“I am stuck in the middle of this convoluted, flawed system,” says Drew Calver, popular high school history teacher and swim coach in Austin, Texas. Last spring, Calver collapsed in his bedroom from a heart attack and was rushed to the nearest hospital for emergency surgery. He lived and returned home to his life only to find a new heart attack waiting as the various bills arrived.
Even from his hospital bed, Calver asked whether his health insurance would cover all of this, a financial worry that accompanies nearly every American hospital stay. He was concerned because St. David’s is out-of-network on his school district health plan. The hospital told him not to worry and that they would accept his insurance, Calver said.
The hospital charged $164,941 for his surgery and four days in the hospital. Aetna, which administers health benefits for the Austin Independent School District, paid the hospital $55,840, records show. Despite the difference of more than $100,000, with the hospital’s prior assurance, Calver believed he would not bear much, if any, out-of-pocket payment for his life-threatening emergency and the surgery that saved him.
In the wake of his heart attack, Calver fell victim to twin medical billing practices that increasingly bedevil many Americans, even as legislators have tried to protect them: surprise bills and balance billing. Surprise bills occur when a patient goes to a hospital in his insurance network but receives treatment from a doctor that does not participate in the network, resulting in a direct bill to the patient. They can also occur in cases like Calver’s, where insurers will pay for needed emergency care at the closest hospital — even if it is out-of-network — but the hospital and the insurer may not agree on a reasonable price. The hospital then demands that patients pay the difference, in a practice called balance billing.
Several states, including Texas (as well as New York, California and New Jersey) have passed laws to help shield consumers from surprise bills and balance billing, particularly for emergency care. But there’s a huge loophole: Those state-mandated protections don’t apply to people, like the Calver family, who get their health coverage from employers that are self-insured, meaning the companies or public employers pay claims out of their own funds. Federal law governs those health plans — and it does not include such protections.
About 60 percent of people with employer health benefits are covered by self-insured plans, but many don’t even know it, since employers typically hire an insurer to administer the plan and employees carry a card bearing the name of Blue Cross Blue Shield or another major insurer.
This case “illustrates the dangers that even insured people face,” said Carol Lucas, an attorney in Los Angeles with experience in health care payment disputes. “The unfairness is especially acute when there is an emergency and the patient, who might ordinarily be completely compliant, has no say about the facility he winds up in.”
This case also raises questions about the validity of the hospital’s charges.
Industry analysts and consumer advocates say St. David’s has a reputation for exorbitant billing and for trying to collect big payouts as an out-of-network provider. “This is a well-known, problematic provider. We’ve seen multiple bills from them and they are always highly inflated,” said Dr. Merrit Quarum, chief executive of WellRithms, which scrutinizes medical bills for self-funded employers and other clients nationwide.
WellRithms reviewed Calver’s bill in detail at the request of Kaiser Health News and determined that a reasonable reimbursement would have been $26,985. That’s less than half what Aetna paid. Healthcare Bluebook, which offers cost estimates for medical tests and treatments, arrived at a similar conclusion. It said a fair price for a hospitalization in Austin involving four heart stents would be about $36,800. St. David’s Medical Center charged four times that amount.
Calver said the whole ordeal has been incredibly stressful for him and his wife. “I’ve never owed a large amount like this or had credit card debt. What does it mean if this goes on my credit report?”
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Texas teacher thought he had great health insurance. Now he’s stuck with a $109,000 ER bill.