Over the past few years, we have increasingly heard about hospitals using billing agencies to claim payments from international insurers for patients treated on national territory. Several questions arise when we hear about these companies:
- Where do these companies come from?
- Why can’t a hospital charge international insurers directly?
- Are these companies’ practices fair?
Having understood the role these companies play in the industry, and without considering at this point whether they do it fairly or not, the first question that entered my head was: where do they come from?
Legal loopholes can cause issues when filing a complaint
At least in Mexico, there is a legal loophole that means there is no public or private entity responsible for regulating international insurers, which is why when a hospital wishes to file a complaint for breach of any agreement – such as a guarantee of payment (GOP) letter for a patient’s care – there is not a single entity in Mexico with which you can file such a claim. This situation is very convenient for those who do not follow through with their payment promises, or whose terms of business with hospitals are disingenuous or unclear. Moreover, due to commercial agreements that exist between Mexico and the US, hospitals are obliged to have a tax ID in the US, or at least fill out forms to give notice of this and avoid double taxation or any fiscal non-compliance in either country. Although this is not complicated, it is still an unknown quantity and creates uncertainty.
It seems, then, that the entrance of these third-party billing companies into the international healthcare market has been the result of a relationship between fiscal complexity, fear of the unknown and, unfortunately, non-compliance on the part of insurance companies and assistance companies. On occasion, these payers find the opportunity to underpay the hospitals that were at a financial disadvantage at the time of trying to reach a settlement, and so distrust has proliferated.
On the other hand, the commercial strategy of many of these companies is based on the simple fact of doing what the usual payers cannot – guaranteeing the hospital that the bill will be paid no matter what. In addition, their bill payment periods range from three to 30 days, but always with the promise that the bill will be covered.
Not all companies operate according to the same ethical standards
When it comes to the ethics and sense of fair play that can be found among these companies, it varies greatly. We cannot label each and every one of them as being the same because there are so many, and we cannot say that all of them are ‘bad’, or that all are ‘good’.
It could be said, however, that some of these companies inflate the usual, customary and reasonable prices of hospital treatment, at least in Mexico, with the excuse of some kind of international tabulator. I use the phrase ‘some kind of tabulator’ on purpose, because when we see the accounts, there seems to be no consistency in, or regulation of, these prices.
Some companies try to justify these prices by saying that it is the same price that an insurance company would pay should the patient be treated in the US, but we have to ask: is this fair? Could we say that the administrative cost of a hospital in the US is the same as it would cost in Mexico? Is the cost of malpractice insurance the same in both countries? Do hospitals in both countries have the same equipment, or do they renew their equipment as often?
If you answer yes to all these questions, then we could consider that maybe this justification is fair. However, if the answers are negative, then there is no proper justification.
A lack of regulations can increase ambiguity when working with local companies
This is a very broad and controversial topic and, like many things in life, it will depend on your perspective. If you ask a hospital if these companies should exist, the vast majority will say yes, and that they are necessary for the industry. This is clearly at odds with what the vast majority of payers would think.
What is a fact, though, is that these companies already exist and are part of the supply chain involved in the provision of, and payment for, international patient care in the main tourist areas of Mexico and in many regions of Central and South America. From a payer’s perspective, they are making the treatment of international patients more expensive, and damaging the reputation of some tourist destinations in the country.
To form an objective view of these companies and determine whether they are good or bad for the industry, the first thing we should do is to encourage their regulation. This will help establish clear and objective rules of their obligations when entering into an agreement with the international department of a hospital.
Up to this point, these companies have been playing a game in which there is no referee, no regulations, nor any rules. Thus, I believe, it is impossible to determine if they are doing things within the permitted parameters or not, since there are none by which they have to abide. While they continue working in this way, the most affected party will always be the end user of the travel insurance policy, who ends up paying increases in their premiums overall, or the insurer, who is paying higher prices for medical care in developing countries.
It is important to mention that there are many other companies that are directly or indirectly involved in this same gambit – assistance companies and cost containment companies among others – whose business models can benefit from high medical costs, either through commission or referral payment schemes or through percentage payment schemes for savings.
All in all, I believe that the best way to deal with this is to create a regulating entity for all the companies involved. An entity that guarantees that the rules it establishes will be followed and that these will be clear and equitable based on specific criteria. As long as this remains absent, we will continue to work in uncertainty and without the possibility of an impartial solution to the problem.