Insurance Companies Reap Hidden Fees as Patients Get Unexpected Bills

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A little-known data firm helps health insurers make more when less of an out-of-network claim gets paid. Patients can be on the hook for the difference.

Weeks after undergoing heart surgery, Gail Lawson found herself back in an operating room. Her incision wasn’t healing, and an infection was spreading.

At a hospital in Ridgewood, N.J., Dr. Sidney Rabinowitz performed a complex, hourslong procedure to repair tissue and close the wound. While recuperating, Ms. Lawson phoned the doctor’s office in a panic. He returned the call himself and squeezed her in for an appointment the next day.

“He was just so good with me, so patient, so kind,” she said.

But the doctor was not in her insurance plan’s network of providers, leaving his bill open to negotiation by her insurer. Once back on her feet, Ms. Lawson received a letter from the insurer, UnitedHealthcare, advising that Dr. Rabinowitz would be paid $5,449.27 — a small fraction of what he had billed the insurance company. That left Ms. Lawson with a bill of more than $100,000.

“I’m thinking to myself, ‘But this is why I had insurance,’” said Ms. Lawson, who is fighting UnitedHealthcare over the balance. “They take out, what, $300 or $400 a month? Well, why aren’t you people paying these bills?”

Gail Lawson faced more than $100,000 in bills after a complex surgery. Her insurance paid out $5,449.27.Bryan Anselm for The New York Times


How MultiPlan and Insurers Make Money on Fees

MultiPlan and health insurers typically receive a percentage of the “savings” on each claim, creating an incentive to recommend lower payments.

Fee percentages vary based on negotiated contracts.

By The New York Times


Confidential Pricing and Fee Data

Itemized payments and fees for thousands of claims were made public in a lawsuit against Cigna after The Times petitioned the court. The insurer and MultiPlan opposed the release, calling the data “highly confidential.”

View the PDF.

By The New York Times


Fact Check: An Explanation of Benefits

Insurance statements often identify savings or discounts. But sometimes patients can still be billed for that amount, as in this case involving the UnitedHealth subsidiary UMR.

View the PDF.

By The New York Times