Dangers of Surprise Medical Bills Underscore Importance of Medicare’s Beneficiary Protections

This week, Kaiser Health News (KHN) and National Public Radio (NPR) published and broadcast the story of 44 year-old Drew Calver, a high school teacher in Austin, Texas who faced an outrageous hospital bill.

In the wake of a life-threatening heart attack, Mr. Calver was rushed to a nearby emergency room, where he was admitted to the hospital and underwent surgery. The heart attack was a shock for Calver, an avid swimmer and triathlete. Adding to his surprise was the bill he faced afterwards: the hospital charged $164,941 for the surgery and four days in the hospital. His insurer paid the hospital $55,840. The hospital then billed Mr. Calver for the unpaid balance of $108,951.31.

This practice, known as “balance billing,” allows providers to bill patients for the outstanding balance after the insurance company submits its portion of the bill. Out-of-network providers—as was the hospital in this case—are not bound by contractual in-network rate agreements and therefore have the ability to bill patients for the entire remaining balance. Balance billing may occur when a patient receives a bill for an episode of care previously believed to be in-network and therefore covered by the insurance company, or when an insurance company contributes less money for a medical service than a patient expected.

While people who have private health insurance, such as employer-based coverage, may be vulnerable to these and other types of surprise medical bills, Medicare has financial protections in place to safeguard beneficiaries from unexpected and confusing charges.

These protections—which include the participating provider program, limitations on balance billing, and conditions on private contracting—have been effective in limiting beneficiaries’ out-of-pocket liability for physician services. Today, for example, a small share of Medicare beneficiaries experience balance billing, which is very different from the years before balance billing limits were instituted.

After Mr. Calver’s story was made public, the hospital offered to accept $782.29 to resolve the outstanding balance. Mr. Calver disputed that he owes any additional money.

While in this instance the billing situation may be resolvable, others facing such financially crippling costs may not have similar outcomes. State and federal laws must be changed to prevent such billing practices from impacting those who are privately insured, and Medicare’s existing financial protections must be maintained and strengthened.

Medicare Rights will continue to urge policymakers to prioritize these important safeguards. Relaxing these rules, as some policymakers have proposed, would jeopardize recent gains and put people with Medicare at risk of higher costs and reduced access to care. Our latest fact sheet, Paying More for Less: Private Contracting explains how some of Medicare’s beneficiary protections work, and why they are critical to providers, the program, and people with Medicare.

Read the Medicare Rights Center’s fact sheet, Paying More for Less: Private Contracting.

Read the story on KHN, A Jolt to The Jugular! You’re Insured But Still Owe $109K For Your Heart Attack

Mr. Calver’s story is part of an ongoing crowdsourced investigation by KHN and NPR called Bill of the Month, which aims to dissect and explain medical bills in order to shed light on U.S. health care prices and to help patients learn how to be more active in managing costs. Learn more about the Bill of the Month series, including how to submit your own bill.