Bill Bartlett received an $813 bill for a routine cardiac stress test that he had been told would cost him $45. Sean Dundon was charged $800 for having his sliced thumb examined and bandaged.

Both patients faced unexpectedly huge expenses for simple medical care because so-called “facility fees” were tacked onto their bills. The fees are just one example of the arcane and complex world of medical billing that so often frustrates and confuses patients.

Patients receive bills bloated by health care providers that overcharge for services and insurance companies that deny claims without explanation. And with little clout to fight back or even negotiate, feeling helpless, they often give up and pay, worn down by a system that is as time-consuming as it is obtuse.

A public, high-stakes battle between Maine’s largest hospital and its dominant insurance carrier has opened a window into the opaque world of medical billing and insurance claims, and it underscores just how powerless consumers are.

The dispute was settled last week, but the disagreement was over money. Maine Medical Center in Portland said Anthem owes it millions of dollars in overdue and unpaid claims, while Anthem contended that Maine Med has overcharged the insurer by millions of dollars. If the standoff had not been resolved, Maine Med would have left Anthem’s provider network in January, upending Maine’s entire health insurance market.

The Portland Press Herald/Maine Sunday Telegram spent more than three months investigating the byzantine system of medical billing in Maine. The newspaper spoke with dozens of patients who have had billing problems, reviewed their invoices and explanations of benefits, interviewed health care executives and consulted experts in the field. The reporting reveals systemic shortcomings that are not limited to any one medical provider or insurer but are pervasive across the landscape. The Press Herald found that:

• Medical bills are confusing and opaque, and sometimes carry arbitrary and hidden costs, including a common surcharge that hospitals call a “facility fee,” charging hundreds of dollars simply for getting treatment in a hospital.

• Insurance companies deny some claims for reasons that aren’t clear and may never be explained, forcing patients to choose between waging drawn-out fights or paying hefty bills.

• Costs for procedures and insurance coverage vary so widely that even patients who carefully compare prices beforehand can wind up with bills far larger than expected.

• Even though Americans’ access to insurance expanded through the Affordable Care Act, many are still underinsured and subject to massive medical bills they don’t expect and may not be able to pay.

The practice of assessing facility fees – sometimes hiding such fees in other charges – increasingly contributes to some patients’ surprisingly large bills.

It has long been standard practice for hospitals to shift uncompensated costs, such as care for uninsured patients who can’t afford to pay their bills, to patients with insurance.

But with more patients on high-deductible plans – and insurers sometimes refusing to pay or paying only a fraction of their bills – individuals are picking up more of the tab and bearing more of the financial burden.

“The system is broken and is really in need of a major overhaul,” said Dr. Julie Keller Pease, a founding member of Maine AllCare, which advocates for single-payer systems like those in Canada and the United Kingdom.

Still, any efforts to reform or overhaul the system, especially in one small state like Maine, face huge barriers.

HIDDEN FEES

Maine patients are paying hundreds of dollars extra for routine medical tests or procedures simply because the tests are occurring at hospitals. And they may have no idea, because the “facility fees” are not clearly explained and sometimes hidden on their bills.

Bill Bartlett of Kennebunkport said he called his insurance company to check on the price before getting his routine cardiac stress test last November. A few weeks later, the 60-year-old got a bill from York Hospital for the $45 he expected plus $813 for a “facility fee.”

Bartlett only discovered the facility fee because he demanded an explanation. And before he spent months complaining and appealing, his insurance company tried to deny coverage and stick him with the bill.

“This shouldn’t be my problem,” said Bartlett, who appealed the denial. “I did due diligence to determine the cost ahead of time.”

After Bartlett refused for months to pay the bill, Harvard Pilgrim finally paid most of it a few weeks ago, without explanation.

Jean Kolak, a spokeswoman for York Hospital, said that “when a patient receives services at York Hospital, their invoice will include a facility fee.”

“The amount of this fee is created, based on a variety of factors, such as the cost of staff, equipment, technology, medications utilized, supplies and in some clinical care areas, the acuity of the patient,” Kolak said in a statement.

Ann Woloson, executive director of Consumers for Affordable Health Care, a Maine-based advocacy group, said the organization is receiving increasing numbers of complaints about facility fees and may seek legislation to limit when they can be charged and require that patients be warned ahead of time.

“If facility fees are charged, the brunt of those fees should not be on the consumer,” Woloson said.

Al Swallow, chief financial officer for MaineHealth, the hospital network that includes Maine Medical Center and seven other Maine hospitals, said facility fees are an industry standard. They  reflect the need for hospitals to cover higher expenses than other medical providers incur, he said.

“Hospital settings have more costs than (outpatient) settings, including the fact that many of the services delivered by hospitals go uncompensated, either because of charitable care or the fact that Medicare and Medicaid do not cover the full cost of care delivered in a hospital,” Swallow said in an email response to questions. “Hospital settings are also more highly regulated, and meeting those standards can add costs to delivering care in those settings.”

DENIED CLAIMS

Patients can be at the mercy of insurance companies that deny claims for services they thought would be covered, and some fight their bills for years, believing that they should not be responsible.

Others just give up and pay, even though they share that belief.

Doni Gallinger of Portland did not give up, despite having claims denied by two insurance companies. But it took years for the 70-year-old to get coverage for mental health therapy.

“There was a very clear intent … to withhold services,” Gallinger said. “That was a very clear objective for them.”

The system is a perplexing mess, even for health care professionals.

Jill Copeland, a mental health therapist in Yarmouth, said she had to learn the ins and outs of how seven insurance companies conduct business in order to get properly reimbursed. If she didn’t have to spend so much time navigating the system, she said she could see 15% to 20% more patients.

“I have waited a very long time to get paid,” Copeland said. “And I am very persistent.”

Getting insurance companies to fix problems related to reimbursements is often difficult.

“My experience has been in general if they get things set up right the first time, it’s likely to keep going right,” Copeland said. “But if something doesn’t go right the first time, it feels like you might as well just give up. You can spend hours and hours and hours on the phone and be given all kinds of promises that it’s fixed and then it still isn’t fixed.”

UNPREDICTABLE PRICES

Patients trying to navigate the health care market find dramatically different prices among medical providers. Many learn the hard way.

In 2021, Alex St. Hilaire of Westbrook got a CT scan on his abdomen at Shields Imaging Center in Brunswick; it cost about $750. The next year he had the same exact scan at Northern Light Mercy Hospital – and it cost him nearly $3,000. With a high-deductible insurance plan, Hilaire is on the hook to pay most of that total. He had no idea charges for the same service could vary so much.

“I was literally in the machine 40 seconds tops, and it cost $3,000,” St. Hilaire said.

High charges are sometimes the result of a hospital rolling in other costs and services, said Christy Jolliff, Northern Light Health’s vice president of enterprise revenue cycle, who was speaking generally, not about St. Hilaire’s bill. If a bill shows $25 for a bottle of aspirin, that fee may actually cover other materials and services.

“We don’t charge for every piece of gauze, every Q-tip that’s being used,” Jolliff said. “Oftentimes, it covers things that don’t get listed at all.”

Why do hospitals charge so much? “Because they can,” said Jim Ward, president and principal of Patient Advocates, a Gray company that works with self-insured employers to lower health care costs.

Large organizations and insurance networks have the power to negotiate with hospitals, Ward said. Individual patients don’t.

Unlike neighborhood restaurants, hospitals generally don’t compete for business with customers. Rather, they are looking to cover many running costs.

“Hospital pricing is not the same as pricing for goods in a retail store in that it is not done looking strictly at what other providers charge,” said Swallow, the MaineHealth executive. “Rather, hospitals start with the premise that they must cover their operating costs – including free care and costs not fully covered by Medicare and Medicaid – and leave enough of an operating margin to weather future adverse events and invest in new technology and infrastructure.”

SHOPPING AROUND

There are ways to reduce the odds of an unexpected bill, but they don’t offer perfect protection.

The state’s seven-year-old CompareMaine website, launched by the Maine Health Data Organization, a state agency, allows patients to compare the costs of procedures like a colonoscopy or a knee replacement. The site reveals widely varying costs across the state – a hip replacement can cost anywhere from $23,000 to $57,000.

But the site doesn’t tell patients what facilities are in network for their insurance companies – information that can dramatically affect their share of costs. And it doesn’t help patients understand how to navigate their coverage plans to control costs. It won’t tell you, for example, that it is sometimes better for patients to meet their annual deductibles before scheduling elective surgery.

In an effort to increase price transparency, the federal government has mandated that hospitals publish the “chargemaster” prices, or list prices, on their websites.

But the chargemaster prices often have little to do with what patients get charged. The list price of repairing a broken wrist may be far different than what the various insurance companies, negotiating with hospitals, have agreed to pay for that surgery.

The bill a patient receives in the mail may be a full three steps removed from the chargemaster prices.

Stephanie DuBois, a spokeswoman for Anthem, said the company encourages its patients to shop around for health care services and call to find out what Anthem will pay.

“We all know a hospital setting can be one of the most expensive places to receive care, which is why at Anthem Blue Cross and Blue Shield we invest a lot of time and resources into educating consumers about the various choices they have available to them,” DuBois said in a written statement. “Services such as imaging, labs, or prescription drug infusion are available at many non-hospital based facilities that offer consumers a convenient location, a much lower cost, and equal, if not greater, quality.”

INSURANCE GAPS PERSIST

More Americans have health insurance now than ever before because of the Affordable Care Act, which took effect in 2013. Still, about 8 percent of Mainers remain uninsured. And many others are underinsured, with high deductibles or cost-sharing arrangements that shift more of the financial burden onto them.

The proliferation of high-deductible health plans – designed to keep premiums down – means patients are paying a higher share of the bills that come in when they get sick.

While medical bankruptcy is rarer than before the ACA took effect, many patients are saddled with thousands of dollars in bills that they are unable to pay.

Valerie Lawson, 65, of Calais said she was shocked by the $20,000 bill she received when she was temporarily uninsured last winter.  She had dropped her insurance because the premiums were so high, and during that lapse she had to go to the emergency room because of hemorrhaging in her colon.

She learned what she owed when she was still weak and recovering at home. “I felt like the floor opened up beneath me, and I fell through,” she said. “I thought, ‘You have to be kidding me.’ I was really gobsmacked.”

Lawson said she gave up fighting what she believed were unfair charges and paid $14,000 to settle the bill because the fight took too much energy, and being uninsured she was in a poor negotiating position with Northern Light Eastern Maine Medical Center. She is now insured again.

But it’s not only people without insurance getting large bills. People who are underinsured – often with high-deductible health plans to keep monthly premium costs low – end up paying high-cost bills.

The large number of underinsured people does more than land them with massive bills. It also contributes to inefficiencies in the health care system. The higher costs can make people reluctant to use their health care plans, delaying health services even when they need care, experts say.

“We focus on spending a lot of money later in the development of disease, when we should be focusing on prevention, early diagnosis and treatment,” said Reggie Williams, vice president of the International Health Policy and Practice Innovations program at the Commonwealth Fund, a foundation in New York City that supports health care reforms.

That increases the overall cost of health care and leads to worse health outcomes, such as higher rates of infant and maternal mortality, Williams said.

“The lack of investment we have in the United States before people give birth really impacts the quality of care people have while they are pregnant and postpartum,” Williams said.

REFORMS RESISTED

At the root of the problem is the way health care is financed in the United States. It is a system that is hard to defend, even for hospital administrators and insurance executives.

Yet it persists.

MaineHealth’s president, Dr. Andy Mueller, said the system needs to change, and he wants to enact meaningful reforms that would move payment models away from charging fees for services to paying health care providers for keeping people healthy. Mueller said the financial incentives need to move from volume charging for services to prevention and management of chronic conditions, early diagnosis and treatment – in other words, keeping people out of the hospital.

“We can’t accept the status quo,” said Mueller, who became the leader of Maine’s largest hospital network in 2021. “We need to fundamentally change the way we get paid.”

Mueller agreed that massive reforms would be daunting. But he said MaineHealth expects to launch some pilot programs later this year that could begin to make a difference. Details of the programs – which will require a waiver from the federal Medicaid program – will be released this fall.

“Rest assured, we are working on lots of reforms that will change how we deliver care while increasing affordability,” Mueller said.

But Jim Ward, the Patient Advocates president, said the headwinds against meaningful change are strong.

Any change has the potential to benefit one sector of the industry at the expense of another, and would face powerful resistance. “There’s a very strong established and vested interest in maintaining the status quo,” Ward said.

Some see the solution in a single-payer system – where the government pays for medical care, financed through taxes, eliminating much of the market for insurance companies. It would force hospital networks and other medical providers to accept prices set by the government – as they do with Medicare and Medicaid.

Other countries, such as Canada, the United Kingdom, France and Spain, and much of the developed world, have instituted single-payer systems or universal coverage.

Liberal politicians and advocates in the United States, such as Sen. Bernie Sanders of Vermont, have long called for a single-payer model, which Sanders describes as “Medicare for all.” Conservatives have opposed the idea, calling it socialized medicine.

Other substantial but less sweeping reforms that are often discussed include lowering the age eligibility for Medicare from 65 to 55 or 50 and giving people a “public option” for health insurance. But action on such fronts does not seem to be on the horizon, and much narrower changes are hard fought.

Even a modest reform that attracted bipartisan support – letting Medicare negotiate prices with drug manufacturers – took decades of advocacy. The Medicare reform, which finally cleared Congress and was signed into law by President Biden last week as part of the Inflation Reduction Act, will also limit annual out-of-pocket prescription costs for Medicare patients to $2,000.

A proposal championed by U.S. Sen. Susan Collins, R-Maine, would have capped insulin copays at $35 per month. The Inflation Reduction Act that passed Congress included this copay limit for Medicare patients, but not for the rest of the population. Collins and other advocates hope to bring forward a separate bill to pass a broader insulin cap.

Woloson, executive director of Consumers for Affordable Health Care, said it’s difficult to enact reforms that benefit patients given the competing interests of the major players in the market, such as hospitals, insurance companies and drug manufacturers.

“When you adjust something over here, you have to adjust over there,” Woloson said. “The consumer is always left holding the bag. What works best for hospitals or insurance companies might not work for patients.”

Some have tried to reform the system at the state level. Massachusetts launched a system that sharply reduced the rates of the uninsured and inspired the federal Affordable Care Act. In recent years, the state established a health care cost commission, but it has little regulatory power.

Maryland has worked for decades to regulate costs and reduce incentives to over-treat patients. The state regulates and sets hospital prices and places all the hospitals under a single “global budget,” which means the finances for hospitals in Maryland are all lumped into one budget.

But Maryland’s efforts have yielded mixed results, according to recent studies.

Woloson said such efforts are important incremental steps, but they don’t represent substantial progress. “They’re not there yet,” she said.

Maine continues to study the feasibility of reforms. Last year, the state  approved the Office of Affordable Health Care, which is studying a number of reform possibilities, including allowing people to “buy” Medicaid coverage, expanding Medicaid and the Children’s Health Insurance Program and further increasing subsidies for ACA plans using state dollars.

The reforms, like the Affordable Care Act, tend to focus on expanding access to insurance rather than addressing problems with pricing and out-of-pocket costs.

SINGLE-PAYER A TOUGH SELL

Pease, of Maine AllCare, the advocate for single-payer systems, said anything short of single-payer will always be lacking.

“In single-payer systems like Canada, the doctor sends off the bill for services to the government, and they get paid a few days or few weeks later,” Pease said. “It’s very automatic and removes inefficiencies. Insurance companies just add another layer of bureaucracy, denying payments, requiring prior approval of services. They’re the middleman.”

But no state has enacted a single-payer system, and the political climate does not appear conducive to a national single-payer system. Proposals in recent years to establish single-payer in Maine have stalled out on numerous occasions.

Vermont came close in the early 2010s, but ultimately abandoned it over the complexity of a small state going it alone and the difficulties in a state financing the system.

California is considering a single-payer system, but a bill to create one failed to get a vote in the state assembly this February.

Single-payer also may not be a panacea.

Mueller, the MaineHealth CEO, said that a single-payer system would not necessarily be an improvement. If the government did not put enough money into the system, there could be massive cuts to health care services.

The way it is now, if there are cuts in government-funded Medicare and Medicaid, health care systems have the flexibility to make up for lost revenue by increasing costs to private insurers.

Health care systems would potentially lose that ability under a single-payer system, Mueller said. So, if public funding for a single-payer system was insufficient or inconsistent, it could result in cost-cutting and ultimately a declining quality of health care, he said.

Dan Colacino, vice president of the Maine Association of Health Underwriters, which represents brokers that sell insurance, said the success of a single-payer system would be subject to the push and pull of state budget negotiations.

“It moves the cost of health care from individuals and employers onto the state,” Colacino said. “The increase in taxes would be huge.”

Without meaningful change, Maine patients are largely left to navigate the medical billing maze on their own, learning one painful lesson at a time.

Sean Dundon’s teaching moment came on Christmas Day, when he sliced off a portion of his thumb peeling potatoes. The trip to Northern Light Mercy Hospital for an assessment and a bandage – he didn’t even need stitches – cost him about $300 for the actual treatment and another $500 for a hospital facility fee he had to use his deductible to pay.

Dundon said the system is “intentionally obfuscating and confusing” and it shouldn’t be. “If there had been a sign on the wall that said there was a facility fee, I would have gone home, dressed it myself and gone (somewhere else) the next day.”

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