Collections, credit threats, a lawsuit: Patients pursued for medical bills their alternative insurance plan says they don’t owe

Published: May. 7, 2020 at 6:07 PM CDT
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What happens when employers try to buck the high costs of health insurance with an alternative model? In central Wisconsin, employees are left caught in the middle of a legal battle, with insurance telling them they don’t owe the bills that providers are pursuing them to pay. Critics say these plans leave employees exposed without a safety net; advocates say this is one way to combat a broken insurance system. But ultimately: it's the employees without a recourse who pay the price.

“We’ve always paid our bills. We’ve never had this experience.”

The collection agency was sympathetic, Jennifer said--almost apologetic about calling during a pandemic that’s devastated both health and livelihoods across the country.

It’s been a couple weeks since the last effort to collect thousands of dollars from Jennifer and Steve Kurzinski for a colonoscopy Steve got last fall when he turned fifty. It was the latest in a lengthy string of efforts from Aspirus to collect on a bill that Jennifer’s alternative insurance company says not to pay. The colonoscopy had seemed like the right idea last fall: their health insurance plan under Jennifer’s employer told them it was preventative care and would be covered; they’d even get a ‘smart shopping’ gift card reward.

The problems started when they learned it wasn’t free--it’d need to be done at Aspirus Wausau Hospital out of some extra precautions for Steve’s health. One thing led to another. Today, Jennifer’s employer-funded alternative plan says they don’t owe anything. Aspirus says they owe more than $3,000. And now, the couple is postponing medical care from their longtime physician while the battle continues.

According to Wisconsin Pricepoint, a system owned by the Wisconsin Hospital Association that provides public, aggregated data about estimated charges for medical procedures, the uninsured rate for a colonoscopy like Steve got averages about $2,000 across Marathon County medical facilities. Hospital averages are higher, between $3 and $5,000.

The procedure happened on August 2. In the weeks after, the bills for that appointment started trickling in: all four of them. A bill from Aspirus Wausau Hospital for the use of their operating room, the Aspirus Network, Inc (ANI)-member anesthesiologist, Steve’s primary physician, and an Aspirus member pathologist.

Jennifer, who handles the couple’s finances, was stunned: the four bills totaled more than $10,000.

Bills from the pathologist and primary physician were negotiated by her employer’s Apostrophe plan, and Jennifer never paid a dime. Apostrophe tried to do the same with those from Aspirus. According to bills provided to 7 Investigates by Jennifer, the adjusted payments from Apostrophe were applied and the couple was sent a bill for the remainder.

It’s called a balance, or “surprise”, billing. Essentially, health care providers can bill patients with the costs of a procedure that a patient’s insurance company won’t pay because a person inadvertently got treatment outside their network of care--often despite being at a facility where in-network care was expected. It’s a practice that’s received nationwide attention, is fully or partially banned in several states (but not Wisconsin), and has been the recent target of bipartisan Congressional efforts to end on a national level.

But for Jennifer, whose alternative insurance seeks to operate outside of the traditional network system--it’s even worse.

And now, after a routine preventative procedure that the couple at first believed would be free, collection agencies are pursuing them for about $3,000 that their insurance plan tells them they don’t owe--and shouldn’t pay.

The Employer

Steve and Jennifer’s story is one of dozens of similar stories among their coworkers, and it begins long before Steve’s August appointment-- when her longtime employer Team Schierl, owned and operated by three brothers, started looking for an alternative after years of frustration with rising costs of health insurance plans and the opaque nature and pricing disparities of healthcare providers.

Team Schierl, based in Stevens Point, owns and operates The Store gas stations, Subways, and Schierl Tire centers across central and northern Wisconsin and the Upper Peninsula of Michigan. The business is a staple in the central Wisconsin economic community: founded by John “Butch” Schierl in 1956, the business leadership passed to his three sons when he passed away from cancer when he was 55. Today, they have about 700 employees (the company calls them associates); roughly 300 are full time and eligible for the company’s health insurance.

Tim Schierl, one of the brothers, became directly involved with determining the company’s health care insurance a couple years ago. The rising costs of health insurance was a source of major frustration, and he wasn’t hearing a way to combat those costs through traditional insurance brokers.

Kaiser Family Foundation’s

in 2019 found the average premium for family coverage has increased by 54% in the past decade, with both worker and employer contributions rising significantly faster than the rise of wages or inflation.

“We’ve all felt this,” Tim Schierl said. “You give a 3, 3.5% increase in compensation to your people. Then you turn around and you have to increase their deductible or their copay.”

No one was getting ahead. “It’s not right. It’s not fair,” he said. The insurance models he was hearing when his company went to bid weren’t addressing the problem; he wanted something different.

The Plan

That’s when he began researching alternative insurance pricing models. He heard David Contorno speak, a benefits advisor affiliated with the nationwide organization Health Rosetta, which according to its website seeks to “accelerate adoption of simple, non-partisan fixes to our healthcare system.” The company shifted to a reference-based pricing model; Schierl connected with Drew Leatherberry, a Rosetta-affiliated advisor who last year founded a Green Bay-based company Avergent connecting businesses in Wisconsin with alternative plans.

He founded it with one simple belief, he says. “The majority of health plans have been bankrupting employers and Americans for quite some time.”

“It was a path that was so different than we'd ever seen,” Schierl recalled. “We haven't seen it in Central Wisconsin, to be honest with you.”

Today, Leatherberry says he represents six employers and several thousand employees in Wisconsin, including Team Schierl. “It's a growing movement in the state; it's still still a relatively young and immature movement,” Leatherberry noted.

Reference-based pricing plans, adopted by Team Schierl in the past couple years, are alternative insurance plans that try to bring their own rates--usually a percentage of federally-set Medicare prices--to health care providers. Advocates believe it’s a better starting point than the traditional model that negotiates contracts with providers that set discounts on what they say are highly-inflated charges. Critics, however, say these types of plans leave employees exposed, without a safety net when a high-cost emergency occurs, due to their ‘open network’ nature.

But for an employer like Schierl trying to reduce health care costs, there's benefits. Tim says they’ve reduced deductibles from $3,000 to $1,000 and kept health care costs level for employees for three years in a row: one of the biggest motivations for him after switching to reference-based pricing plans.

The response

13 people currently report credit threats and collection agencies from balance bills through Aspirus under the plan, Leatherberry tells 7 Investigates; more than a dozen more have in the past. Employees facing smaller bills have opted to pay to avoid the credit threats, despite the company’s requests to allow the bills to be handled by the insurance plan’s legal efforts. They haven’t been able to negotiate rates down on past balance bills, with Apostrophe paying in full in the hopes Aspirus would agree to a contract negotiation.

Other providers have backed down. For one employee facing $6,000 in balance bills from UW Health, the system ultimately dropped the pursuit after ongoing disputes from the insurance plan.

Last year, Marshfield Clinic signed a contract with the company, Leatherberry said. They had balance billed more than twenty of Schierl’s employees; all, however, had eventually been negotiated down and employees weren’t pursued by collections. At area Ascension facilities, nearly all the rates proposed by the plan had been accepted.

They say Aspirus, however, didn’t bring an acceptable contract in 2018, and has been unwilling to negotiate down procedure rates to what the plan views as acceptable, Medicare-based rates ever since.

“Instead of going after the insurance plan, the employer--they go after the weak link,” Leatherberry said. “They’re unwilling to negotiate. They have sent members to collections. There have been repeated calls to the member at their home to pay that additional balance.”

In a statement to 7 Investigates, Aspirus said it is vital to note that “no contract of any sort” exists between Aspirus and Apostrophe Health, the plan used by Schierl. “Rather than collaboratively contracting for services--like so many of our regional business partners--Colorado-based Apostrophe seeks to coerce health care providers into accepting non agreed-upon fees.”

Aspirus says the business model is unethical, leaving employees in “a terrible situation”.

“They are the real victims,” Communications Director Andy Napgezek said. “They are misled by Apostrophe Health and left with substandard benefits and unpaid medical bills.”

The lawsuit

The conflict went to court last October, kicking off an ongoing legal battle when Aspirus filed a lawsuit seeking about $13,000 in balance billing against a Schierl employee for a medical procedure from late 2018, the same year his plan was unable to finalize a contract with Aspirus for medicare-based rates.

His Milwaukee-based attorney Ryan Woody, specializing in medical litigation, says the claim is routine--but the nature of the lawsuit isn’t. His typical cases involve disputes over inflated or surprise billings; this, he believes, is more than that.

“This is not one I’m used to seeing,” he told 7 Investigates. Woody’s investigation and countersuit accuses Aspirus of engaging in anticompetitive practices and antitrust law violations, citing an internal Aspirus memo that called alternative plans like Apostrophe disruptors to the market.

“Basically, Aspirus goes on to instruct its billing department to specifically target patients covered by those blacklisted plans,” Woody said, referencing the memo included in the lawsuit documentation.

“Aspirus is telling everyone [in the market] that either you join the club and deal with us and pay our prices, or we’ll essentially blacklist you from the health care market in Central Wisconsin.”

In the undated memo which Woody believes was circulated in late summer of 2019, Aspirus legal instructs the revenue department to ignore the letters disputing rates from these plans and bill the patient instead. The memo describes the reference based pricing model as a rate based on a percentage of what Medicare would pay a facility for a procedure (according to the memo, typically between 120 and 170% of Medicare.)

“The concern is that more companies like these may be coming in to the ANI market and gaining a stronger presence which would compromise and potentially deteriorate established payor relationships,” the memo states.

Aspirus told 7 Investigates the countersuit was meritless, and that it was unfortunate the lawsuit--originally brought by them against the Schierl employee--was being revived while health care providers dealt with an ongoing pandemic.

The controversy

Reference-based pricing plans are not without enormous risks to patients, researchers say. A study published in 2019 in the peer-reviewed American Journal of Managed Care found that plans using a reference-based pricing model were unlikely to be adopted by employers due to the potential for catastrophic out-of-pocket costs for employees, the complexity of the plans, and the risk that employers would lose competitiveness in the marketplace.

“The few employers that have adopted RBP have implemented extensive, year-round employee education campaigns and invested in multipronged and proactive decision support to help employees navigate their choices,” the study noted in its summarized findings.

A big factor is just the extensive level of employee involvement in their health care choices and the need to communicate extensively about the plan to achieve success, something that Schierl has found at his own company.

“There’s pain,” he admitted. “You can talk about all the rules and all the things you're supposed to do and make the phone calls and, and get actively involved with your care. But the truth of the matter is I can't make everybody do that.”

Reference-based pricing plans typically require a high level of employee involvement in their health care, a concern cited in the AJMC study as a reason why studies had failed to pick up traction among employers looking for less costly alternatives.

The story continues

Aspirus has alerted the Wisconsin Office of the Commissioner of Insurance, as well as the Wisconsin Hospital Association, of their concerns with the alternative plans.

Leatherberry provided 7 Investigates with a copy of a letter being sent to U.S. Senators Ron Johnson and Chuck Grassley, as well as Attorney General Josh Kaul calling on their offices to investigate the collection and litigation practices of Aspirus. They intend to send a similar letter Friday to Aspirus, calling on them to stop those practices within 72 hours.

As the battle escalates between them, the patients are left wondering what to do.

“I don’t know what to tell you,” Jennifer recalls telling a billing staff member of Aspirus on the phone. “I’m kinda in the middle of what you and the insurance company needs to work out.

And for her and other employees waiting for resolution--the consequences could be enormous.

“For 30 years, my husband and I have paid our bills, gone to work, and earned an income, and done what you’re taught to do as a child: have a good work ethic.”


Editor’s note: This investigation included some interviews and video shot prior to the public health emergency announced in Wisconsin in mid-March, so some guidelines regarding social distancing are not observed in those portions of the video.
Full Aspirus Statement

It’s unfortunate that this ongoing lawsuit is being revived at a time when Aspirus and other health care providers are devoting tremendous resources and energy to protecting our communities and staff from COVID-19. While nothing can distract us from that responsibility, we will defend ourselves against this meritless legal action.

It is vital to note that no contract of any sort exists between Aspirus and Apostrophe Health or the companies it represents. Rather than collaboratively contracting for services – like so many of our regional business partners – Colorado-based Apostrophe seeks to coerce health care providers into accepting non agreed-upon fees.

Through this unethical business model, Apostrophe places Central Wisconsin businesses and their employees in a terrible situation. They are the real victims, as they are misled by Apostrophe Health and left with substandard benefits and unpaid medical bills. Aspirus has made these concerns known to state officials in an effort to protect the patients we serve and care about.

Excerpt from letter to be sent to state officials from Schierl benefits advisor

"We are now seeking to bring the public’s awareness to this matter. A letter with the same contents herein is being delivered to the Aspirus Inc. Executive members and their Board of Directors, many of whom we suspect are not fully aware of the extents of these practices. We are demanding they cease all balance bill litigation and collection practices against patients.

While we would wish to have a win-win reimbursement relationship with them, and will in good faith negotiate to that degree, we cannot do so until they’ve taken these ethically necessary steps. We wish to reach a fair level of reimbursement. Ultimately, we sought a better way to distribute the available finite benefit resources to be fair to health providers and to best protect it for our plan members. Their demands, through our health plan partners in the past, for inflated, billed charges are unfair, inequitable and anticompetitive. Not only that, they do not match their own pricing levels for the uninsured or their own public admissions that chargemaster prices are not final.

With our letter to them, we have requested a public response within 72 hours with a commitment to cease all balance bill litigation and collection practices against patients. We don’t want to believe that Aspirus is acting counter to its own values yet actions eerily mimic those of other health provider systems in the nation who’ve followed the same course of action.”