It's time to start building health plans around the member, not the money
A personal essay and case study (~5 minutes read time)
As patients, we all want to believe that the healthcare facilities we turn to for treatment are there to take care of us. And it's true that the doctors we're seeing usually are. But a hospital is more than just doctors and nurses, and the sad truth is that many hospitals are more interested in extracting money from vulnerable patients than providing quality care at a fair price. They usually get away with it, too, because the leverage they hold - a person's access to care - makes it seem like they can demand as much money as they want, while making the payer feel like there isn't another option.
The good news: it doesn't have to be this way. There are good men and women across our industry who have both the will and the audacity to fight back, and they’re showing us that with vigilance and a little know-how, even one person really can make a difference. Because a good plan administrator knows the truth: greedy healthcare participants like hospitals don’t have quite as much leverage as they’d like us to think.
At Flume Health, we recently saw this play out firsthand when our account management team received a single-payer agreement from a hospital for an ongoing case. On its face it looked legitimate, but a closer look revealed the shocking truth: the hospital billing team was trying to use the agreement to quietly pocket an extra hundred thousand dollars of the patient’s and plan sponsor’s money, and lying to make sure it got signed.
Across the country, predatory billing offices are using scare tactics and bogus prices to extract money from vulnerable patients. But it doesn't have to be this way. Here's the story of how we fought back.
When hospitals are more interested in profits than honesty
The case in question involved a minor who had been receiving regular infusions for several months to treat a serious illness. When their treatment started, the plan was paying a rate of $3,700 (Medicare plus 40%) for the hospital to provide the medication.
Five months into the plan year, and after several infusions, the hospital's billing team was sending over a contract asking the patient’s health plan to blindly agree to pay $18,000 per infusion - an increase of over 350%. The contract would also retroactively apply that price to any past infusions, meaning that the five treatments that patient had already received in 2019 would be balance billed. If the contract were signed, someone - most likely the patient’s family - would be on the hook for $71,500 for medication they thought they had already paid for.
In order to push it through, the billing team had falsified the contract, claiming that the patient had cancer (she didn’t) and that the treatment was chemotherapy (it wasn’t). They were hoping that this diagnosis would make the high price they were asking for the treatment seem less egregious. Ploys like this take advantage of a systemic issue in our healthcare system: “rubber stamping” by large insurance carriers, who either aren’t paying attention to contracts or sign them despite clear issues to avoid pushing back on hospitals. This enables ridiculously high prices, which the insurance carriers simply pass off to plan sponsors and members through higher premiums. If the falsified contract did get blocked by insurance, language was also included to scare the patient’s family into believing that treatment would be cut off until the new price was paid.
The people sending the contract almost certainly knew that the patient's family would be so focused on getting her the treatment the hospital recommended that they wouldn't think to look for other alternatives. In fact, they were probably counting on it. How else would hospitals get away with charging up to 1,600% of the Medicare price for some procedures?
Proactively working to protect the patient’s access to care
The client’s account manager at Flume was familiar with the patient’s case, as well as with the medication they were receiving. So when the contract came across his desk to sign, alarm bells started ringing. When did this patient get cancer? Why is the medication being priced at 3 times what it’s worth? It didn’t add up. Medication prices aren’t hard to find if you know where to look. A quick Google search confirmed that this medication is worth nowhere near the $18,000 the hospital wanted to charge. The account manager also found that a supplier Flume had worked with in the past would be able to provide it for $3,500. The hospital’s money grab was starting to break down. With a source and fair price for the drug secured, Flume's medical management partner, AIMM, contacted the patient’s clinical team at the hospital, and they agreed to let us “white bag” the medication to the hospital for each infusion. The plan would probably end up paying a premium on the administering of the treatment, but that was a worthwhile cost - no one wanted to disrupt the patient's treatment any more than was absolutely necessary.
It was a good solution, but no one was out of the woods yet. The clinical team may have agreed to let us ship in the medication, but once that news reached the billing team, Flume needed to be ready for them to retaliate. Here's another crucial disconnect in our healthcare system: even though doctors usually have their patients' best interests at heart, they're often separated from, and even unaware of, the predatory billing practices that patients face after they leave the operating room.
Working with AIMM, Flume found that the patient’s infusion didn’t need to be administered at the hospital. There were several other options including out-patient facilities and even at-home care, if needed. The incumbent hospital was still first choice, but it was important to have a backup plan in case the hospital tried to pull any funny stuff.
How hospitals use patients as leverage to make more money
Unfortunately, the possibility that the hospital might try to deny treatment wasn't that outlandish. Billing offices like this one understand that a patient's care is the only leverage they have to try and extract large sums of money, and they're not shy about using it. Flume worked with the plan's benefits advisor to prepare the family for a situation where the hospital refused to provide treatment unless the health plan paid what they wanted. By taking a proactive approach, we made sure the family knew that no matter what happened, their daughter would still get the care she needed.
The family also needed to be prepared for balance bills. The hospital’s best shot at getting the extra $71,500 for the previous treatments would be to go after the patient. By sending bills to a patient in situations like this one, billing teams are often able to shift the plan sponsor's perspective from a financial question ("Is this a reasonable amount to pay?") to an emotional one ("Am I really going to make my employee handle this alone?"), turning a patient into a sympathetic figure in order to use their well-being as leverage to get extra payment.
Most insurance providers offer too little support for members who receive surprise bills - leaving them unsure how to respond and vulnerable to being overcharged. It's no wonder that 57% of fully insured Americans who receive a surprise bill end up paying it in full - even though up to 80% of hospital bills contain errors.
In this case, Flume and the plan sponsor’s benefits advisor made sure that the family was prepared to receive a bill and educated them on what to do if it happened- in short: call us! If worse came to worst, and the hospital tried to sue them, the plan would provide a co-fiduciary partner to represent the family in court. Under no circumstances would these Flume members be left to deal with this on their own.
Fighting for a better healthcare system
As of the time of writing, the patient is still receiving her regular infusions at the previously agreed price. Situations like this take time to be resolved, but Flume, the benefits advisor, and the family are all prepped and ready to pursue optimal care at a fair price. Under a different plan, or with a less-vigilant team, this contract funny business could very well have been overlooked, costing the family, the plan sponsor, and by extension all members of that plan, unnecessary expense.
Yes, addressing the situation head-on saved money for the plan sponsor and the family. But situations like this also remind us that what we do as a plan administrator is about more than just savings. Every day, American families are being taken advantage of by a system that’s working to turn their sickness into someone else’s cash cow. It’s our job to stand up for them.
We all want to believe that our providers are the good guys in this broken healthcare system. The doctors and nurses themselves usually are. But it's an inescapable fact that even as these dedicated professionals are trying to take care of their patients, many of the hospitals they work for are using people's sickness as an opportunity to overcharge them and their health plans. If this is the status quo, then it's no surprise that hospitals are the number one driver of increasing healthcare costs, or that Americans owe over $750 billion in past-due medical debt.
Many patients don't have the time or know-how to successfully navigate these situations. They need to focus on getting healthy. That's why is crucial that we give them health plans they can count on. Rejecting the status quo and fighting back against predatory billing is the only way we're going to create the sort of healthcare system our members deserve.
If you’re a broker who fears your clients may be getting the short end of the stick, and you want to talk about moving them onto a transparent, high-engagement health plan, drop us a line.
This case study contains no PHI.