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The Emergency Room Switcheroo

When my daughter Ali was in middle school, she played softball in a local youth league.

The coach’s older daughter was on her team. His younger daughter, a grade schooler, would play with friends nearby while her father coached. I was watching a game with the other players’ parents one evening when we heard an ear-splitting shriek from the coach’s little girl. I had heard that sound before from someone else’s child on a ski hill; some of the other moms and dads had heard similar sounds too. We instantly knew what it meant: a broken bone.

The little girl had been climbing on something - I believe it was a tree - and fell off. I don’t think we grown-ups even exchanged words. The coach ran from the field to collect his daughter; his wife came down from the stands to join them; the assistant coach moved into the coach’s spot; and, since I sometimes helped the team practice, I went down to take the assistant’s place. The game went on. By the time it ended, little Charlotte was already back, sporting a cast on her arm.

This happened about a dozen years ago. If it had happened today, an especially alert parent might remember to make sure to take his daughter to a hospital that is part of his insurance plan’s network. But he is not going to wait, while his child is in pain, for the emergency room to locate a doctor who also happens to be part of his insurer’s plan, assuming such a doctor is available at all. And he certainly is not likely to wait around for a doctor to see his child, discover that the doctor is out-of-network, and then depart for another hospital in order to avoid exorbitant charges for a routine childhood injury.

A recent article in The New York Times made it clear, however, that patients who go to the emergency room nowadays are at the mercy of opaque billing systems that treat many emergency room doctors as “contractors,” who negotiate with insurers completely independently from the hospitals where they work, rather than employees. As a result, the doctor who treats you may be out-of-network, even for patients with the presence of mind to seek out an in-network hospital.

A physician who took his daughter to a Philadelphia emergency room in 2010 was charged $2,000 for the out-of-network doctors who oversaw her cardiac monitoring, while the rest of the visit was covered by insurance. He fought the charges, but eventually ended up shelling out the co-payment for out-of-network services, which came to $1,200. “It was ridiculous,” he told The Times. “There was no sign saying ‘Our physicians are out-of-network.’”

Even patients who are on the lookout for this bait-and-switch have little recourse. Often there is no way for even a discerning patient to know what is in or out of network until much later, when the bills arrive. And in an emergency, seconds can count. The idea of skipping or delaying necessary care until a covered doctor can be found is one that would not occur to most patients, parents or caregivers.

This problem is not limited to any one region of the country. Journalists have covered the practice in communities ranging from Oregon to Texas to Virginia. Some of the patients were able to dispute the charges, but most were stuck with or still fighting them at the time they spoke to the press.

Doctors and hospitals both say they are not to blame. Around two-thirds of U.S. hospitals engage contractors to staff their ERs, and many staffing groups opt out of all insurance plans. Insurers can drive harder bargains with physicians than they can with major hospitals, and some physicians are left with practices they say would be unsustainable at the rates insurers offer their in-network doctors. So the doctors get around the problem by working at hospitals billed as in-network, while remaining technically free to charge out-of-network rates.

In almost any other context - an auto sale, a bank loan, a door-to-door sale of kitchenware (such things happen, even in the Internet age) - this sort of bait-and-switch would be branded a deceptive practice. It would be heavily regulated or just illegal. In a consumer sale, for example, the consumer typically gets three days to review a contract and cancel without penalty. But in the ER, there are no second chances, no take-backs. Under the duress of physical pain or emotional distress over a loved one’s condition, you sign paperwork that says you will pay whatever is eventually billed, and you are held accountable for what you signed.

Any sensible legal framework would prohibit or circumscribe the fiction that doctors who have privileges in a hospital are acting as independent contractors and not as agents or employees of the institution, at least in connection with nonelective medical treatment.

Of course, we don’t have a sensible legal framework governing medical care in this country. We have the Affordable Care Act, which does nothing to make care truly affordable. It artificially subsidizes some forms of treatment, but to limit the subsidies, it also has all sorts of gatekeepers and gotchas. The limited networks available under many lower-costs ACA plans, and this sort of chicanery to get around the limitations, are among them.

It isn’t fair to blame the ER switcheroo entirely on Obamacare, but the federal law’s poor design has encouraged, rather than curtailed, the practice. Many insurers contract with increasingly narrow networks of health care providers to create offerings that fit the law’s requirements, and many of the exchanges make it hard to determine which providers are in-network, even when it isn’t an emergency.

At the rate things are going, the only people who will be able to go to an ER without anxiety will be Medicare patients. Providers who accept Medicare are not allowed to bill prices above the Medicare-set ceilings. In most cases, the ER exposure of a Medicare recipient is limited or nonexistent. Everyone else, though, will be stuck wondering what absurdly high bill they can expect to receive once the emergency ends and the accounting of every scan, doctor’s opinion, bandage and analgesic is complete.

Consumers have no effective protection right now. A trip to the emergency room is just a roll of the dice. It’s outrageous, but not enough people are outraged yet. When they are, it will change.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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