIR) at Georgetown University’s McCourt School of Public Policy, told NPR/KHN that the part of the law requiring health insurance companies to provide an “Advanced Explanation of Benefits” is not yet being enforced.

Patients who find themselves in a similar situation to Yuengling may want to consider paying the cash price for the procedure. Although this may not be common practice, Jacqueline Fox, JD, a healthcare attorney and professor of law at the University of South Carolina’s Joseph F. Rice School of Law, told NPR/KHN that there is not a law she is aware of that would prohibit patients from doing so.

Anatomic pathology groups and clinical laboratories should check that their online prices and estimation tools comply with the No Surprises Act to ensure that what happened to Yuengling does not happen with their patients. They also could inform patients on how to pay cash for procedures if insurance rates are too high. Medical professionals and patients can work together to achieve transparency in healthcare pricing.

—Ashley Croce

Related Information:

An $18,000 Biopsy? Paying Cash Might Have Been Cheaper than Using Her Insurance

Comparison of US Hospital Cash Prices and Commercial Negotiated Prices for 70 Services

Patient Rights Group Says Too Many Hospitals Are Not Complying with CMS Price Transparency Rules

Price Transparency: What Labs Need to Know Now about Existing Regulations and Pending Legislation

CMS Proposes New Amendments to Federal Hospital Price Transparency Rule That May Affect Clinical Laboratories and Pathology Groups

Some Hospitals Under Financial Stress Ask Patients for Payment of Certain Procedures in Advance of Care

Request for money upfront comes at a time when many patients already struggle with medical debt  

In its reporting of healthcare trends gathering momentum, a national newspaper caused quite a stir this spring when it published a story documenting how some hospitals now require patients to pay in advance of specified surgeries and procedures. Hospitals are recognizing what clinical laboratories have long known—a larger proportion of Americans do not have the cash to pay a medical bill.

“It costs [hospitals] time and money to collect after the fact. So, if they can get it upfront, they will” said Wall Street Journal (WSJ) reporter Melanie Evans, during a podcast about her article, “Hospitals Are Refusing to Do Surgeries Unless You Pay in Full First.”

Hospitals and surgery centers are requesting advanced payment for elective procedures such as knee replacements, CT scans, and childbirth procedures, according to an Advisory Board daily briefing.

“In some cases, they may also have a contract with an insurance company. And in that contract are terms that stipulate hospitals need to collect deductibles or co-insurance before a procedure,” Evans added.

According to Bankrate’s 2024 Annual Emergency Savings Report, nearly half of all American’s would be unable to pay cash for an unplanned $1,000 bill. Therefore, one wonders why hospitals would attempt to extract payments from patients in advance of medical visits and clinical laboratory testing. Wouldn’t that just reduce the number of patients electing to undergo needed surgeries and other costly procedures? Nevertheless, it appears that many hospitals struggling financially are doing just that, according to The Wall Street Journal.

Genetic testing laboratories have a similar problem because of high-deductible health plans ($5K/year for individual, $12K/year for family). It means that many patients, even with insurance, struggle to pay a $1,000 to $5,000 bill for a genetic test.

Requesting payment from patients before healthcare visits is not new. However, the practice is on the rise and comes at a time when consumers are already struggling to make ends meet.

“Hospitals collected (in Q1 2024) about 23% of what patients owed them before they set foot in a hospital or doctor’s office. That’s up from about 20% in the same period a year earlier,” said reporter Melanie Evans (above) of The Wall Street Journal, referring to data from 1,850 hospitals analyzed by Kodiak Solutions. Genetic testing laboratories experience similar challenges getting paid due to many people struggling with high deductible health plans. (Photo copyright: LinkedIn.)

Price Transparency Behind Upfront Payments

According to a recent KFF survey of US families, “about half of adults would be unable to pay an unexpected medical bill of $500 in full without going into debt.”

Regardless, asking for payment for nonemergency care has become more common as people increasingly choose health plans with high-deductibles and amid the push for greater price transparency, according to Richard Gundling, Senior Vice President, Content and Professional Practice Guidance at Healthcare Financial Management Association (HFMA), in an interview with Advisory Board.

“It’s very common if not the norm” for hospitals to give patients a cost estimate and ask for advance payment, Gundling stated during the interview.

In fact, healthcare providers and insurers are required to shared charges and estimates as part of newly implemented federal rules. According to the American Hospital Association (AHA) those statutes and rules include:

  • The Hospital Price Transparency Final Rule (effective January 2021) which requires hospitals to publicly post “standard charges” via machine readable files.
  • The No Surprises Act which mandates the sharing of “good faith estimates” with uninsured/self-pay patients for most scheduled services and also requires insurers to provide explanation of benefits to enrollees.

According to Consumer Reports, hospitals are finding consumers less reliable payers than insurance companies. “No one would say, ‘Pay up or we won’t treat you.’ But we’re saying that, ‘You have a large out-of-pocket cost, and we want to know how are you going to pay for it,’” explained Jonathan Wiik, Vice President of Health Insights at FinThrive, a revenue cycle management company.

Razor Thin Hospital Margins

For their part, hospitals, health systems, and medical practices wrote off $17.4 billion in bad debt in 2023, Kodiak Solutions, an Indianapolis-based healthcare consulting and software company, reported in a news release.

Providers collected less than half—47.6%—of what patients owned them for care in 2022 and 2023, down from 54.8% in 2021, according to Kodiak’s report, “Drawing the Line on Patient Responsibility Collection Rates.”

“With the amounts that health plans require patients to pay continuing to grow, provider organizations need a strategy to avoid intensifying pressure on their already thin margins,” said Colleen Hall, Senior Vice President, Revenue Cycle, Kodiak, in the news release.

“Patient collections have become an increasingly difficult challenge for hospitals due primarily to a shift in payer mix. Because of rising deductibles and increased patient responsibility, the percentage of healthcare provider revenue collected directly from patients increased to more than 30% from less than 10% over 10 years,” the HFMA noted.

Thus, the financial tension being experienced by both patients and providers, and the need for patients to prepay for some treatment, are extreme challenges. The situation may call for clinical laboratory leaders to not only focus on quality testing and efficient workflow, but also affordability and access to services.

—Donna Marie Pocius

Related Information:

Why Hospitals Now Require Patients to Prepay for Treatment

Hospitals are Refusing to Do Surgeries Unless You Pay in Full First

Some Hospitals Are Billing Patients in Advance. Here’s Why.

More Hospitals Want Patients to Pay in Advance. Is That Radical Transparency or Unfair to Patients?

Americans’ Challenges with Health Care Costs

Fact Sheet: Hospital Price Transparency

Should You Ever Prepay a Hospital Bill?

Insured Patients Account for More than Half of Bad Debts Written Off by Provider Organizations in 2023, According to Kodiak Solutions Analysis

Drawing the Line on Patient Responsibility Collection Rates

Patients as Payers: Five Ways to Improve the Patient Experience

Healthcare Debt in the U.S.: The Broad Consequences of Medical and Dental Bills  

Milliman Medical Index Predicts Families Will Spend More for Healthcare in 2018 Than Previous Years; Growth Trend Could Impact Clinical Laboratories Unprepared to Collect Fees at Time of Service

Employers and consumers continue to pay more for health benefits from one year to the next, continuing a trend that is not auspicious for clinical laboratories and anatomic pathology groups

Most clinical laboratories don’t have the capability to collect payments from patients at time of service the same way patients pay doctors during office visits. Thus, Milliman’s annual report which details the increasing amounts patients are expected to pay out of their own pockets should be of interest to clinical laboratory managers and stakeholders. As this trend accelerates, labs will need to adopt new procedures and technologies to conduct business and remain profitable.

The Milliman Medical Index report (MMI) details how much consumers are predicted to pay for healthcare each year, as compared to previous years. Milliman, a Seattle-based independent actuarial and consulting firm with offices throughout the world, examines healthcare costs, property and casualty insurance, life insurance, financial services, and employee benefits.

Milliman released its first MMI in 2005. That year, the average annual medical cost for a family of four was $12,214.

Both Employees and Employers to See Increase in Healthcare Costs

The 2018 MMI report provides both good and bad news for the healthcare industry and patients. Milliman examined the costs for a typical family of four that participates in an employee-sponsored health insurance plan. For the report, a family of four consists of a 47-year old male, a 37-year old female, and two children under the age of five.

The MMI estimates a family of four will spend an average of $28,166 in healthcare expenditures in 2018. Included in this amount is the cost of the insurance paid by the employers and the employees, deductibles and out-of-pocket expenses. The figure represents an increase of $1,222 from 2017. The report found the amount families have been paying for healthcare has been increasing by an average of $100 per month over the last ten years.

The graphic above, taken from the 2018 Milliman Medical Index report, illustrates the increasing medical costs for a family of four. (Image copyright: Milliman.)

Both employers and employees will see an upsurge in costs from last year with employees experiencing an increase of 5.9% and employers seeing an increase of 3.5%.

The MMI found that employees will pay approximately 44% of their healthcare costs in 2018. By contrast, in 2008 employees paid less than 40% of their healthcare expenditures. In 2018, employers will pay about $15,788 of healthcare costs for a family of four, the employee will pay $7,674 via payroll deductions, with the remaining $4,704 being out-of-pocket expenses.

Costs Increasing While Growth Slows

The MMI also found that while the dollar amount families are spending on healthcare is increasing, the overall pace of the growth is slowing. The 4.5% rate of increase over last year is the slowest percentage growth in 18 years.

“We asked key stakeholders across the healthcare system what might be driving the decline in growth rates,” said Sue Hart, co-author of the MMI, in a Milliman news release. “Several common themes emerged, in particular provider engagement, more effective provider contracting, value-driven plan design, and spillover effects from public program initiatives.”

The reasons cited for this slowing trend include:

  • Involvement of healthcare providers to reduce costs;
  • More sophisticated contracting and provider consolidation;
  • Increased member cost sharing;
  • High deductible health plans;
  • Role of government and public programs; and the,
  • Impact of pharmacy initiatives.

“There are two ways of looking at this year’s MMI,” said Chris Girod, co-author of the Milliman Medical Index, in the news release. “On the one hand it’s heartening to see the rate of healthcare cost increase remain low. On the other hand, we’re still talking about more than $28,000 in total healthcare costs for the typical American family.”

The MMI graphic above breaks down healthcare costs into their constituent categories. (Image copyright: Milliman.)

To explore how costs have grown, the MMI examined five separate components of services. The typical family of four spends:

  • 31% ($8,631) of their healthcare costs on inpatient facility care;
  • 29% ($8,257) on professional services;
  • 19% ($5,395) on outpatient facility care; and,
  • 17% ($4,888) on pharmacy services.

The remaining 4% ($995) of costs are spent on other services, such as:

  • Home healthcare;
  • Ambulance services;
  • Durable medical equipment; and,
  • Prosthetics.

The MMI measures costs for a typical family of four, but certain families or individuals may have variations in costs depending on such factors as age, gender, health status, geographic area, provider variation, and insurance coverage.

Prescription drug costs is one such variance that is hard to predict. The 2018 MMI determined drug costs for a family of four increased by 6%, which represents the lowest percentage increase since 2015.

“Prescription drug costs have steadied, but this trend is volatile and hard to predict,” said Scott Weltz, co-author of the MMI in the news release. “High-cost drugs can have a big impact on trends, as we witnessed a few years ago when hepatitis C treatments hit the market. Alternatively, point-of-sale rebates could push a consumer’s costs in the other direction, particularly for people taking high-cost drugs. As the environment evolves, changes in drug prices can be deployed quite quickly.”

Scott Waltz (left), Christopher Girod (center), and Susan Hart (right) are Principles, Consulting Actuaries, for Milliman in Seattle. They co-authored the 2018 annual Milliman Medical Index report, which outlines the rising burden of out-of-pocket medical and insurance costs on patients, especially those on high deductible health plans. These costs are increasing and could impact clinical laboratories unprepared to collect fees at time of service. (Photo copyrights: Milliman.)


Preparing to Accept Payments

The results of this year’s MMI illustrate the impact increasing consumer costs could have on the way clinical laboratories conduct business and receive payments for services rendered. Studies have shown that patients with high deductible health plans (HDHPs), who frequently must pay 100% of lab costs, are especially affected by these trends. And the numbers of patients on HDHPs have increased each year since they were enacted.

Many clinical laboratories and anatomic pathology practices do not have the capability to collect fees from patients at the time of service. This lack of preparedness could threaten the survival of those labs and should be addressed.

—JP Schlingman

Related Information:

$28k: The Average Price a Family of Four Will Spend on Healthcare in 2018

2018 Milliman Medical Index

Milliman Medical Index: Healthcare Costs for Typical American Family Reach $28,166 Despite Low Annual Rate of Increase

Cost of Health Care for a Typical Family of Four Now over $28,000

KFF Study Finds HDHPs and Increased Cost-Sharing Requirements for Medical Services are Making Healthcare Increasingly Inaccessible to Consumers

Though ACA reforms may have slowed healthcare spending, rapidly increasing deductibles and cost sharing requirements have many experts questioning if patients can afford care at all, despite the increased availability of insurance coverage

Much of the debate surrounding efforts to replace and repeal the Affordable Care Act (ACA) has centered on premiums as a central facet of out-of-pocket spending. However, new data from a Kaiser Family Foundation (KFF) survey reveals that premiums are only one factor affecting consumers’ ability to pay healthcare bills. High-deductible health plans (HDHPs) are another culprit. This directly impacts clinical laboratories and anatomic pathology groups that find revenues down as more American’s avoid costs by delaying or opting out of testing and treatments.

The KFF report highlights both the complexity of managing healthcare costs and how the current focus on premium prices might miss other important considerations that make healthcare inaccessible to many Americans.

High Deductibles and Consumers’ Lack of Savings

An increasing number of insurance plans now include high deductibles—particularly in the individual markets, though employer-based insurance plans are experiencing steady increases as well.

This leaves consumers facing larger bills and making tough decisions about whether their healthcare is affordable—even with insurance.

When healthcare consumers cannot afford the out-of-pocket costs of healthcare, they are less likely to schedule wellness visits, adhere to treatments, or follow through on physician-ordered clinical laboratory tests they don’t consider essential to their well-being or simply cannot afford.

Even when they follow protocols and recommendations, that does not mean patients will be able to pay medical laboratories for tests performed, or anatomic pathology groups for specialized services, when the bill comes due.

The Ever-Growing Deductible Dilemma

In its 2017 study, “Do Health Plan Enrollees have Enough Money to Pay Cost Sharing?,” the KFF compares median data on liquid assets from 6,254 single and multi-person households—spanning a range of incomes and age brackets—to the average cost of both standard employer-based insurance and individual market insurance deductibles.

They further note that their data modeling and estimates present a “conservative estimate,” because chronic conditions might cause an extended period of out-of-pocket spending, and that median assets might not be available at a single time or throughout the year.

Concerning a previous 2016 KFF study on high-deductible insurance plans, the authors noted in a press release, “In 2016, 83% of covered workers face a deductible for single coverage, which averages $1,478. That’s up $159 or 12% from 2015, and $486 or 49% since 2011. The average deductible for workers who face one is higher for workers in small firms (three to 199 employers) than in large firms ($2,069 vs. $1,238).”

In the press release following KFF’s 2016 survey, Drew Altman, CEO (above), Kaiser Family Foundation, noted, “We’re seeing premiums rising at historically slow rates, which helps workers and employers alike, but it’s made possible in part by the more rapid rise in the deductibles workers must pay.” (Image copyright: Kaiser Family Foundation.)

In their latest look at deductibles and out-of-pocket spending, the KFF study authors note, “About half (53%) of single-person non-elderly households could pay the $2,000 from their liquid assets towards cost sharing, and only 37% could pay $6,000, which … was less than the maximum out-of-pocket limit for single coverage in 2016. For multi-person families, 47% could pay $4,000 from their liquid assets for cost sharing, while only 35% could pay $12,000.”

This sets the stage for the grim picture now facing many Americans. Despite increased access to medical insurance, being able to use the insurance to obtain care can be a struggle for a sizeable part of the lower to middle class population.

Creating a More Affordable Future for Healthcare

Data from the Q1 National Health Interview Survey (NHIS) conducted by the Centers for Disease Control and Prevention (CDC) show that growth in high-deductible plans might skew these numbers further still. They found that the number of persons under the age of 65 enrolled in HDHPs increased from 25.3% in 2010 to 40.0% in the first quarter of 2016 despite uninsured rates dropping from 22.3% to 11.9% over the same period.

In the 2017 study, KFF outlines the complexity of the issue: “There are significant differences across the income spectrum … For example, 63% of multi-person households with incomes of 400% of poverty or more could pay $12,000 from liquid assets for cost sharing, compared with only 18% of households with incomes between 150% and 400% of poverty, and 4% of households with incomes below 150% of poverty.”

While there are no simple answers to address today’s increasing deductibles, KFF emphasizes the importance of looking at the bigger picture.

“Much of the discussion around affordability has centered on premium costs. A broader notion of affordability will have to focus on the ability of families,” they note. “To adequately address the issue of affordability of health insurance, reform proposals should be evaluated on the affordability of out-of-pocket costs, especially for low and moderate-income families, and be sensitive to the financial impacts that high cost sharing will have on financial wellbeing.”

In the meantime, lack of access to preventative care and regular checkups can increase long-term healthcare costs and health risks, creating a spiral of financial concerns for patients as well as the healthcare professionals and the clinical laboratories serving them.

—Jon Stone

Related Information:

The Biggest Health Issue We Aren’t Debating

Do Health Plan Enrollees Have Enough Money to Pay Cost Sharing?

Average Annual Workplace Family Health Premiums Rise Modest 3% to $18,142 in 2016; More Workers Enroll in High-Deductible Plans with Savings Option Over Past Two Years

Americans Are Facing Rising Out-of-Pocket Healthcare Costs—Here’s Why

Americans’ Out-of-Pocket Healthcare Costs Are Skyrocketing

Americans Are Shouldering More and More of Their Healthcare Costs

Medicare Out-of-Pocket Costs Seen Rising to Half of Senior Income

Consumer Reaction to High-Deductible Health Plans and Rising Out-of-Pocket Costs Continues to Impact Physicians and Clinical Laboratories

Because of Sizeable Deductibles, More Patients Owe More Money to Clinical Pathology Laboratories, Spurring Labs to Get Smarter about Collecting from Patients

Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service

 

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