By Lynn Arditi
Published November 26, 2016

WESTERLY, R.I. — Stacey Jackson thought she knew what to expect when she went into labor with her second child.

As the contractions intensified, she agreed to an epidural to blunt the pain.

Two months later, the anesthesiologist sent her a bill for $1,400.

Jackson has health insurance with Neighborhood Health Plan of Rhode Island. But she was surprised to find out that the anesthesiologist at Lawrence + Memorial Hospital who administered her epidural is an “out-of-network” provider.

In the increasingly complex and convoluted world of health insurance, where strapped consumers are opting for high-deductible plans, surprise medical bills like the one from the anesthesiologist have become “far too common,” said Stacey Pogue, a senior policy analyst at the Center for Public Policy Priorities, in Austin, Texas.

Nearly one-third of privately insured Americans received a surprise medical bill in the last two years when their health plan paid less than expected, according to a national survey of 2,200 adults in the U.S. conducted in 2015 by the Consumer Reports National Research Center. Surprise medical bills often turn up after an emergency room visit to an out-of-network hospital. But even a planned surgery or hospitalization can result in these unexpected charges.

Jackson, 32, works at two nonprofit agencies. Her husband, Alex Nunes, 31, shuttles between four colleges teaching writing as an adjunct professor. Their combined income in 2015 was under $55,000.

“I’m the kind of person who is afraid to go to the dentist because I’m not sure what’s covered,” Jackson said one recent afternoon as she sat next to her husband in their living room, holding their four-month-old son. “I don’t even have a credit card.”

Neither Jackson nor her husband could get health coverage through their employers, so they shopped for coverage on the state’s online health-care exchange.

They chose the “Neighborhood Secure” plan, which has a high deductible but includes coverage for preventive care at no charge.

“They make it seem like you’re shopping on Amazon,” Nunes said, “but obviously you need a lot more details than if you’re shopping on Amazon.”

The plan carries a $4,900 deductible, but Nunes says he wasn’t too worried about it. He and Stacey are both healthy. And he’d read on the federal healthcare.gov website that the Affordable Care Act, known as Obamacare, requires all approved plans to cover 100 percent of maternity and newborn care. He assumed that meant his plan also had to cover the entire cost of their baby’s birth.

He was wrong. Nothing in the Affordable Care Act requires insurers to cover 100 percent of the cost of the birth of a child, said Kelli Garcia, senior counsel at the Women’s Law Center in Washington, D.C.

Jackson’s plan with Neighborhood covers childbirth in the same way it would if she were sick or injured and visited a doctor: She has to spend at least $4,900 on covered medical expenses in a year to fulfill her deductible before her insurance kicks in to cover 80 percent of additional charges. (The plan has an annual out-of-pocket maximum of $6,550 a year.)

Cheaper plans often carry higher deductibles, which is one reason for the increase in surprise medical bills.

To save money, Jackson chose from Neighborhood’s list of in-network doctors. The insurance company’s approved in-network providers usually cost a lot less because they have contracts with the insurer to accept certain negotiated rates for their services. Out-of-network providers, on the other hand, have no such agreements. So depending on what the insurer decides to pay an out-of-network provider, patients can be on the hook for part or all of the bill.

Jackson selected Women’s Health Services, an in-network obstetrician-gynecology practice near their home in Westerly. She recalls one of the doctors there explaining that since Westerly Hospital closed its birthing center in June 2013, patients in their practice group now deliver babies at Lawrence + Memorial Hospital, just across the state line in New London, Connecticut. (The Connecticut hospital’s parent company, Lawrence and Memorial Corp., also owns Westerly Hospital.)

Jackson received pre-authorization from Neighborhood Health to deliver at Lawrence + Memorial, the hospital spokesman confirmed. Yet, Jackson says, nobody told her or her husband that Lawrence + Memorial Hospital was not in Neighborhood’s approved provider network. And why would they have questioned it?

Two weeks before Jackson went into labor, her blood pressure spiked and she was admitted to Lawrence + Memorial for observation. A few hours later, she was discharged. They never received a bill.

(A new federal regulation that takes effect in 2018 would require insurers to notify patients who are pre-approved for surgery or childbirth that they may be billed for out-of-network care.)

On June 20, Jackson gave birth to their second child. He was a healthy, 7-pound, 7-ounce boy with a full head of corn-silk hair. She and her husband were thrilled.

In August, the $1,400 bill arrived from Anesthesia Associates of New London, Connecticut.

“We’re going to someone in-network, and then we get a bill from the anesthesiologist,” Jackson said. “I just don’t get it.”

The Connecticut anesthesiology practice, they learned, has no in-network contract with Neighborhood, which has contracts only with providers in Rhode Island.

Jackson’s husband called the anesthesiology company and was told that since the practice was out-of-network, the patient was responsible for the bill.

Since August, Jackson and her husband have pleaded their case to the anesthesiology company, their insurance company and regulatory officials in Rhode Island and Connecticut.

“At no time during my pregnancy did anyone at Women’s Health Services or L+M inform me that a routine part of my delivery — the administration of anesthetics — was going to be administered by an out-of-network provider,” Jackson wrote in a letter on Aug. 23 to the anesthesiology company, referred to as ANES Associates. “I was also never given an alternative in-network option. I was only handed a consent-to-treat form by an ANES doctor while in active labor and was unable to adequately read it before signing because of the pain of my fast approaching delivery.”

In mid-September, another bill arrived. This one was from Lawrence + Memorial Hospital for $2,475.

Together with the $1,400 anesthesia bill, that brought their out-of-pocket costs for the birth to almost $3,900. But Nunes thought the hospital bill must be a mistake.

It wasn’t. The hospital, too, was out of network. Lawrence + Memorial billed Jackson $2,475 because that’s how much Neighborhood would pay an out-of-network hospital, said Michael O’Farrell, a spokesman for Lawrence + Memorial and Westerly Hospitals.

In fact, they could have been billed up to five times that amount. That’s because the hospital’s charges for labor and delivery total $12,375, according to her bill. And since the hospital has no contract with Neighborhood, O’Farrell said, the hospital reserves the right to bill the patient for the balance not covered by the insurer — known in the industry as “balance-billing.”

For a planned birth, “it’s shocking to me that someone in the system didn’t catch that the hospital is going to be out of network,” said Pogue, the policy analyst. Patients “make some logical assumption if the doctor was in-network, the hospital would be …. Even if you have a really educated, savvy patient, they can’t get the answers half the time.”

Nunes filed a complaint with the health insurance commissioner’s office in the Rhode Island Department of Business Regulation.

Adrienne-jo F. Evans, the DBR’s principal health insurance analyst, asked that Neighborhood “make an exception” in their case, she said in an Oct. 7 email to Nunes. But Neighborhood refused.

The insurance company and the hospital say patients need to make sure the health-care providers they see are in their insurer’s network — or be prepared to pay extra.

“There’s a shared responsibility from all the stakeholders, including the insured and the providers, to make an informed choice,” said Patrick Tigue, Neighborhood’s director of commercial products.

“The hospital’s priority is to provide the best care possible, which has happened,” said O’Farrell. “The end responsibility on the insurance plan and understanding all of the elements of it falls to the patient.”

After The Providence Journal raised questions about the couple’s bills with Lawrence + Memorial Hospital, O’Farrell said he contacted the anesthesiology company and was told that the $1,400 charge was a billing “mistake.”

The following week, the couple received a reduced bill from the anesthesiology company, for $280.

They caught a break — this time. But the anesthesiologist has the right to balance-bill them for everything Neighborhood Health Plan didn’t cover, O’Farrell, the hospital spokesman, said, adding, “So do we.”

— larditi@providencejournal.com

(401) 277-7335

On Twitter: @LynnArditi