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Barbara Brooks Kimmel: After home birth during blizzard, insurance fails. What’s fair, ethical, and trustworthy corporate behavior?

When a baby decides it is time to be born…the show must go on. Such was the case on January 23, 2016 when approximately 103 million people were affected by a blizzard that hit the east coast of the United States, requiring eleven states to declare emergencies, including New Jersey.

Assisted by local EMTs, the healthy baby was delivered at home on the living room couch, the second child of a couple with a fully paid health insurance policy. But the extreme weather conditions and treacherous roads required both the healthy mother and her new baby to be transported to the closest hospital, not one designated by the family’s insurance plan, and certainly not through any special requests on the family’s part.

In less than 24 hours, both mother and child were released from the “unaffiliated” hospital, returning home to celebrate their new arrival.

But the biggest surprise for this family was yet to arrive.

The following week a hospital bill was delivered for $53,000. And in case you are not totally shocked by that number, it didn’t include subsequent invoices from the EMTs, emergency room doctors, nor the $39.00 adult diaper that was “sold” to the mother following delivery, to name just a few “incidentals” that brought the total hit to over $60,000.

Now this family, who should be bonding and celebrating the birth of their healthy second child, is instead:

1) Faced with a daunting bill that no insured young middle class family could ever possibly pay, and mounds of paperwork and invoice totals that change with every postal delivery.

2) Spending countless hours away from their children and professional obligations listening to prerecorded messages claiming “our menus have changed,” “your call is important to us,” and “we are experiencing unusually high call volume.”

The following are some not so simple questions for insurance companies, hospitals, doctors, miscellaneous health services providers and any other parties who would like to weigh in on this story:

  • What responsibility, if any, do organizations have to ensure their customers are treated fairly, ethically and in a trustworthy manner?
  • Has corporate greed and the “maximization of shareholder value” permanently replaced doing what’s right?
  • If this child had been born to a family with no health insurance what would their bill be?
  • How can this family, who believed they had done everything right except better timing the birth of their baby, expeditiously resolve this and get on with what matters and their daily lives?”

I suppose the moral of the story is “buyer beware.”

Even under the most extreme circumstances caused by acts of nature, thousands of dollars in monthly health insurance premiums don’t cut it once companies are asked to honor their obligations and do the right thing.

Why is this so?

Please email your suggestions to [email protected].

_____

Barbara Brooks Kimmel is the CEO and cofounder of Trust Across America-Trust Around the World whose mission is to help organizations build trust. Now in its sixth year, the program’s proprietary FACTS® Framework ranks and measures the trustworthiness of over 2000 U.S. public companies on five quantitative indicators of trust. She’s also the editor of the award winning TRUST INC. book series and the executive editor of TRUST! Magazine. She can be contacted at [email protected].

[Editor’s note: This post first appeared on LInkedIn here is republished with permission.]

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7 Comments

  1. I think we have to look at the ethics in a much broader way here. As a Canadian, we see the US as being totally unethical in not having a free health care system, so the woman would not have had this issue in the first place.

    Secondly, how unethical was it of the hospital to charge $60,000 for a stay of less than 24 hours? A bill from a Canadian hospital for this would have been perhaps $2000 maximum (a Canadian would not have to pay that amount, since the care is free, but the hospital usually gives the bill to the patient, just to know how much is being paid by the government for their health care).

    Thus, the insurance company is caught in a totally unethical milieu. Asking them to pay for the hospital stay renders them financially responsible for the unethical system.

  2. Thank you Alan for your thoughtful comments.This is certainly a very "broad" ethical dilemma and perhaps very US centric. While the hospital certainly started the chain of ethics failures, where does this leave the patient?

  3. As a comment to the Canadian, your healthcare may be free but to have to wait 6 monnths for an MRI (what my cousin had to go through) is ridiculous. To have to beg and beg to get my aunt into a stroke rehab center after a brain aneurysm and still being denied is silly. Your health care maybe free but you are not getting the best care, as each person is just a number in the free healthcare system.

    As for the NJ couple, if they have insurance they must have an out of network deductible and should be aware of what their policy provides for. I believe that it is quite ridiculous to charge that much but every person needs to also be accountable for knowing what they are paying for and what coverage they will be receiving. Call the CEO of the insurance company, the hospital etc. get press behind them and I bet the charges will either be reduced or negated completely.

  4. Pricing for health care in the US is byzantine, because it is entirely disconnected from any market function.

    Without knowing what hospital was involved, it's impossible to know whether there was any private profit motive at all. My guess is that this has nothing – NOTHING – to do with maximizing shareholder value; it has everything to do with reimbursement systems involving various government health care systems (that by rule undercompensate for treatment) and insurance arrangements (that are all looking for discounts). From my experience, you would get a similar bill whether you were getting treatment at a Kaiser facility (non-profit) or a Tenet or HCA facility (private and for-profit)

    This has nothing to do with ethics. This has to do with reimbursement structures that turn our pricing mechanism into metaphysics. If the cost of treatment is X, then Medicare will basically reimburse at X-20%; Medicaid at X-30%; insurance at X-15%, etc. (Why do health care providers accept this under-compensation from government health care systems? Because those systems will regularly pay those costs upon presentment and are a steady stream of income. That's also why Medicare routinely has measurements of waste, fraud, and abuse of 10%.)

    So health care providers shift costs around and develop published prices ("usual and customary" I think is the term) that have no connection with reality but are only used for negotiation. Although everyone will deny there is cost shifting, there is cost shifting and that means that the uninsured patients gets handed a monstrous bill using the published price. Sorry, this is not greed driving unfair pricing; this is the way we (through our government and over-reliance on third-party payers) designed the system.

    Why wasn't the hospital closest to you covered by your insurance? Well, part of the Accountable Care Act was to reform how premium costs were calculated, as well as to increase no-cost services. To massage all of these into competitive and affordable premiums, one thing insurance companies have done is limit the scope of available networks. I don't know whether that applies to your specific situation, but it is a common occurrence.

    Try this: Offer to pay the bill at the fair market value of the services and either pay with cash or with a credit card. Very often the health care provider will accept a steep discount for the cash payment, just to avoid the exercise of going through the reimbursement process or payment plans.

  5. The US health care "system" is intentionally convoluted with special caveats. It is a "gotcha" system where all the risks to insurance companies are mitigated through charges when you go off policy. It is absurd. A single-payer system is so much more fair to everybody, including employers outside the insurance industry. I am a US citizen living in Thailand with my Thai wife and children. We just had a son. My wife had a C-section with 3 nights and 4 days in the hospital. The bill was around $1300 USD with no insurance.

  6. Thanks to all who stopped by to comment. Please keep in mind that NJ was under a State of Emergency, and the patients were transported to the nearest hospital by the EMTS, not at the request of the family. If the delivery had occurred at the "pre approved" facility, the family's out of pocket cost would have been capped at $1000.

  7. I share with you your thought that acts of nature can be very unkind. The first question I have for you Ms. Kimmel is, Was the family covered under a first-party insurance policy or did they have an employer-sponsored medical plan? Knowing the answer to this question would provide guidance as to whether an administrative remedy is available under a medical plan (which would alleviate all the phone calls you mentioned). The remedy should be explained in a medical plan brochure given to employees. Similarly, if the family purchased a separate first-party insurance product, a letter written (online or mail-posted) to the New Jersey Department of Insurance is a recommendation; it would also allow the family "space" from all the phone calls.

    While I am not a Lawyer, it is clear from your post that you believe a company breached an obligation. What obligation did the company fail to perform? Was the company non-compliant when it applied contractual language to the plan member/ insured, resulting in a claim denial?


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