Physician Lauren Hughes was heading to see patients at a clinic about 20 miles from her Denver home in February when another driver T-boned her Subaru, totaling it. She was taken by ambulance to the closest hospital, Platte Valley Hospital.
A shaken Hughes was examined in the emergency room, where she was diagnosed with bruising, a deep cut on her knee, and a broken ankle. Physicians recommended immediate surgical repair, she said.
“They said: ‘You have this fracture and a big gaping wound in your knee. We need to take you to the OR to wash it out and make sure there’s no infection,’” she said. “As a clinician, I thought, ‘Yes.’”
She was taken to the operating room in the early evening, then admitted to the hospital overnight.
A friend took her home the next day.
Then the bills came.
The Medical Procedure
Surgeons cleaned the cut on her right knee, which had hit her car’s dashboard, and realigned a broken bone in her right ankle, stabilizing it with metal screws. Surgery is typically recommended when a broken bone is deemed unlikely to heal properly with only a cast.
The Final Bill
$63,976.35, charged by the hospital — which was not in-network with the insurance plan she got through her job — for the surgery and overnight stay.
The Problem: Should I Stay or Should I Go?
Hughes’ insurer, Anthem, fully covered the nearly $2,400 ambulance ride and some smaller radiology charges from the ER but denied the surgery and overnight stay charges from the out-of-network hospital.
“Sixty-three thousand dollars for a broken ankle and a cut to the knee, with no head injury or internal damage,” Hughes said. “Just to stay there overnight. It’s crazy.”
Insurers have broad power to determine whether care is medically necessary — that is, what is needed for treatment, diagnosis, or relief. And that decision affects whether and how much they will pay for it.
Four days after her surgery, Anthem notified Hughes that after consulting clinical guidelines for her type of ankle repair, its reviewer determined it was not medically necessary for her to be fully admitted for an inpatient hospital stay.
If she had needed additional surgery or had other problems, such as vomiting or a fever, an inpatient stay might have been warranted, according to the letter. “The information we have does not show you have these or other severe problems,” it said.
To Hughes, the notion that she should have left the hospital was “ludicrous.” Her car was in a junkyard, she had no family nearby, and she was taking opioid painkillers for the first time.
When she asked for further details about medical necessity determinations, Hughes was directed deep inside her policy’s benefit booklet, which outlines that, for a hospital stay, documentation must show “safe and adequate care could not be obtained as an outpatient.”
It turns out the surgery charges were denied because of an insurance contract quirk. Under Anthem’s agreement with the hospital, all claims for services before and after a patient is admitted are approved or denied together, said Anthem spokesperson Emily Snooks.
A hospital stay is not generally required after ankle surgery, and the insurer found Hughes did not need the kind of “comprehensive, complex medical care” that would necessitate hospitalization, Snooks wrote in an email to KFF Health News.
“Anthem has consistently agreed that Ms. Hughes’ ankle surgery was medically necessary,” Snooks wrote. “However, because the ankle surgery was bundled with the inpatient admission, the entire claim was denied.”
Facing bills from an out-of-network hospital where she was taken by emergency responders, though, Hughes did not understand why she wasn’t shielded by the No Surprises Act, which took effect in 2022. The federal law requires insurers to cover out-of-network providers as though they are in-network when patients receive emergency care, among other protections.
“If they had determined it was medically necessary, then they would have to apply the No Surprises Act cost,” said Matthew Fiedler, a senior fellow with the Center on Health Policy at Brookings. “But the No Surprises Act is not going to override the normal medical necessity determination.”
There was one more oddity in her case. During one of many calls Hughes made trying to sort out her bill, an Anthem representative told her that things might have been different had the hospital billed for her hospitalization as an overnight “observation” stay.
Generally, that’s when patients are kept at a facility so staff can determine whether they need to be admitted. Rather than being tied to the stay’s duration, the designation mainly reflects the intensity of care. A patient with fewer needs is more likely to be billed for an observation stay.
Insurers pay hospitals less for an observation stay than admission, Fiedler said.
That distinction is a big issue for patients on Medicare. Most often, the government health program will not pay for any care needed in a nursing home if the patient was not first formally admitted to a hospital for at least three days.
“It’s a classic battle between providers and insurers as to what bucket a claim falls in,” Fiedler said.
The Resolution
As a physician and a director of a health policy center at the University of Colorado, Hughes is a savvier-than-usual policyholder. Yet even she was frustrated during the months spent going back and forth with her insurer and the hospital — and worried when it looked like her account would be sent to a collection agency.
In addition to appealing the denied claims, she sought the help of her employer’s human resources department, which contacted Anthem. She also reached out to KFF Health News, which contacted Anthem and the Platte Valley Hospital.
In late September, Hughes received calls from a hospital official, who told her they had “downgraded the level of care” the hospital billed her insurance for and resubmitted the claim to Anthem.
In a written statement to KFF Health News, Platte Valley Hospital spokesperson Sara Quale said that the facility “deeply regrets any anxiety this situation has caused her.” The hospital had “prematurely” and erroneously sent Hughes a bill before working out the balance with Anthem, she wrote.
“After a careful review of Ms. Hughes’ situation,” Quale continued, “we have now stopped all billing to her. Furthermore, we have informed Ms. Hughes that if her insurance company ultimately assigns the remaining balance to her, she will not be billed for it.”
Anthem spokesperson Stephanie DuBois said in an email that Platte Valley resubmitted Hughes’ bill to the insurer on Oct. 3, this time for “outpatient care services.”
An explanation of benefits that was sent to Hughes shows the hospital rebilled for around $61,000 — about $40,000 of which was knocked off the total by an Anthem discount. The insurer paid the hospital nearly $21,000.
In the end, Hughes owed only a $250 copayment.
The Takeaway
There are places where patients receiving emergency care at an out-of-network hospital may fall through the cracks of federal billing protections, in particular during a phase that may be nearly indistinguishable to the patient, known as “post-stabilization.”
Generally, that occurs when the medical provider determines the patient is stable enough to travel to an in-network facility using nonmedical transport, said Jack Hoadley, a research professor emeritus at the McCourt School of Public Policy at Georgetown University.
If the patient prefers to stay put for further treatment, the out-of-network provider must then ask the patient to sign a consent form, agreeing to waive billing protections and continue treatment at out-of-network rates, he said.
“It’s very important that if they give you some kind of letter to sign that you read that letter very carefully, because that letter might give them your permission to get some big bills,” Hoadley said.
If possible, patients should contact their insurer, in addition to asking the hospital’s billing department: Are you being fully admitted, or kept under observation status, and why? Has your care been determined to be medically necessary? Keep in mind that medical necessity determinations play a key role in whether coverage is approved or denied, even after services are provided.
That said, Hughes did not recall being told she was stable enough to leave with nonmedical transportation, nor being asked to sign a consent form.
Her advice is to quickly and aggressively question insurance denials once they are received, including by asking for your case to be escalated to the insurer’s and hospital’s leadership. She said expecting patients to navigate complicated billing questions while in the hospital after a serious injury isn’t realistic.
“I was calling family,” Hughes said, “alerting my work colleagues about what happened, processing the extent of my injuries and what needed to be done clinically, arranging care for my pet, getting labs and imaging done — coming to grips with what just happened.”
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