Today, Explained - The $629 Band-Aid

Episode Date: October 12, 2018

Imagine a world where a Band-Aid costs $629. Bad news: you live in that world. Vox’s Sarah Kliff explains how American hospitals tack on “facility fees” to cover their expansive costs, and a new solution that's getting bipartisan support. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Sarah Cliff, senior policy correspondent at Vox. Welcome back. Thank you. You've been working on this project about massive ER bills for a while now, and we talked about it on the show back in May. But you're back to talk about it again because the government's actually going to do something about it? They might do something about it. So there are some senators who definitely want to do something about it. We actually, and this was kind of surprising to me, we saw a bipartisan group of senators introduce this bill just recently in late September that would outlaw surprise emergency billing. And this came after I and others have been writing a lot about these bills. Some senators actually want to do something about it.

Republicans, Democrats? Republicans and Democrats. And that was surprising to me because, you know, when you think about Obamacare repeal, they just fight about health care. Yeah. But I think these surprise bills are an issue that everyone agrees is bad. How does the legislation work? What does it do? So what it would essentially do is a lot of these surprise bills, they come from out-of-network providers billing people who were seen at an emergency room in some kind of emergency situation. Yeah. And now this out-of-network surgeon, radiologist, anesthesiologist is saying,

I want to be paid. Your insurance isn't paying me, so I'm coming after you, the patient. These bills would essentially outlaw that practice. They would say, you know, you're an out-of-network doctor. You have to go to the insurance company. Sounds pretty good. It's pretty good. It has some, you know, when I've talked to health economists about it, they have their quibbles as economists usually do. They say this is not the

best solution. But the guy I trust the most on this, the guy who's been doing the leading research on this, he says it's 80 percent of the way there. And, you know, that would be a big improvement to how things work now if this bill became law. OK. And will it? Probably not. Really? It's going to fail? The cynic in me says there's so much else going on. You know, there is just a lot happening. No one's really talking about health care right now. No one's really talking. I mean, this is a huge first step that this legislation exists, that health economists think it's good legislation, that Republicans and Democrats are working together on it. Yeah. talked about a possible solution. Should we get back to the problem? Yeah, the problem is still definitely here. Okay, great. In fall 2016, I got this email from a Vox reader who sent me a bill for his daughter's emergency room visit where they were charged $629 for a Band-Aid. A single Band-Aid? Yeah. Nothing special about the Band-Aid? No. And like it turns out, you can go to CVS and buy a whole box of Band-Aids

for a lot less than $629. I've heard this. The Band-Aid was only $7, which I would say like in any other context, the Band-Aid was only $7. It's an absurd sentence. But the vast majority of that bill, the other $622, were something called a facility fee. I'd been reporting on healthcare for seven years at that point. I'd never really heard of a facility fee. I didn't know what it was. And it turns out it's this usually pretty big, pretty mysterious charge that shows up on all of the millions of ER visits that happen in America. And it's actually what makes going to the emergency room pretty expensive for a lot of people. I'm guessing this Band-Aid facility fee of like $629 is probably on the low end of a facility fee? It's actually a great question that unfortunately I would love to tell you the

answer to. But one of the things you quickly learn looking into facility fees is that they are kept secret. It's actually really hard to find information about how much these things cost. That's what this whole reporting project I'm working on is all about. So what have you learned since launching the project? I'd say I've learned three things. One is that facility fees are basically on every single emergency room bill. There's always some line, it's sometimes called something different, but there's some fee for just going into the emergency room and seeking service. This is like the base price of going to the ER. Okay. The second is that these fees are really secret. You won't know what your fee is until you get that bill in the mail. They're not posted somewhere in the emergency room. Most doctors I've talked to say, I could not tell

you what the facility fee is in my hospital that I work at. So it's very hard to find out what these fees are. It's not like it's being tabulated there in the ER room. So probably months before you have an emergency room appointment, your insurance company and your hospital, they sat down and had this big negotiating meeting where they figured out, here's what we're going to pay for appendectomies and for Band-Aids. And here's the facility fee. So that's saying also that like if you and your husband, for example, have different insurance, you might get two dramatically different bills? Totally. That is 100% plausible. And maybe we got the exact same service. We might go into the emergency room and come out with two very different bills. And I think that actually gets to, you know, the last thing I've learned from this project is that there's huge variation in the size of these fees,

that from hospital to hospital, you could have two hospitals across the street that are charging really, really different amounts. You can't call them up and say like, hey, what's yours? Yeah. There's just such big variation between what different hospitals are charging for what I thought might be a relatively standard item. So in these thousands of stories you've come across, is there another Band-Aid story in there or something even more absurd? There are so many. One thing that stood out to me that I noticed about a half dozen cases of are people who

don't get treated in the emergency room, but because they walk through the doors and show up and say, hey, I'm sick, they end up with some pretty significant bills. So these are people who decide to leave either because they're feeling better or they find out it's going to be out of network. And then a while later, they get a medical bill for walking in the ER and leaving. There's one that really stood out to me, this woman from New Jersey named Jessica. My name is Jessica Powell. I live in Jersey City.

This is what happens to Jessica. I was in the kitchen and I apparently had blacked out. I knew that this had happened because my ear started bleeding a lot. She goes to sleep, but the next day wakes up. It still hurts. I had gone to an urgent care facility with the injury, and they said, well, this looks like a time-sensitive issue, you should go to the emergency room. She goes to the emergency room, and she keeps asking,

is this doctor I'm going to see in my network? She's really worried about the medical bills. Like, wait, wait, wait, is this care going to be out of network? And she said, yes. And I said, okay, that's all I needed to know. I'm going to go find an in-network physician who can see me, you know, as soon as possible. Luckily, I was able to find somebody.

I was discharged. No actual care was given other than an ice pack and ice bandage to wrap the ice pack around my head. She leaves with her ice pack and her ice bandage, and that's the visit. I got a bill from them for $5,751, and that's just the facility fee. And her insurance company says, you know, we think this is too much. Her insurance company pays, I think, $862 to the hospital for this encounter.

The hospital then, after about a year, starts sending her bills. $4,989. That was the remaining amount that the hospital said that I owed. That's the point at which she got in touch with me about this story. Sarah did contact the hospital asking about this bill. The hospital declined to comment to me about the bill. They declined to comment to me about how they set their rates. But oddly enough, a few hours later, this was resolved.

The entire bill was reversed. Amazing. It is, but it's not like a scalable model for managing healthcare costs in America. Not even a little. There's only one Sarah Cliff. I would have gone back to the hospital and returned the ACE bandage and the ice pack if I knew it was going to cost $5,000 plus. This was one of multiple examples.

You know, I talked to a woman in Philadelphia who left an ER. She was charged an $800 facility fee. This happens. Usually, you know, I'd say I hope and I think that $5,000 is an outlier, but it can happen. And, like, it did happen to Jessica. Is there anyone out there that knows to expect these facility fees? Or does everyone in this country basically go into a hospital sort of blind to them? I think we mostly go in blind to them.

And a lot of times that works out OK because most Americans do have health insurance. And in most cases, the health insurance is going to pay that fee and maybe, you know, you'll pay $100 copay or something like that for going to the emergency room. There are two situations, though, and one of them becoming increasingly more common where it's not really fine. One is if you're uninsured. So you're on the hook for the entire bill. The second is if you have a high deductible. So this is the amount you have to spend before your health insurance ever kicks in. One of the trends we've seen in American healthcare is deductibles really going

up over the past decade. As medical prices rise, employers think about, you know, how can we keep our contribution down? And one thing they can do is just put on a higher deductible. Now, if I'm in my deductible, like I notice the fact that this is actually pretty expensive, that the Band-Aid costs $629. How did these facility fees get put into place? Like, where did they come from? What is their genesis? When I talk to hospital executives, what I usually hear is that, look, emergency rooms are expensive to run.

You need to be open 24-7. You have to accept anyone who comes through your door. Federal regulations actually say that ERs have to provide life-stabilizing care to anyone who shows up regardless of their ability to pay. Does that vary? It doesn't. Essentially, if you are an emergency room, you are subject to this law called the Emergency Medical Treatment and Labor Act, or everyone in my world just calls this EMTALA. Is that a character in Black Panther? It might.

It should be. It should be a character if there's like a health care superhero movie. We need that movie. It's probably the emergency doctor is named Emtala. Emtala. But Emtala basically is this requirement from the 1980s that says emergency rooms have to accept anyone who walks through their doors and provide them with life-saving care. They can't say, give us $100 first. They can't say, let us check your insurance card, and then we'll decide.

When I talk to hospital executives, the thing I hear again and again is like, well, we have to be ready for strokes. We have to be ready for gunshots. We have to be ready for strokes. We have to be ready for gunshots. We have to be ready for anything. So we essentially create this charge to cover all that overhead. Yeah. I think that certainly makes sense up until a point. But the place where I don't find that argument convincing is the fact that these costs vary so much. Yeah.

It raises some red flags about, you know, what is actually driving those costs. Is there a reason that hospitals can't just be a little more transparent about these fees? I send a lot of inquiries to hospitals where someone sends me a bill and then I write the hospital and I say, I'm writing about this bill. I'd like to ask you some questions about how this price was set. The response I almost always get is, well, that's a private matter between us and the insurance company. Those prices are part of a negotiation between a private hospital and a private insurance company. And it is built into their contracts that they are not going to talk about what numbers they settled at. It seems beyond counterintuitive that this care that you received because it was sort of like

a life or death situation could ruin your life, could cripple you financially. What do we do? Are there solutions? One of the things, you know, is just giving this information to people. Yeah. I would love to see at a hospital front desk, you walk in and there's a sign that says, here's the facility fee if you have Cigna or Aetna or Blue Cross or whatever insurance companies they contract with. So people know like, okay, this is like the base level and I am aware of that. This is something a lot of emergency doctors I've talked to get pretty uncomfortable with. They worry that people might see those prices, go home, get sicker, possibly die in the worst case scenario. But I don't think

the right solution is just keeping people in the dark and deciding that emergency doctors definitely know best. Like you said, those bills can be pretty crippling. It's possible some federal regulations would need to be revised to allow this kind of information. But I think that would do more harm than good for American patients. I got a middle ground for hospitals. Don't display what the fee might be for a gunshot wound, lest someone go home and just not treat it and die. But maybe let people know that like an ice pack and a bandaid might cost $5,000 so they could just go to CVS. Right, exactly. Like that's a case where I feel like Jessica, who we were hearing from

before, she would have benefited by knowing up front. And, you know, when we talked, one of the things she said, which is a kind of sad reflection of the American health care system, because she was really worried about medical bills. She told me that, you know, if it came down to going thousands of dollars in debt versus saving my ears, like, it's sad. But I think I'd choose not to be in debt and like lose my ear, which is a really sad statement. But I think someone like that who is asking and someone like that who is not

in a life-threatening situation, they should have the right to know. Sarah Cliff is the host of the Impact Podcast here at Vox. If you want to hear more about these ER fees, her show is a great place to start. Next up, how do doctors in emergency rooms feel about all this? I'm going to ask one in Kentucky. I learned a lot of things about Eater's new podcast from start to sale this week. First off, it's hosted by Aaron Patinkin from Ovenly, which is a New York-based bakery that does not make bread, but does make cookies and cakes and does make banana bread, but that doesn't really count as bread. The other host of the show is Natasha Case. She's from Cool House, which is a

national ice cream sandwich brand based in Los Angeles. Every week on the show, they talk to someone about what it takes to build a company from launch to exit. The first episode features the superstar pastry chef and founder behind Milk Bar, one of the most celebrated American pastry brands. And the second episode is with the founder of Away, which is the travel brand that makes really fancy suitcases. You can find From Start to Sale wherever you find your podcasts. And now that the weekend's here, I finally get to listen. Today Explained, I'm Sean Ramos for them Top. We heard about how Jessica Pell got billed well over $5,000 for an ACE bandage and an ice pack in an emergency room. We reached out to the American Hospital Association to talk about these fees, but they declined to be a part of the show.

So we decided to ask an emergency room doctor. Nobody reasonable in health care thinks coming in and getting a Band-Aid and getting a screening exam is worth $5,000. Ryan Stanton works in Lexington, Kentucky. R-Y-A-N-S-T-A-N-T-O-N, emergency physician and spokesman for the American College of Emergency Physicians. So, Ryan, you're around these fees. You think and talk about these fees. What's the deal with these fees? Well, there has to be a facility fee. You have to pay for the room, the supplies, the lights, the water, the nurses, the inspections, the rules. I mean, everything, if you slap healthcare on it, is automatically more expensive. Even if you come in for something that's not a significant emergency, I still had to go to medical school. I still have to pay about $25 for every patient

who walks in that door for malpractice insurance. I still have to pay to medical school. I still have to pay about $25 for every patient who walks in that door for malpractice insurance. I still have to pay to have the nurses there, the lights on. So the facility still needs a fee to make it available. And that's one of the challenges with emergency medicine. It's expensive because we are designed for unstable, sick, and dying patients. I get why we need those fees. But what about like this $5,000 plus fee we heard about in the top half of the show

for like an ACE bandage and an ice pack? That's going to be an outlier. $5,700 or whatever it may be, that's going to be an outlier. That's not going to be the norm across the country. What about what Sarah Cliff proposed earlier in the show? This idea that hospitals could display a fee structure, something like if you have X insurance,

the sprayed ankle is going to cost Y. Is that a bad idea? Well, no, I don't think it's a bad idea. I just know I can't do it. The federal law, EMTALA, which came around in the mid to late 80s, says that anybody has the right to seek emergency care, no matter their ability or intent to pay, no matter if they're American, whether they're visiting from another country, whether they've got insurance or not. I can see how maybe if you posted that a gunshot wound to your upper thigh is going to cost you $15,000 or something like that, some might go, you know, forget it. I'm going to go ask my cousin

Larry to like douse me in rubbing alcohol and pull this bullet out of my leg. But what about for this person who comes in with a cut on her ear and ends up being charged $5,000 for an ice pack? Does it make sense to list some of the facility fees and maybe not all of them, at least as some sort of compromise? People should know how much things are going to cost. But to give you an idea of how strict the law is when it comes to that, if I have an urgent treatment center across the street, I can't post a sign for it in my emergency department that says you can go there, because that is considered dissuading you from the emergency services.

If part of the problem, at least, is this EMTALA thing where you can't do anything that might deter someone from coming in and using your services in an emergency room, do you think we should just get rid of EMTALA so you can say, hey, a sprained wrist is going to cost you $2,000 and that way people might be, I don't know, more inclined to go to urgent care down the street or something like that? Well, EMTALA may be a pain in the butt for a lot of things, but what it does is it protects every single person on the property of the United States of America. If you jumped a border and you came here, EMTALA still protects you. If you have no money or if you have money and you have no intention of giving me a dime of it for the care I provide. EMTALA still protects you.

That was the whole purpose of it. It was seen as a need in the 1980s that people were being refused care, denied care, and were having complications and deaths because of it. And really the thing that pushed it over the edge is pregnant women having babies and nobody wanted to take them because they were uninsured and there was complications and there was deaths to mothers and babies because of it. So I think EMTALA is very, very important. Yeah, I mean, but that doesn't really explain

why people are getting price gouged for cuts and bruises. Physicians don't control healthcare. Patients don't control healthcare. Healthcare is controlled by big business, whether it's big hospital systems, whether it's big contract management groups, whether it's the insurance. I mean, the profits that Blue Cross Blue Shield announced enough to pay the salaries of 5,000 ER physicians. I mean, we're talking about lots and lots of money, lots and lots of power, lots and lots of influence that have continued to propagate this very

challenging and difficult system that makes up a significant proportion of our gross domestic product. I still just don't understand when you talk about the costs involved with a Band-Aid and ice pack. You know, as I mentioned, that's an outlier. I mean, you can't keep bringing in the outlier. If that can happen in the system, outlier or not, it feels like something's gravely, gravely wrong.

Well, it feels like something's gravely, gravely wrong. Well, it does. Even if it were an outlier, someone in some hospital or some billing agency somewhere looked at a service, which was someone came into our ER, got an ice pack, we sent them home, and still said, all right, let's bill them over 5K. Who thought that was okay? I don't know. And that's what we have to work with, with the public, with insurance, our providers, and our system as a whole on the transparency to know how much things are going to cost, a fair value to know how much it needs to bill and how much it needs to get paid, and also then helping patients understand access, where they can go based on what they have going on. And right now, for many, many in our population, the ER is the only place to go.

It sounds like you don't agree with a lot of the system that you work in, but do you think it's possible to fix it? Yeah, I think it has to. President Obama tried to change our health care system, and it felt like it was the most controversial thing that's ever happened in our government in my lifetime. You know, you have to understand the number of people that pull. So in my state, we put up legislation that was going to establish that fair health value across the entire state. And the insurance industry came in and just threw out all these scare things and say,

we're going to have to jack up your bills. You're going to have to pay thousands of more dollars per year just to pay for this, even though they still reported $1.3 billion of profit just in Anthem and Blue Cross Blue Shield. So there's folks that don't want to fix it this way. You know, they're the for-profit industries that want to be able to game the system. And if we fix the system, they can't game it and pull more profits. And that is, I think, one of the true crimes of our system, is how many groups are profiteering at the expense of the physicians,

the providers, the nurses, and the patients. Ryan Stanton is the spokesperson for the American College of Emergency Physicians. R-Y-A-N-S-T-A-N-T-O-N, emergency physician. If you or someone you know would like to share your ER bills with Sarah Cliff for her reporting project, head to erbills.vox.com. Thanks.