The Colorado Springs woman looked at the statement from her insurance company and almost needed a defibrillator to recover from the sticker shock. A procedure that had been billed at $5,000 the first time she had it was being billed a year later at about $28,000 — and the statement indicated she was on the hook for all of it.
The dramatic difference in price stems from where she had the procedure done. The first time, it was at an ambulatory surgery center that was “in-network” with her health insurance plan. The surgery center and the insurance company had negotiated rates, and she had no out-of-pocket expenses.
The second time, however, her doctor sent her to Kissing Camels Surgery Center, which opened in 2010 as an out-of-network facility and has yet to sign a contract with an insurance company. Without negotiated rates, Kissing Camels can set its own rates and bill that amount to the insurance company.
Had the woman known Kissing Camels was out-of-network, she would have gone elsewhere, she says. But she claims the doctor who performed her surgery last year failed to tell her, and it didn’t occur to her to ask because the doctor is in-network with her insurance plan. When he did the first procedure, it was at an in-network surgery center.
“It sent me over the edge,” says the woman, who asked not to be identified because she has professional ties to the medical field. “I just assumed: same physician, same physician’s office. They didn’t tell me it was out-of-network until I got the bill.”
At its most basic, her story is a “buyer-beware” saga — an admonition for people to determine whether the medical providers and facilities they use are in-network with their insurance plan, and to be aware of their financial obligations and the amount their insurance company will be billed if they decide to go out-of-network.
But the story behind her story is far more contentious and complex. It raises questions about transparency in medical costs, about the relationships, or lack thereof, between insurance companies and Colorado ambulatory surgical centers. It involves allegations of unethical and even illegal activities, of antitrust-law violations, of sky-high bills that some people warn will translate into higher insurance costs for everyone if the issue is not addressed.
Similar tales have surfaced in other states, brought to light by a flurry of lawsuits filed primarily by insurance companies against surgery centers operating out-of-network. But the issue hadn’t received much attention in Colorado outside of the healthcare industry until Kissing Camels and three sister surgical centers filed an antitrust suit in federal court in November against two major healthcare outfits — HCA-Healthone and Centura Health — the Kaiser Foundation Health Plan of Colorado and the Colorado Ambulatory Surgery Center Association (CASCA).
The lawsuit alleges that the hospital systems have conspired to put the four surgery centers out of business by gaining control of CASCA’s board and persuading insurance companies not to sign contracts with them. The suit also claims insurance companies have threatened to essentially blackball doctors by cutting ties with them if they perform surgeries at the centers.
“The result is that the plaintiffs and the patients they serve are being damaged,” the lawsuit says.
HCA, Centura, Kaiser and CASCA have said little publicly about the allegations, except to deny that they’ve done anything wrong or violated antitrust laws.
But privately, some people with ties to the lawsuit say the surgery centers were designed from the get-go to be out-of-network so they could charge exorbitant fees, file for reimbursement with patients’ insurance companies and see whether the companies would pay up. In the case of the Colorado Springs woman, her insurance company refused to pay, but in many other cases both in Colorado and elsewhere, the insurance companies have covered the costs.
The surgery centers also have been accused of illegally waiving co-payments and deductibles for patients to make it more palatable for them to go out-of-network, in essence giving them in-network treatment while leaving it to the insurance companies to bear the cost.
“Who’s going to end up paying for this? We all are,” said Brent Ashby, administrator of Audubon Surgery Center and a member of CASCA’s board, who is named in the lawsuit but isn’t one of the defendants. “The insurance companies will have to jack up their premiums. You’re going to see an impact in the market eventually.”
Joe Whatley Jr., attorney for Kissing Camels and the other centers, says they’re not doing anything unlawful or unethical.
A group of Colorado Springs doctors started Kissing Camels Surgery Center about two years ago with a hand from SurgCenter Development, a Pismo Beach, Calif., company that helps develop and manage centers throughout the U.S., including the three other plaintiffs in the Colorado lawsuit: Cherry Creek Surgery Center, Arapahoe Surgery Center and Hampden Surgery Center.
Some of the 106 centers tied to SurgCenter have contracts with insurance companies, and some don’t, Whatley said. From the outset, he said, Kissing Camels tried to negotiate an agreement with health insurance companies, including United Healthcare. He doesn’t know why it didn’t go through.
“You’ll have to ask them,” Whatley said.
United Healthcare spokeswoman Kristen Hellmer declined to comment, but noted that the company and Kissing Camels are “working on developing a contracted relationship.”
Without contracts, Kissing Camels has been operating out-of-network, even though most, if not all, of the physicians who own it are in-network. That, in and of itself, isn’t what troubles its critics.
“It is important to emphasize that CASCA has never opposed the concept of an ambulatory surgery center being out-of-network with any particular health plans,” says a statement CASCA sent to its members after the lawsuit was filed.
Instead, CASCA’s board president and its executive say in the statement, they’re more focused on complaints they received from sources within and outside its membership alleging that Kissing Camels and the other SurgCenter operations in Colorado were engaged in “questionable practices,” including charging rates that are “grossly in excess of usual and customary rates for certain procedures,” and waiving or discounting co-payments or deductibles, which is illegal under state law.
“CASCA is not only concerned that such practices are illegal, but more importantly, CASCA is concerned that the negative effects of such practices on the health care industry may have a trickle-down effect that may ultimately lead to higher insurance premiums for patients and their employes,” executive director Rob Schwartz and board president Lisa Austin say in a statement for the media.
CASCA asked the Colorado Department of Regulatory Agencies to take action, but DORA said neither it nor the Colorado insurance commissioner has statutory authority to do so. It would likely be up to the Colorado Attorney General’s office to investigate, but spokeswoman Carolyn Tyler said no complaints have been filed, “though we know there are some issues” surrounding the centers.
Charges vary greatly
Two Kissing Camels patients, including the Colorado Springs woman with the $28,000 bill, said they weren’t told their co-pays and deductibles would be waived. The second patient had to cover a $6,000 out-of-network deductible; her in-network deductible would have been $3,000.
“They did tell us they didn’t have an agreement with the insurance company, but we wouldn’t have to pay more than if we went in-network,” said the second patient, who asked not to be identified because she didn’t want to ruin her relationship with her doctor. “So how do they do that? If they get to where you’re not going to pay more than if you went in-network, they’ve got to be putting the screws to the insurance company.”
It appears that patient’s insurance company picked up the tab, and a procedure that had cost $9,000 the first time it was done, at an in-network facility, was billed at $85,000 at Kissing Camels, the patient said.
“I thought it must be a mistake,” the patient said. “I thought they added a zero.”
In another case, United Healthcare paid $27,000 for a bunionectomy performed at Kissing Camels in 2010, with the patient responsible for about $3,000. According to Asbhy, who was interviewed before the lawsuit was filed, the procedure would have been billed at no more than $4,000 at Audubon. which is physician-owned in a joint venture with Penrose-St. Francis Health Services/Centura Health. Ashby said Audubon would expect an out-of-network payer to cover the full billed amount; an in-network payer would have a contractual discount of 25 percent to 50 percent, he said.
Without more information about the patient, United Healthcare was unable to say why it paid the $27,000, but a lawsuit the company filed in June against a group of California surgery centers, unrelated to the ones in Colorado, gives one possible reason.
“United itself receives approximately a million health care claims per day,” says the suit, which lodges some of the same accusations against the California centers that have been aimed at the Colorado operations. “Claims administrators could not make timely payment to providers or timely reimburse members if the claims administrator first had to examine each and every claim for truthfulness and accuracy.”
How Kissing Camels landed on those amounts is unknown, and with no contracted rates to bind them, out-of-network surgery centers can charge what they want.
“It’s a free country,” Whatley said. “Except during the Nixon administration, we don’t have price controls in this country.”
Whatley rebutted criticism that Kissing Camels and others that operate out-of-network submit inflated charges to insurance companies to see what would stick.
“Doctors, especially surgeons, spend a very significant part of their lives being trained,” he said. “They have to be highly paid to do what they do.”
Daron Tooch, a California attorney who has taken on the insurance industry in numerous cases, said it may be that the insurance companies wouldn’t agree to rates that would adequately compensate the centers.
“Many would like to be contracted, but they can’t afford the rates the insurance companies are offering them, so they have no choice but to be non-contracted, so a lot of them just set their charges where they set their charges, and then the insurance companies are determining how much to pay. Then there are disputes over whether the charges are accurate. That’s sort of the state of the industry. It’s a strange way it’s done.”
Several health-care experts say it underscores a bigger problem in the industry: a lack of transparency in fees.
“The current environment is absolutely a buyer-beware environment,” said Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reform. “Some major health plans will give you prices on negotiated rates, but when you got out of network, it’s much more wild west.”
Push for oversight
Ashby said the brouhaha over the SurgCenters’ Colorado operations has made strange bedfellows of organizations that don’t usually see eye-to-eye, including the Colorado Hospital Association, the Colorado Association of Health Plans and CASCA.
“These three often have divergent interests,” he said. “We usually don’t buddy up to the CHA. But here you have all three groups saying this is a threat to the entire medical industry.”
The CHA and CAHP declined to comment, as did the national association that represents surgery centers.
The avenues available to those who want to address the issue in Colorado may involve pushing for legislation to give DORA a bigger role in oversight and enforcement of existing statutes, Ashby said. Someone could try to push for caps on what surgery centers can charge, “though that’s a draconian solution I’d rather not see,” Ashby said.
Still, he is blunt about wanting to address billing practices that, “if not illegal, are certainly not ethical, and not morally right.”
“You have to do the right thing,” Ashby said. “There’s a difference between what is illegal and what is right.”
The Colorado Springs woman who was facing a $28,000 bill hasn’t gotten wrapped up in the intricacies of the issue. All she knows is, she got hit with a huge bill, she disputed it, and Kissing Camels waived the entire amount, she said. In the end, she was out about $1,000.
But she feels duped, and wants to people to be smart consumers and ask pointed questions: Do you have an ownership stake in this facility? Is the facility out-of-network? Is the anesthesiologist and everyone who will be part of the procedure in-network? What will this procedure cost? What am I expected to pay
“I think the thing that caused me to speak out on it is, I’m educated. I’m a little savvier than the average Joe,” she said. “I can take care of myself, but most people are not me. I envision in my head some little 80-year-old woman having cataract surgery and getting a bill like this and paying it.”
Of course, some people will choose to go out of network, just to get the doctor or facility they want. But Corlette, of Georgetown University, cautions them to know what they’re getting into.
“When you hear the words ‘out of network,’ be on your guard. You can be hit with some pretty big bills.”
The cost of going Out-of-network
America’s Health Insurance Plans commissioned a survey in 2009 to review claims from the 30 largest states, including Colorado. The survey compared out-of-network charges for several procedures with the reimbursement amount allowed by Medicare, a common but often-criticized benchmark in establishing rates. The amounts below reflect out-of-network physician claims filed in Colorado in 2008:
• Laparoscopic gallbladder removal
Amount billed: $26,100
Medicare fee: $625.94
Amount billed as a percentage of Medicare fee: 4,170 percent
• Minimally invasive knee meniscus surgery
Amount billed: $9,773
Medicare fee: $574.13
Amount billed as percentage of Medicare fee: 1,702 percent
• Cataract surgery with insertion of artificial lens
Amount billed: $9,730
Medicare fee: $622.97
Amount billed as percentage of Medicare fee: 1,562 percent
Benign breast lesion removal
Amount billed: $3,853
Medicare fee: $399.58
Amount billed as percentage of Medicare fee: 964 percent
Source: America’s Health Insurance Plans