Americans are used to seeing things on health care bills that we don’t understand. When I decided to look into one of these inscrutable line items – an $11 charge tacked onto a $110 bill for routine lab work at Mercy Ambulatory Care Center – it led to me learning that people across New York State are overpaying millions of dollars in health care taxes every year.
The Health Care Reform Act (HCRA) is a very complex set of surcharges and fees paid by health plans, providers, self-insured employers and patients. These surcharges are levied on most services provided by hospitals, diagnostic and treatment centers and ambulatory surgery centers.
The $11 charge on my bill was there because of HCRA. But it shouldn’t have been. Since the lab work was for a routine annual physical, it should have been exempt. If it were for an outpatient procedure, the surcharge would have applied.
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This is just one example, but there are dozens of rules surrounding HCRA. Surcharges hinge not only on why a patient is receiving care, but also where as well as many other factors.
Covid-19 has put the problem in stark contrast. With thousands of people in Buffalo and around the state getting Covid tests every day, it’s nearly impossible to keep track of tests that are subject to the tax (because a doctor ordered them ahead of a procedure) and those that aren’t (because a patient thinks they might be sick).
As a result, revenues from HCRA have swelled, growing to nearly $4 billion in 2020 alone, an increase of almost 7% over 2019 levels. In reality, the total should have decreased in 2020 as patients switched to Medicaid (which is taxed at a lower rate) in large numbers and postponed elective surgeries and nonessential care due to the pandemic.
Even the state itself, in its 2021 budget, acknowledged that the pandemic’s effect on health care consumers should have led to “a material and adverse impact on HCRA revenues.” Clearly it didn’t. Why aren’t lawmakers asking why?
These overpayments add to the rapidly growing health care costs for New York residents. An $11 charge may seem insignificant, but the Empire Center for Public Policy estimates these insurance taxes add approximately $440 per person each year to the cost of private health insurance.
I’m an accredited health care fraud investigator. As I unraveled the web of HCRA, I was continually astounded by how difficult it would be for even large employers and insurance companies to pay these taxes accurately. The systems I’ve built to parse this out are some of the most complex I’ve ever designed.
In the U.S. health care system, the more complicated and opaque something is, the more expensive it ends up being for patients and employers. The health care industry does enough of this shell game on its own. New York State shouldn’t add to the problem.