Zurik: Third-party medical bills a shocker? Welcome to 'balance billing'

Statements by Schumacher, Tulane/HCA and Ochsner in response to our requests for comment.

NEW ORLEANS (WVUE) - Steve Fair sounds like a Sooner with a taste for Louisiana living.

"I love New Orleans," the southern Oklahoma resident says, "I love the people, I love Cajun food."

But a recent trip to a local hospital left him with a bad taste in his mouth.

"It's obviously very offensive because it's my money," Fair says. "And I feel like I've been price gouged."

Fair, a grocery salesperson, came to New Orleans for business. And in his hotel room, he woke up in the middle of the night. His uvula, that part that dangles in the back of your mouth, swelled up to five times its normal size.

"It was actually touching my tongue," he recalls. "It was gagging me."

Fair hopped in a cab and went to Tulane's emergency room, spending about 10 minutes with the ER doctor.

"He checked my throat and showed my wife," Fair tells us. "He says, 'He has some obvious infection and pus pockets on his tonsils and he has strep throat.' And he gave me a penicillin shot and I went on my way."

Fair said the service and diagnosis at Tulane were both perfect. "After he gave me the penicillin shot I had to have for strep, everything was fine and I recovered," he tells us, "until I got the bill. And then I'm like... I'm sick again!"

Even though Fair was traveling out of state, his insurance company told him he had visited an in-network provider in New Orleans; Fair paid his copay and his insurance company covered the rest of the cost at Tulane.

But four weeks after the ER visit, he received another bill: about $1,400. The bill didn't come from Tulane but from another company, Schumacher Clinical Partners - formerly known as the Schumacher Group. They charged Fair $1,360 for a 10-minute visit with their doctor.

"If this guy is making this kind of money, he's making $2.5 million a year as an ER physician, working 50 hours a week," Fair suggests. "There's no possible way he can justify this kind of charge."

Fair sent U.S. Senator Bill Cassidy of Louisiana a letter, calling it a "classic example of price gouging."

"It seems like this is astronomical, that this is out of control," Fair tells us. "And my question to Tulane was that: What do you do? Do you know how much your third-party physicians charge? Those guys who are actually there, doing the work in your ER - are they employed by you? Obviously not, because I'm getting a bill from a third party."

Fair wrote Tulane, calling the bill outrageous, writing, "I would love to visit with" the doctor and "ask how he can justify such an astronomical fee."

"And I have heard nothing from Tulane," Fair says.

"It's unconscionable," says Insurance Commissioner Jim Donelon. "That's the word I use, unconscionable - the worst abuse in the insurance arena anywhere in the U.S."

Donelon describes what happened to Fair and many others in Louisiana who have visited emergency rooms. Many ER's in the state contract with a third party - in this case, Schumacher. They supply doctors who are independent contractors. While the hospital may be in your network, those independently contracted doctors are not.

What they're practicing is called "balance billing". The doctor sends the patient an extra bill, essentially an out-of-network bill. That bill is the balance between what the health insurance company chooses to reimburse and what the doctor chooses to charge.

"[They] purposefully stay out of network so they can do this kind of balance billing, which is more profitable than signing on with an insurer and being in-network and settling for the fees that the insurer would force them to take if they were in-network," Donelon says.

So, you can go to an in-network hospital and still be charged an out-of-network fee.

"As my doctor/daughter told me when my grandson was born at East Jefferson Hospital, it offended her that the anesthesiologist, who she never met, got paid more than the obstetrician who delivered the child and treated her for the entire nine months of her pregnancy," Donelon recalls.

"First of all, most hospitals don't man their own ER's," says Mike Dendy, vice chairman/CEO of Advanced Medical Pricing Solutions, a corporate medical advocate organization. "Docs who work there are not typically hospital employees. They are outsourced for most hospitals."

The commissioner calls the solution easy: a one-line law that requires insurers to cover all ancillary treatment in an in-network facility. For 10 years, he's tried to get a bill passed, but repeatedly meets resistance. He's given up.

"Be a senator in Baton Rouge and take on Our Lady of the Lake and the State Medical Society and Blue Cross and Children's, Woman's Hospital, all together in opposition to your bill," Donelon suggests. "It's a tough row to hoe."

Donelon says the bill has encountered such strong opposition because the medical providers all profit from it.

"The hospital profits because they can turn over all these ancillary facilities to third parties and wash their hands of it and [don't] have to worry about it," he says. "The insurer benefits from it because he doesn't have to pay the coverage - it's out-of-network, a much-reduced payment to their policy holder than if it were in-network. And of course, the doctor, the ER doctor or the anesthesiologist, they make much more money by charging these people they have never met before unreasonable amounts."

Donelon says some of these doctors make more than $1 million a year, working as an independent contractor and charging these rates.

We received an email from a FOX 8 viewer who also got a bill from the same company, Schumacher. The viewer wrote about "the widespread practice of hospitals using contract ER doctors instead of hiring these doctors as employees." He adds, "Under this practice, patients have no choice [but to receive] bills from these independent contract doctors."

The viewer had brought his son to the ER at Ochsner in Kenner. The ER doctor saw his son for 15 minutes and, weeks later, Schumacher sent him a $2,000 bill. He called it a "scam for these doctors to circumvent the insurance payment process," and said it's a "ridiculous practice that needs to be stopped."

"Balance billing is a dirty thing that companies and hospitals do in concert," Dendy says. "It''s medical extortion in my eyes."

"Here's the thing," Fair tells us. "If you don't pay a medical fee, what they'll wind up doing is either, you know, pursuing litigation or they will tap your credit. And ultimately, you're going to have to pay it, one way or another. So yeah, you're at their mercy."

Fair may be fortunate: His insurance company says it will pick up part of the bill. Still, Fair must cover $600 for the 10-minute doctor's visit.

He still loves New Orleans, still plans to come back. But if he gets sick again, he may think twice about where that taxi takes him.

"When you get the bill after the fact and it is so astronomical," he says, "you're like, how in the world can this be justified? How can you justify a bill of $1,300 for a 10-minute consultation? I mean, I realize that ER's are expensive, and expensive to operate. I'm a business person, so I understand that principle."

About a dozen states, including Florida and New York, have outlawed balance billing. If this happens to you, demand a copy of the itemized bill. Then seek a health consumer advocate who can help you interpret it, and possibly fight it. Louisiana residents may seek assistance from the state insurance department's Office of Consumer Services.

You can read NOLA.com's report on balance billing practices here.

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