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.
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 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.
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.
Though the cost of clinical laboratory testing is not highlighted in KFF’s annual survey, it is a component in how much employers pay for healthcare plans for their employees
Employers now pay higher health insurance premiums than ever for family coverage. However, because of the current tight labor market, they are generally absorbing much of that increase rather than passing the higher costs on to their workers. That’s one key takeaway from KFF’s 26th annual Employer Health Benefits Survey, which the non-profit published on Oct. 9, 2024. While the report does not comment specifically about the cost of clinical laboratory testing or genetic testing and how they may contribute to rising insurance costs, it stands to reason they are part of growing healthcare costs for corporate health benefits.
The KFF survey found that premiums for family coverage increased 7% in 2024, reaching an average of $25,572. That follows a 7% increase in 2023. “Over the past five years—a period of high inflation (23%) and wage growth (28%)—the cumulative increase in premiums has been similar (24%),” KFF stated in a press release.
However, the amount paid by workers has gone up by less than $300 since 2019. It now stands at an average of $6,296, a total increase of 5% over five years. On average, workers covered 25% of family premium costs in 2024, down from 29% in 2023. Workers with single coverage paid an average of $1,368—16% of the annual premium cost—compared with 17% in 2023.
“Employers are shelling out the equivalent of buying an economy car for every worker every year to pay for family coverage,” KFF President and CEO Drew Altman, PhD (above), said in a press release. “In the tight labor market in recent years, they have not been able to continue offloading costs onto workers who are already struggling with healthcare bills.” Rising costs of clinical laboratory testing is always part of the mix contributing to increased worker insurance premiums for employers. (Photo copyright: KFF.)
HDHP/SO plans, as defined by KFF, “have a deductible of at least $1,000 for single coverage and $2,000 for family coverage and are offered with an HRA [Health Reimbursement Arrangement] or are HSA [health savings account]-qualified.” Point-of-service plans “have lower cost sharing for in-network provider services and do not require a primary care gatekeeper to screen for specialist and hospital visits,” the report states.
Cost Sharing via Deductibles
Average deductible amounts—which KFF identified as another form of cost-sharing—varied depending on the type of plan, employer size, and whether the worker had family or single coverage.
For workers with single coverage, average deductibles across all plan types rose from $1,655 in 2019 to $1,787 in 2024, a total five-year increase of about 8%. The average in 2023 was $1,735. These numbers were for in-network providers.
The report noted that some family plans calculate deductibles using an aggregate structure, “in which all family members’ out-of-pocket expenses count toward the deductible,” whereas others use a separate per-person structure. The report includes breakdowns of average deductibles across all types.
Who Offers the Best Benefits?
In general, the KFF report found that large companies—defined as those with 200 or more workers—tend to offer more generous health benefits than smaller ones. Virtually all large companies (98%) offered health benefits, while slightly more than half of small companies (53%) do so.
Among companies that do offer health benefits, the average deductible at a small firm was $2,575 compared to $1,538 at large firms. Among workers with family coverage, the average contribution toward overall premium costs was $7,947 (33%) at small firms compared to $5,697 (23%) at large firms. Among workers with single coverage, the numbers were $1,429 (16%) at small firms compared to $1,204 (14%) at large firms.
The report also found variations in overall premiums and health benefits across nine different industries. For example, healthcare firms paid the highest premiums for family coverage—an average of $26,864—followed by transportation/communications/utilities at $26,601. Companies in agriculture, mining, and construction paid the lowest premiums, an average of $22,654.
There were wide variations by industry in terms of how many firms offer any health benefits. Among state and local government entities, 83% offered health benefits, followed by transportation/communications/utilities (69%), manufacturing (65%), wholesale (62%), healthcare (58%), and finance (56%). Just 40% of retail businesses and 49% of agriculture/mining/construction businesses offered health benefits.
Health Screening Coverage
The KFF report did not include data about insurance coverage for clinical laboratory services. However, one section did address employer willingness to provide opportunities for health screening.
Among large businesses, 56% offered health risk assessments, in which individuals answer questions about their medical history, lifestyle, and other areas relevant to their health risks. A smaller number (44%) offer biometric screening, which “could include meeting a target body mass index (BMI) or cholesterol level, but not goals related to smoking,” the report said. Only 9% of small businesses offered biometric screening, the report found.
KFF conducted its survey between January and July 2024 among a random selection of public and private employers with at least three workers. The survey excluded federal government entities but included state and local government. A total of 2,142 employers responded.
Inflation during this current administration definitely hit consumers in the health insurance premium pocketbook. At the same time providers raised their own prices making it more expensive for people with HDHPs to come up with the cash required by their annual deductible. While clinical laboratory and genetic testing are not highlighted in KFF’s survey, they certainly play a role in increasing costs to healthcare consumers and are worth considering.
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.
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.
“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.
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.
Recognizing the need to serve patients with high-deductible health plans, hospital systems are opening healthcare centers in outpatient settings where patients can receive care and undergo procedures—including clinical laboratory tests—more conveniently and for less cost
Health systems are putting medical imaging services, such as MRIs, in strip malls and shopping centers as a way to make it easier for patients. Such locations can also offer lower-cost procedures because of lower overhead compared to imaging centers located in hospitals. This trend to offer patients more convenient service at a lower cost is something that clinical laboratory managers and pathologists should watch and understand.
One driver behind this trend is the growing number of Americans enrolled in High Deductible Health Plans (HDHPs), where deductibles can exceed $6,000 for individuals and $12,000 for families. With such high deductibles, patients are now keenly focused on the cost of their healthcare. Medical laboratories and anatomic pathology groups have been impacted by this trend, as more patients shell out cash to pay for walk-in procedures and providers must collect full payments for services rendered.
Hospitals and health systems recognize the increased demand for outpatient, lower-priced medical services, along with price transparency. Patients with HDHPs are one reason why hospital bad debt is growing.
Healthcare Shopping Drives Lower Costs and Convenience
Price shopping on the Internet for medical services also is becoming more popular due to the availability of online doctor and facility ratings and easily-accessible price comparisons.
There are more than 7,000 stand-alone imaging centers in the US that operate independently of hospitals. About 70% of diagnostic imaging services occur in hospital settings with the other 30% performed in outpatient facilities.
According to Amino, a healthcare transparency company based in San Francisco, the cost for an MRI can vary significantly depending on where a patient lives and what type of facility is utilized for the test. Their research found that the cost of a limb MRI can range from hundreds of dollars at a freestanding facility to as much as $4,000 at a hospital. In some states, the price difference between getting an MRI at a hospital versus a stand-alone facility was almost $2,000. The average cost of having an MRI performed in a hospital setting is $2600.
Based on data from Amino, the graphic above illustrates the wide range of prices for MRIs throughout the country, and the cost disparity between hospital and free-standing medical imaging centers. In the future, pathologists and clinical laboratory managers can expect to see the publication of similar graphs that show the variation in the cost of clinical laboratory tests and anatomic pathology procedures, not just by state, but by individual laboratories. (Graphic copyright: MBO.)
Smart Choice MRI, based in Mequon, Wis., charges a maximum price of $600 for an MRI. The company now has 17 locations in Illinois, Minnesota, and Wisconsin, but plans to have 90 facilities within the next three years.
“The rise of high deductible health plans has fueled consumers who understand their options and demand a higher level of service from their providers,” Rick Anderson, Chief Executive Officer of Smart Choice MRI told the StarTribune. “Quality, service-focused care at a fair, transparent price has never been more important.”
Anderson added that his company can handle 94% of MRI procedures in their convenient, freestanding imaging facilities.
“I think the quality is very good, but we’ve combined the cost and quality, and most importantly the convenience of being in the neighborhood where people are shopping,” Anderson said. “If you look at our Richfield (Minnesota) location, we’re literally next to SuperTarget, Caribou Coffee, Noodles and Company, and Qdoba.”
Public and Private Health Insurers Shift Payments to Free-standing Facilities
Anthem recently announced they will no longer pay for outpatient MRIs and CT scans performed at hospitals in almost all of the states where the health insurer does business. They are requiring patients to have the tests performed in free-standing imaging facilities in an effort to cut costs and lower premiums. This change could affect 4.5 million people in 13 of the 14 states Anthem serves, with New Hampshire being the exception.
Diagnostic imaging is not the only medical service transitioning to outpatient facilities.
In July, the Centers for Medicare and Medicaid Services (CMS) announced that it is considering payment approval for total hip and knee replacements performed in outpatient settings. This change could go into effect as early as next year.
According to Steve Miller, Chief Operating Officer at Ambulatory Surgery Center Association, an estimated 25-50% of joint replacements could be performed on an outpatient basis.
“There’s more and more comfort among surgeons who are coming out of residencies where they trained to do surgeries on an outpatient basis,” Miller told Modern Healthcare. “The volumes are doubling year over year.”
Surgeons Approve of Free-standing Surgery Centers
There are currently more than 5,500 ambulatory surgery centers in the country and upwards of 200 of those facilities are performing outpatient joint replacement procedures. Three years ago, there were only around 25 facilities providing these services.
In 2015, there were more than 658,000 total hip and knee replacements performed on Medicare beneficiaries, according to CMS data. In 2014, the government paid more than $7 billion for the hospitalization costs of these two procedures. The CMS estimates that the cost for uncomplicated knee replacement surgeries in 2018 will be $12,381 for an inpatient procedure and $9,913 for the outpatient rate.
Physicians feel that performing joint replacements in outpatient facilities could reduce costs by up to 50%.
“I could do maybe 20% of my Medicare patients on an outpatient basis, as long as they have the support and structure at home to help them recover,” said Matthew Weresh, MD, a physician at Des Moines Orthopedic Surgeons (DMOS) in the Modern Healthcare article. “It’s a great move by Medicare.” DMOS plans to begin performing joint replacements at an ambulatory surgery center later this year.
Pathologists would be wise to monitor this trend and anticipate how anatomic pathology services might shift towards lower-cost settings. For clinical laboratories, this trend further illustrates the need to prepare for more consumers paying cash for their medical services and seeking cost-effective, high-quality options.
