Tony Leys, Kff Health News

In retrospect, Erica Kahn realizes she made two big mistakes.

The first was choosing to temporarily forgo health insurance when she was laid off from her job.

The second was screaming when a wild bat later landed on her face.

The bizarre encounter happened last August, while the Massachusetts resident was photographing the night sky during a vacation at the Glen Canyon National Recreation Area in Arizona. Kahn, now 33, noticed a few bats flying around but didn’t worry about them — until one flew up to her and got tangled between her camera and her face.

She screamed, and part of the bat went in her mouth. She doesn’t know which part or for how long, though she estimates it was only a few seconds. “It seemed longer,” she said.

The bat flew away, leaving Kahn shaken.

She didn’t think the animal had bitten her. Regardless, her father, who is a physician and was traveling with her, said she should go to a hospital within a day or so and begin vaccinations against rabies.

Figuring she would be covered as long as she obtained insurance before going to the hospital, Kahn said, she found a policy online the day after the bat incident. She said she called the company before she bought its policy and was told services related to an accident or “life-threatening” emergency would be covered.

Kahn went the next day to a hospital in Flagstaff, Arizona, where she started rabies prevention treatment. Over the next two weeks, she received the rest of the rabies shots at clinics in Arizona and Massachusetts and at a hospital in Colorado.

Then the bills came.

The Medical Procedure

Kahn received a total of four doses of the rabies vaccine. The doses are administered over the course of 14 days. Along with her first vaccination, she received three shots of immunoglobulin, which boosts antibodies against the virus.

Rabies is typically transmitted through bites or scratches from an infected animal. Experts recommend precautionary measures when a person has been potentially exposed to rabies, because once the neurological disease causes symptoms, it is fatal. The Centers for Disease Control and Prevention says postexposure rabies treatment has reduced the number of human fatalities to fewer than 10 a year in the U.S.

The Final Bill

According to explanation-of-benefits statements, Kahn owed a total of $20,749 for her care at the four facilities. Most of the charges were from the hospital where she was first treated, Flagstaff Medical Center: $17,079, including $15,242 for the rabies and immunoglobulin shots.

The Billing Problem: Most Insurance Doesn’t Start Immediately

Kahn’s policy did not pay for any of the services. “The required waiting period for this service has not been met,” said an explanation-of-benefits letter she received in December.

Kahn was stunned. “I thought it must have been a mistake,” she said. “I guess I was naive.”

When Kahn was laid off from her job as a biomedical engineer last summer, she had the option to temporarily stay on her former employer’s insurance under a COBRA plan, at a cost of about $650 a month. But as a young, healthy person, she gambled that she could get by without insurance until she found another job. She figured that if she needed medical care, she could quickly buy a private policy.

According to the Centers for Medicare & Medicaid Services, those who qualify for COBRA must be given at least 60 days to sign up — and if they do, the coverage applies retroactively. Kahn, who was still within that period at the time of the incident, said recently that she did not realize she had that option.

The policy she purchased after the bat episode, which cost about $311 a month, was from a Florida company called Innovative Partners LP. Documents Kahn provided to KFF Health News say the policy has a 30-day waiting period, which “does not apply to benefits regarding an accident or loss of life.”

Kahn said that after receiving notice that her claims were denied, she called the company to ask how she could appeal and was told a doctor would have to file paperwork. She said she wrote a letter that was signed by a doctor at Flagstaff Medical Center and submitted it in March but was unable to reach doctors at the other facilities.

Kahn said she was given conflicting answers about where to send the paperwork. She said a representative with the company recently told her it had not received any appeals from her.

Benefits statements Kahn received in early July show Innovative Partners had not paid the claims. The company did not respond to requests for comment for this article.

Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University, said most health coverage plans take effect on the first day of the month after a customer enrolls.

“The insurance companies — for good reason — don’t want people to wait to sign up for coverage until they are sick,” she said, noting the premiums healthy people pay help balance the costs of paying for health care.

The Affordable Care Act requires insurers to cover preexisting conditions, such as diabetes or heart issues. But that doesn’t mean they have to pay for treatment of an injury sustained shortly before a person enrolls in coverage, she said.

Corlette, who reviewed a brief benefits overview provided by Kahn, said the policy appears to have been a limited, “fixed indemnity” plan, which would pay only set amounts toward treatments per day or other period regardless of total expenses incurred. Such plans have been around for decades and aren’t required to meet ACA standards, she said.

But she said even if Kahn had bought comprehensive health insurance, it probably wouldn’t have covered treatment received so soon after she purchased it.

David Shlim, a travel medicine specialist in Wyoming who studies rabies, said Kahn made the right choice by promptly seeking treatment, even though she didn’t feel the bat bite her. The disease is deadly, and the fact that the bat went into her mouth meant she could have been infected from its saliva, he said: “You could hardly have a more direct exposure than that.”

Shlim, who recently co-wrote a federal advisory about rabies prevention, added that healthy bats don’t normally fly into people, as the one in this case did. The animal’s entanglement with Kahn suggests it could have been sick, possibly with rabies, he said.

Rabies prevention treatment is much more expensive in the United States than in most other countries, Shlim said. The priciest part is immunoglobulin, which is made from the blood plasma of people who have been vaccinated against rabies.

The treatment is often administered in hospital emergency rooms, which add their own steep charges, Shlim noted.

The Resolution

Kahn said she is employed again and has good health insurance but is still facing most of the bills from her misadventure at Glen Canyon. She said she paid a doctor bill from Flagstaff Medical Center after negotiating it down from $706 to $420. She said she’s also arranged a $10-a-month plan to pay off the $530 she owes for one of her rabies shots at another facility.

She said she plans to continue appealing the denials of payment for the rest of the bills, which total more than $19,000.

In a statement on behalf of the Flagstaff hospital — where Kahn incurred the highest charges — Lauren Silverstein, a spokesperson at Northern Arizona Healthcare, said the health system does what it can to limit costs. “We have less ability to control the prices of critical supplies that we use to treat patients, including pharmaceuticals, biologics, diagnostics and medical devices made by other companies,” she said.

Silverstein said the hospital needs to keep immunoglobulin on hand to prevent rabies, even though such cases are relatively rare and the drug is expensive.

The Takeaway

COBRA insurance policies, named for the Consolidated Omnibus Budget Reconciliation Act of 1985, enable many people who lose job-based coverage to pay to stay on those plans temporarily. There is a 60-day window to choose COBRA coverage, and once a beneficiary pays for it, the coverage applies retroactively — meaning that medical care is covered even if it occurred when the person was uninsured.

Corlette said Kahn’s predicament illustrates why people need to make sure they have health insurance.

She said people who lose employer-based coverage should consider enrolling in individual insurance plans sold on federal or state marketplaces. Many people who buy such policies qualify for substantial ACA subsidies to help pay premiums and other costs.

“If you are losing your job, COBRA is not your only option,” Corlette said.

Kahn wishes she had signed up for insurance coverage when she was laid off, even though she felt confident she would find another job within a few months. “That’s a very big lesson I learned the hard way,” she said.

Her wildlife encounter did not destroy her love of the outdoors. She even sees humor in it.

“I know what bats taste like now. It’s an earthy, sweet kind of flavor,” she joked. “It’s actually a pretty funny story — if it weren’t for the horrible medical bill that came with it.”

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Collection agents for the state of Iowa have sent letters seeking millions of dollars from the estates of at least two people with disabilities who died after spending most of their lives in a state institution.

The amounts represent what Medicaid spent covering the residents’ care when they lived at the Glenwood Resource Center, a state-run facility that closed last summer.

The bills are extraordinary examples of a practice called Medicaid estate recovery. Federal law requires states to try to collect money after some types of Medicaid recipients die. The point is to encourage people to use their own resources before relying on the public program. But some states, including Iowa, are particularly aggressive about the collections, national reports show.

Joy Higgins was stunned by a letter she received a few weeks after her 41-year-old daughter, Kristin, died last May. The letter was written on Iowa Department of Health and Human Services stationery. At the top, in bold letters, it said, “Re: Kristin Higgins.”

“Dear Joy Higgins,” the letter read. “Our sincere condolences to you, as we understand the above person is deceased.”

The letter explained that any money Kristin Higgins left behind would have to be remitted to the state to help repay Medicaid $4,263,148.67. Her family had 30 days to respond.

Joy Higgins, who lives in Council Bluffs, wonders why state debt collectors would send a massive bill to the family of someone like her daughter, who had little income because of a severe developmental disability stemming from a premature birth.

“What are they gaining? That’s my question. Except for kicking someone in the face right after they lost a loved one?” Higgins said.

Kristin Higgins’ only income was a Social Security disability benefit of $1,105 monthly. Most of that went directly to the state institution, where she lived for more than 30 years. Just $50 was set aside monthly as an allowance for personal expenses, according to a state ledger obtained by her family. “They knew exactly how much she had,” her mother said.

When she died, Kristin’s personal account had a balance of $2,239.84. The family put that money toward her funeral, an allowed expense. Nothing was left for the state to take. Higgins said receiving the letter was traumatic even though the family didn’t have to pay the Medicaid bill.

The Higginses have heard about similar attempts to collect from other families, including that of Eric Tomlyn, who died in 2020 at age 29 after spending most of his life at the Glenwood Resource Center.

Shortly after his death, the Tomlyn family received a Medicaid bill of more than $4.2 million. His mother, Susan Tomlyn, was shocked by the letter. “I was like, ‘What? What? Oh my God,’” she recalled.

She filled out a form explaining that the small balance in her son’s personal account had gone toward his funeral. “That’s the last I heard of it,” Tomlyn said.

Supporters of estate recovery efforts say the rules encourage people to pay for their own care before applying for Medicaid, which is mainly intended to help those with little money.

Critics of estate recovery programs say they often target families with little to give. Wealthier families tend to have lawyers who can structure estates in ways that avoid Medicaid repayment demands, the critics note.

Like Higgins, Tomlyn thought her Medicaid recovery bill came from state officials because it was printed on letterhead from the Iowa Department of Health and Human Services. The people who signed the letters identified themselves as being from the “Estate Recovery Program.” But the people who produce such letters work for private contractors hired to collect Medicaid debts, according to Alex Murphy, a spokesperson for the state agency. Their contract requires them to use state stationery.

Murphy said in an email to KFF Health News that such letters are sent after every death of an Iowa Medicaid recipient who was at least 55 years old or who lived in a long-term care facility. He said the letters “request information from family members regarding the deceased person’s assets and expenses,” and the letters note that repayments are expected only from the person’s estate.

Iowa’s Medicaid collections are handled by Sumo Group, a Des Moines company. Its director, Ben Chatman, declined to answer questions, including why the company sent bills to families of people with disabilities who lived most of their lives in state institutions. “I don’t do media relations,” Chatman said.

Sumo Group is a subcontractor of a national company, Gainwell Technologies, which has handled Medicaid collections for several states. In Iowa, the company is paid 11% of whatever it can collect from the estates of Medicaid participants. A spokesperson for Gainwell declined to comment.

Iowa’s Medicaid estate recovery program brought in $40.2 million in the fiscal year that ended last June, up nearly 14% from two years earlier, state records show. That total represents a sliver of the state’s total Medicaid budget, which is expected to hit $9 billion this year.

Nearly two-thirds of Iowa estate recovery cases wound up being closed with no collection of money last fiscal year, according to the state. In cases in which money was recouped, the average amount paid was about $10,000.

Thirty-five Iowa families were granted hardship waivers, which the state allows if an heir’s health or life would be endangered because payment of the Medicaid bill would deprive them of food, clothing, shelter, or medical care. Officials denied an additional 20 requests for hardship waivers.

A 2021 report to Congress estimated states collected more than $700 million annually from Medicaid participants’ estates. That money is shared with the federal government, which helps finance Medicaid. Some states claw back much less than others. Hawaii, for example, collected just $31,000 in 2019, the latest year analyzed in the federal report. Iowa, with about twice as many residents as Hawaii, raked back more than $26 million that year.

Americans aren’t subject to such clawbacks for using any other federal health program, including Medicare, which covers older people of all income levels.

The national group Justice in Aging has helped lead opposition to Medicaid estate recovery programs. Eric Carlson, a California attorney for the group, said the issue usually comes into play after the death of a person who had nursing home care covered by Medicaid. Recovery demands often force survivors to sell homes that are their families’ main form of wealth, he said.

Carlson said he hadn’t previously heard of Medicaid estate recovery bills topping $4 million, like the ones sent to survivors of the two Iowans with disabilities.

He wondered why debt collectors would pursue such cases, which are unlikely to yield any money but could cause anxiety for families. “Of course, if you open up a piece of mail that says you owe millions of dollars, you’re going to think the worst,” he said.

Carlson said he would advise anyone who receives such a letter to respond to it with documentation showing that their loved one’s estate can’t repay a Medicaid debt. “It’s never a good idea to ignore it,” he said. Failure to respond to the bill could lead to continued collection efforts, which could threaten a family member’s finances or property, he said.

Some states have reined in their Medicaid clawback efforts. For example, Massachusetts legislators last year voted to drastically limit their program. This was the second time Massachusetts reduced its Medicaid estate recovery effort, which once was one of the most aggressive in the U.S.

Critics in Congress have also tried to limit the practice.

Rep. Jan Schakowsky (D-Ill.) has twice introduced bills to eliminate the federal requirement that states claw back Medicaid spending from recipients’ estates. Last year’s bill gained 47 Democratic co-sponsors, but it received no support from the Republicans controlling the chamber, and there was no similar bill in the Senate. She plans to try again this year, even though her party remains in the minority.

Schakowsky said in an interview that she’d never heard of Medicaid estate recovery demands reaching millions of dollars, as the Iowa families faced. But demands for hundreds of thousands of dollars are common. For many families, “that’s still impossible” to meet, she said.

Schakowsky hopes that members of Congress from both parties will agree to curtail the program once they realize how much angst it causes their constituents and how relatively little money it returns to the government. “The whole program is ridiculous,” she said.

Her quest could become even tougher if the Trump administration moves ahead with proposals to trim Medicaid spending.

The office of Sen. Chuck Grassley, who is the senior member of Iowa’s all-Republican congressional delegation and has taken leading roles in many health policy debates, declined to comment on the issue.

The Iowa Department of Health and Human Services said it notifies families about the estate recovery process when they apply for Medicaid. Joy Higgins said she doesn’t recall seeing such a notice.

The institution where Kristin Higgins spent most of her life was closed last year after federal officials investigated complaints of poor medical care. But Joy Higgins said her daughter was treated well there overall. “If I had millions in the bank, I’d give it to the state,” she said. “I would. It was worth it.”

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KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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This article first appeared on KFF Health News and is republished here under a Creative Commons license.