‘I got scammed’: Americans describe getting surprise medical bills via health care loopholes

Surprise medical bills are nothing new in the U.S., and they've become so commonplace in the 13 years since the landmark Affordable Care Act (ACA) became law that Congress recently passed legislation aimed at banning the practice.

Sometimes a simple coding mishap can result in a major headache for a patient, as was the case for Anthony, a 29-year-old based out of Norwalk, Conn.

When Anthony visited his doctor for a routine annual checkup — which his insurance plan through Cigna advertised as 100% covered without a copay — he ended up receiving a bill for $132.09.

This was because his doctor’s office coded the visit as an “office visit” instead of an “annual checkup or preventative care.” In an effort to clear up the confusion, Anthony called both Cigna and his doctor’s office, and Cigna assured him that it was simply listed under the wrong code and would be covered if the doctor’s billing department corrected it.

“I submitted a complaint to Westmed, and they forwarded it to the billing department,” Anthony told Yahoo Finance. “They rejected my request several times. According to them, the office staff had the final word on the billing code. I was able to talk to the office staff directly too, but I’m not sure who was responsible for selecting the billing code there.”

The experience, he added, has been "very frustrating" and time-consuming, especially after he reached out to multiple offices to try to solve the issue.

“Wasted a bunch of time, and, frankly, I got scammed," Anthony said. "In the end, I got no explanation why they used the wrong code, and the bill was sent to collections. It’s going to hurt my credit score and in the U.S., that also means my ability to find a place to rent or even buy a house if I ever get the chance. It’s the kind of thing you lose sleep over.”

'They think short-term'

A loophole in the ACA — commonly known as Obamacare — is part of the reason why this issue persists in the U.S.

Under the ACA, insurers are required to cover preventive services such as cancer screenings, immunizations, and well-woman visits without cost-sharing, meaning that the individual receiving the services is not required to pay anything.

A study published in 2021 in the journal Preventive Medicine found that “in addition to premium costs meant to cover preventive care, Americans with employer-sponsored insurance were still charged between $75 million and $219 million in total for services that ought to be free to them.”

“The ACA specified those rules around what should be covered, but then how that’s actually operationalized is left up to individual insurers — what procedure codes are covered under the umbrella of each of those services in same or spirit, who qualifies, how often they can get them is up to each individual insurer,” Paul Shafer, assistant professor of health, law policy, and management at Boston University School of Public Health, told Yahoo Finance.

Furthermore, last September, Judge Reed O'Connor — who previously ruled that the ACA was unconstitutional, a decision that was later overturned by the Supreme Court — issued a ruling that it was also unconstitutional for the ACA to require insurers to cover preventive services without copayments.

If that ruling were to stand, at least 40% of adults indicated in a new Morning Consult survey that they would not be willing to pay for a majority of the preventive services covered by the ACA mandate.

While the primary goal of preventive visits is to prevent longer-term issues from arising down the line — thereby eliminating potential costs — insurers don’t always see it that way, especially if a provider lists a different code on a patient's file.

“They think short-term — and I’m talking in particular about the publicly-traded companies,” Wendell Potter, president of the Center for Health and Democracy and former executive at Cigna and Humana, told Yahoo Finance. “They’re the ones who are dominant in this area. They know there’s a good chance that a person who’s enrolled in a Cigna plan now might in the second half of this year be enrolled in a United plan, or even next month could be enrolled in a United plan or a Humana plan. People change jobs, and when they change jobs, that often requires that they have to work with a new carrier with a new network of doctors. And all of that goes with that.”

Essentially, insurance companies grow by taking market share from each other, and Potter and other industry experts refer to this as “churn.”

Consequently, Potter said, “they choose to have a short-term focus and don’t have the interest really in doing what is right for someone down the road because they are just making a bet that they likely will not have that person enrolled for a long period of time.”

The No Surprises Act, which became law in 2021, was intended to prevent patients from receiving surprise medical bills. However, it also comes with another loophole: The law protects patients receiving care from out-of-network providers and out-of-network emergency services, but it doesn't apply in circumstances where the care is being provided by in-network providers, regardless of whether or not it should be free for the patient.

“Policymakers and employers and the media, to a large extent, are missing some important parts of our health care system that need more scrutiny,” Potter said. “We are really focusing on a few specific areas where patients in particular are at a great disadvantage. Increasingly, this is an area where we find people are having problems when there is a dispute or glitch in refusing to pay a claim.”

Not-so-free procedures

Because of these loopholes, patients often find themselves billed for routine procedures that typically are fully covered by their health insurance.

Several individuals, who asked to remain unnamed due to privacy concerns, shared with Yahoo Finance the forms they were required to sign in order to be seen for routine physicals and other preventive exams.

In one of the forms, an individual was told that if they discussed any new or chronic medical issues with their doctor, their insurance would be billed for both an office visit and a preventive health exam.

For another individual, their form indicated that if they discussed new acute conditions or a worsening chronic condition, if a diagnostic test was ordered, or if a treatment changed, they would also be subject to two separate bills.

“There are a lot of gray areas but generally, those shouldn’t be billed,” Jenifer Bosco, a staff attorney at the National Consumer Law Center, told Yahoo Finance. “In the worst case, some providers do engage in what’s referred to as upcoding where they will try to bill for things or get reimbursed at a high rate for things that really should be either preventive or should be billed at a lower rate.”

For example, a preventive colonoscopy meant to screen for cancer is required to be covered at 100% by health insurance providers. However, if a polyp is discovered and removed from the patient during that screening, that procedure becomes a “surgery” rather than a screening and is billed as such.

“It makes zero sense charging the cost of something or the cost to the patient for something while they’re literally mid-procedure,” Bosco said. “You can essentially bill two visits for the same time, which I think intuitively just doesn’t make a lot of sense to most people. If you’re going in for one visit, how can you be charged for two and also be losing that free preventive visit at the same time?”

According to the Preventive Medicine study, patients were saddled with a total of $12.8 million for preventive colorectal screenings in 2018, while wellness visits incurred charges of up to $73.1 million.

“It feels a little bit like a bait and switch, and that’s not on the doctors,” Shafer said. “That’s just how we’ve set up the reimbursement guidelines and everything else. It’s frustrating.”

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Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at adriana@yahoofinance.com.

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