The Self-Pay Patient: How to Eliminate Surprise Medical Bills

February 12th, 2020

The root cause for surprise medical billing is the failure nationally to adhere to an accepted pricing norm. Networks negotiate their rates and contracts based on their self-directed priorities and market forces. This effectively leaves self-pay/cash-pay patients struggling for fairness, equity and predictability in pricing. Price transparency is a good initial step in marketplace reforms, but it is only a first step. Consider the millions of Americans who choose health sharing as their health coverage option.

Healthcare sharing ministries are organizations where healthcare costs are shared among members who have common ethical or religious beliefs. A healthcare sharing ministry does not use actuaries, does not accept risk or make guarantees, and does not purchase reinsurance policies on behalf of its members. One of the largest health sharing ministries in the United States is Liberty HealthShare.

Liberty does not use a PPO network for its members. Members have the option to use any doctor or hospital they choose. Through a baseline analysis to determine fair and reasonable charges — Reference-Based Pricing (RBP; Medicare reimbursement plus 20-40 percent) — Liberty members share in RBP amounts and send a check for services based on that pricing analysis. Ninety-seven percent of all providers accept Liberty members’ checks. The remaining three percent send a balance bill to our members. Our members expect to be balance billed. We educate the member on what a balance bill is, when to expect it, and what to do after receiving it.

We provide education, notification, and alerts to members beginning at enrollment as to when to expect a balance bill, and the remedial steps to take when a balance bill arrives. Balance billing is no doubt our number one member complaint, because consumers expect a provider to routinely accept a fair and reasonable reimbursement that conforms to national norms such as RBP. Alas, this is not always the case.

The most likely providers to balance bill Liberty members are hospital-contracted providers such as anesthesiologists, emergency room physicians and radiologists. However, some hospital systems are notorious for not accepting Reference-Based Pricing. Liberty communicates with its members from the onset of a medical incident regarding the prospect of a balance bill. Fifty percent of balance bills get negotiated to a zero balance. Twenty-five percent of balance bills get negotiated with a discount, and the final 25 percent are shared by members in full. The best way to avoid surprise medical bills is to mitigate them or eliminate them entirely.

An educated medical consumer is a health sharing ministry’s best member. Liberty, for example, offers multiple tools to its members to secure the best pricing as a self-pay consumer:

•  Healthcare Bluebook. Liberty currently provides members with access to Healthcare Bluebook to help the member understand different medical costs in their area, including the actual facility and range of costs for their service. This strategy is most helpful to members who pay cash for services and submit the billing for reimbursement by the members. Our fall back pricing analysis is always Reference-Based Pricing.

•  Single Case Agreements. Prior to any medical service being rendered, Liberty advocates for a bundled price and enters into an agreement with the provider for that single case. Diagnostic and procedure information is exchanged, and a favorable pricing agreement is reached prior to the service. Subsequently, service commences and sharing follows the pricing guidelines established. No surprises.

•  Pre-Payments. Frequently, hospital systems will not engage in services for a member until prepayment is made on behalf of the self-pay patient. Upon submission of a membership card and upon determination that the patient does not have insurance but is a member of a healthcare sharing ministry, the provider requires a substantial prepayment. LHS advocates on behalf of the member for the best cash payment and arranges for services to be rendered at that pre-determined rate. 

Publicly disclosed price averages and/or ranges would enable health sharing ministries and their members to price-shop procedures against our pricing norms and negotiate better more predictable rates. Pricing transparency is needed to inject pricing competition into the marketplace.

Health sharing isn’t for everyone — but our strategies and tactics to mitigate and eliminate surprise medical billing are a model for closer consideration:

•  Transparency. Encourage providers to publish rates based on an accepted measurement like DRGs. A DRG, or diagnosis-related group, is a patient classification system that standardizes prospective payment to hospitals and encourages cost-containment initiatives. In general, a DRG payment covers all charges associated with an inpatient stay from the time of admission to discharge.

•  Fairness. Encourage adoption of providers billing lowest-contracted rates instead of amounts generally billed. 

•  Reciprocity. Propose providers with privileges at a facility honor contracts the facility has with payers, self-pay included.

•  Reward competition. Create a legislative/regulatory culture for self-pay friendly pricing. Yes, this will be a heavy lift considering the political clout of the insurance industry — but it’s a battle worth fighting.

“Military power wins battles, but spiritual power wins wars.” – George C. Marshall

This article was first published in the Washington Times,