Laurel Hurst had done everything right, at least that's what she thought until she opened her mailbox to find a $20,000 bill for a surgery she assumed had been covered by her health insurance.
Even reading the demand letter from a collection agency, Hurst figured there had been some clerical mistake. It had happened before, when another insurer had assigned a newborn baby boy to her policy, even though she hadn't had a baby that year.
This, too, was probably a mistake that could be resolved with a phone call or two, she thought.
But the only resolution that was forthcoming would be for Hurst to pay off the bill, in $300 monthly payments that the family of six could ill afford.
Ten years later, she's still paying on the debt, and will be for another two years. And Hurst, a Christian who won't file bankruptcy for ethical reasons, has become a cautionary tale of how quickly a family's debt can spiral out of control when someone gets sick or injured and their insurance company only pays a fraction of the bill.
The few issues Democrats and Republicans agree as they debate the repeal and replacement of the Affordable Care Act is the high cost of health care. Although medical debt has declined under the ACA, about one-quarter of Americans under the age of 65 have unpaid medical bills, according to a new study from the Urban Institute. And the Kaiser Family Foundation reported last week that even families with health insurance are finding it harder to pay their premiums and meet their deductibles, and that 27 percent have postponed seeking health care because of the cost.
Their concerns are not unfounded. A few financial missteps, a surgery to correct a chronic condition or an ambulance ride to the emergency room can wreck a family's finances for years. Medical debt is a major factor in U.S. bankruptcies, and it's the No. 1 reason that debt collectors call, the Consumer Financial Protection Bureau recently said.
While you can't always avoid the illness or accident that causes you to need care, there are strategies that families can use to keep medical bills to a minimum. And if those bills have already piled up, knowing how to analyze them — and challenge them — might keep you from nightmarish scenarios, such as bankruptcy or wage garnishment.
The most important thing, patients and patient advocates say, is knowledge —understanding the fine print in your insurance coverage and approaching health care like any other purchase you make, by comparison shopping. It also helps to hear the cautionary tales.
When Hurst, who lives in Kent, Ohio, was seven months pregnant with her second child, she was lifting her feet into bed when she heard a "massive cracking sound." At her next prenatal checkup, a doctor diagnosed her with symphysis pubis dysfunction, a condition that affects about 2 percent of women during pregnancy. It happens when the ligaments that normally keep the pelvic bone aligned become too relaxed, making the pelvic bone unstable, causing what the website What To Expect calls "wrenching pain, as though your pelvis is tearing apart."
Hurst's doctor told her to take over-the-counter pain relievers and that the condition would resolve with time. It didn't, and grew even worse when she fell down the stairs while carrying a toddler in her next pregnancy. "Every night, I would lie down and tears would slide out of my eyes," she remembers.
Over 15 years, Hurst saw 10 different doctors for pain that never subsided as she mothered four children and worked 12-hour night shifts as a nursing assistant so the family would have health insurance. Her husband worked for a nonprofit and did not have health benefits.
Finally, on Thanksgiving week of 2007, a surgeon ordered X-rays and told her that he could stop her pain by spanning the dislocated pelvic joint with screws and a titanium plate and securing her sacral joint with a large stainless steel screw. She had the surgery before Christmas, and was in the hospital for three days. Hurst was confident that, after her deductible, her limited in-hospital benefit plan would cover 100 percent of her in-hospital care.
In fact, her plan only paid "100 percent up to $2,000/day." Not only were her hospital benefits capped at $2,000, but half of the surgical portion of Hurst's $32,500 bill was denied because two surgeons worked on her in two discrete surgeries under one anesthesia. The company declined to pay the costs of the second surgery, the placement of a cannulated sacral screw.
But Hurst didn't know any of this until the past-due account had been turned over to a collection agency. Because of a clerical error, the hospital had been sending the bills to the wrong address.
By the time her mail carrier realized the problem and delivered the demand letter from the collection agency, it was too late to negotiate with the hospital for a reduced amount, and the family was turned down by three different assistance programs because they had jobs and owned a home — a two-bedroom house in which six people lived.
"After all the doctors were paid, we owed $19,500, and to this day, we pay $300 a month," Hurst said. The debt won't be paid off for another two years.
Some people advised the couple to declare bankruptcy or sue the doctors. At the time of the surgery, the debt was nearly half of their income, which was about $43,000 at the time.
"But quite honestly, this is a matter of principle to us. The Bible says not to take a fellow Christian to court. Some of our doctors were our friends and Christians, so we took it on the chin. We trusted God would take care of us somehow," Hurst said.
"Sometimes it seems like it was not worth it, but integrity is its own reward, right?"
That integrity had a cost, though — a ruined credit rating, difficulty making ends meet, and a residual reluctance to seek health care unless it's absolutely necessary. On the positive side, Hurst is now unusually well-informed about health insurance and its pitfalls and better able to advise her young-adult children how to choose theirs.
The American health-care system is famously complicated, and not just for consumers. One study, published in the Annals of Internal Medicine last year, analyzed the workdays of 57 physicians and found that nearly half of their time was spent on paperwork and electronic records.
For each visit by an insured patient, the doctor submits a bill that contains a numerical code for the type of service. If the five-digit code contains a wrong number, the insurer might decline to pay.
That's just one of dozens of reasons a claim might be denied, say patient advocates like Kenneth Klein, a former attorney who now works full-time helping people resolve problems with medical bills. The system seems designed for confusion, he says.
"There's a tremendous disconnect between people obtaining medical services and people paying for them," said Klein, the owner of a Florida business called Human Health Advocates.
In Klein's experience, most people who are shocked by medical bills didn't understand the difference between "in-network" and "out-of-network" providers, or, in some cases, were not given the chance to choose. Klein had one client who chose an in-network hospital, but inadvertently used an out-of-network surgeon. The insurer paid $3,000; the client got a $27,000 bill.
Another common cause of medical debt is when a patient fails to obtain preauthorization for a service or hospital stay, he said. "Most doctors now put in their contracts that you're responsible for obtaining your own preauthorization. If you fail to do so, you're responsible for the cost. Sometimes people don't figure that out until after the fact," Klein said.
To avoid situations like this, consumers must take the time to learn everything about their health policy, and to call the company and ask questions if there's something they don't understand. When you have a conversation with an insurance representative, take thorough notes, and write down the time and date of the conversation, the reference number, and the full name of the person with whom you spoke, Klein said.
Also, consumers should learn the laws of their state regarding health insurance, particularly whether a practice called "balance billing" is allowed.
Balance billing is when an out-of-network medical provider charges the patient for whatever part of a bill the insurer doesn't pay, and it's illegal in some states, such as New York, California and Florida. In some cases, balance billing has led to patients getting six-figure bills, often for emergency care, when the hospital might be in the patient's insurance network, but the doctors who care for him are not.
Other advice Klein offers: Take the time to examine every medical bill carefully, checking for duplicate charges and incorrect dates or times. "I've seen someone who checked out at 10 in the morning, but got charged for a full day. Half of all hospital bills have errors," he said.
Don't be afraid to challenge a bill with the provider. "And sometimes it doesn't hurt to go file a complaint with your state's insurance commissioner," he said.
Whenever possible, reach a resolution before the account goes into collections, which limits your options, as Hurst learned in Ohio. If the bill hasn't been turned over to a collection agency, the provider may be willing to reduce the amount owed, knowing that they may lose as much as a third of the amount to the collection agency, even if the patient eventually pays the full amount.
In a talk on TEDMED, Dr. Jon Cohen of Quest Diagnostics asked, "Why don't patients behave like consumers?"
The major reason is that people don't have the opportunity to comparison shop, like they can easily do if they're buying a TV. But that doesn't mean we shouldn't make the effort to learn the prices of the services we're getting, and ask if we can do better.
There are several places to check the cost of a doctor's visit or procedure on the internet, among them the websites Guroo.com and Healthcarebluebook.com. Some insurance companies post average prices on their websites, and some state health departments do, too.
The sites offer ballpark estimates, but the numbers they give can vary widely. Guroo.com, for example, puts the cost of a C-section childbirth in Utah at $15,734 (compared to a national average of $16,038); Healthcarebluebook.com puts it at $10,481; and the Utah Department of Health shows a range of $11,068 to $16,998 in 2014.
Making a few local phone calls is likely the most reliable way to check prices before you seek health care, whether it's for an X-ray or a child's dental exam.
Jessica Migala, a writer in the suburbs of Chicago and the mother of a 16-month-old, did just that and wrote about it for Women's Health magazine. Migala's husband recently had an X-ray on his ankle, and the couple hadn't thought to check the prices in advance, so she was surprised to find that in her area, the cost of an ankle X-ray ranged from $50 to $406.
The cost of a routine eye exam ranged from $100 to $297; for adult teeth cleaning, from $79 to $307.
Of course, the lowest bidder isn't always the best choice, so Migala recommends that patients consult with their doctor if they're thinking about shopping around, as she does.
Migala has a benign tumor on her pituitary gland, which she has to monitor with an occasional brain MRI. Because in the past, she's had to pay hundreds of dollars out of pocket for the procedure, she asked her ob-gyn if she could have it done at a health-care chain that only does MRIs. That facility quoted her $600, as opposed to a hospital that would charge $5,200, but the doctor did not recommend it.
"He said that for something like a knee MRI, that might be OK, but not in the case of needing a brain MRI to look for something very, very small on my pituitary gland," she said. "He did say that getting blood work done at an independent lab is completely fine, so I do that," she added.
Klein, too, recommends that families consider their choices when needing health care, rather than heading straight for their regular doctor's office or the emergency room.
"Know where the urgent-cares are near you, and know which ones are in your network," he said. "There are many things an ER does than an urgent-care (facility) can do."
The National Patient Advocate Foundation was founded in 1996 after Nancy Davenport-Ennis, now its chair emerita, watched a dying friend struggle not only with cancer but also its bills.
The foundation offers education for consumers, including free webinars on topics such as health insurance and getting help with prescription costs, as well as co-pay assistance for medication and treatment of a serious illnesses. (Applicants must have household income under 400 percent of the poverty level.)
Even if the foundation is unable to assist a person with medical bills, they often help by directing patients to other resources that can help. Last year, they helped more than 80,000 patients who suffered from 500 different chronic illnesses or diseases, said Caitlin Donovan, director of outreach and public affairs. Only about 18 percent were uninsured; the rest had commercial insurance, Medicare or Medicaid.
Donovan notes that the definition of "catastrophic" varies widely. For people with high incomes, catastrophic medical bills could be tens of thousands of dollars for cancer treatment; for people on a fixed income, just affording the gas or bus fare to get to a health-care facility could be beyond their means. However, she said, "Debt and catastrophic debt have the same repercussions, no matter how it starts."
If you've got unpaid medical bills, start by examining them carefully for errors. Then, appeal any decision by the insurer not to pay for something. "Sometimes insurers will turn down bills because they used your Social Security number instead of a group ID number (when processing the bill). Always call and ask why it was turned down," Donovan said.
If the insurer won't budge, and they've already paid their share, call the doctor, hospital or other provider and negotiate. "There's no set amount that a hospital charges. Bills are negotiable," she said. "Ask if you qualify for a discount." Or, if it's a hospital, ask for financial assistance.
"You have to ask; they won't volunteer that information," Donovan said.
If you don't qualify, ask for a list of outside resources who could help. She also said that some people have had success using internet fundraising sites. These "crowdfunding" sites include Gofundme.com and Youcaring.com.
Although negotiating for deals on health care may seem strange and uncomfortable, Migala, the writer in Chicago, said most people she talked to about the price of procedures were friendly and at times, compassionate.
Donovan said to take the time to make as many calls as necessary to find help. The foundation's caseworkers average 22 phone calls for every patient's case, she said.
"In our society, we have great respect for professionals, and we tend not to question them. But your financial health and your medical health are intimately intertwined," Donovan said. "Remember that you're not negotiating just on behalf of yourself and your family, but that it's a totally normal thing to do. It's part of the system.
"As much time as it takes, and as frustrating as it can be, it's worth it to get into the weeds," she said.