'Byzantine' hospital billing practices often leave patients with huge bills; Maine paper's work provides example for U.S.

Kaiser Health News and NPR map based on Urban Institute data

Despite efforts in recent years to increase the transparency of medical bills, millions of Americans are still saddled with medical debt from "unexpectedly huge expenses," partly from "facility fees" charged by hospitals, Joe Lawlor reports for the Portland Press Herald/Maine Sunday Telegram. That's according to a three-month investigation the paper conducted into the "byzantine system of medical billing in Maine," The most rural state. Its findings are broadly applicable.

More than 100 million Americans, or 41% of adults, have medical debt, and they are more likely to live in rural areas, the South, and/or in states that didn't expand Medicaid. The government has attempted to help Americans avoid such debt: The "No Surprises Act," which took effect Jan. 1, 2021, is meant to prevent patients from being blindsided with surprise bills for out-of-network medical treatment. But there are loopholes: Ground ambulances, which can cost thousands of dollars, aren't covered. Another law that took effect that day required hospitals to begin posting the prices for their services online, but few hospitals have complied and fewer still have been fined.

Percentage of those surveyed with below-average income
who said they had serious problems paying or couldn't pay
a medical bill. (Portland Press Herald chart based on
2021 data from the Commonwealth Fund.)

"It has long been standard practice for hospitals to shift uncompensated costs, such as care for uninsured patients who can’t afford to pay their bills, to patients with insurance," Lawlor reports. "But with more patients on high-deductible plans – and insurers sometimes refusing to pay or paying only a fraction of their bills – individuals are picking up more of the tab and bearing more of the financial burden."

Facility fees are another way often cash-strapped hospitals try to stay in the black, Lawlor found. That jibes with a years-long investigation on sky-high emergency room bills by health journalist Sarah Kliff (now at the New York Times, then at Vox). In Maine, "patients are paying hundreds of dollars extra for routine medical tests or procedures simply because the tests are occurring at hospitals," Lawlor reports. "And they may have no idea, because the 'facility fees' are not clearly explained and sometimes hidden on their bills." But one hospital's chief financial officer said facility fees are an "industry standard" because hospitals must cover higher expenses than other medical providers.

Other findings from the Portland Press Herald's investigation:

• "Medical bills are confusing and opaque, and sometimes carry arbitrary and hidden costs" such as facility fees, which can reach hundreds of dollars.
• "The practice of assessing facility fees – sometimes hiding such fees in other charges – increasingly contributes to some patients’ surprisingly large bills."
• Insurance companies sometimes deny claims for unclear reasons that may never be explained. That forces patents to choose between a long fight with insurance or paying huge bills.
• Insurance and procedure costs vary so widely that even patients who carefully compare prices can end up with much higher bills than expected. (See this Kaiser Health News story.)
• Even though Americans have more access to insurance through the Affordable Care Act marketplace, many are still underinsured and risk owing massive unexpected medical bills.
• The high number of underinsured and uninsured people makes the health-care system less efficient and raises costs for providers. The higher costs make even insured people reluctant to seek medical care.
• Everyone agrees reform is needed, but change is difficult because change in one sector often hurts another.
• Reforms like the ACA tend to focus on expanding insurance access instead of addressing root problems with pricing and out-of-pocket costs.
• A single-payer model (not the same thing as universal health-care, though the two are often conflated) could help, but only if the state and federal governments adequately fund it. And there is little momentum right now in enacting such a system, either at any state or national level.