Fighting the bill: Secret negotiations by your insurance company can lead to surprise bills

CASTLE ROCK, Colo. (KRDO) - Closed-door negotiations between insurance companies and medical manufacturers can cause customers to overpay for medical devices they could buy online for a fraction of the cost. 

This is what happened to Castle Rock resident Steve Peck. In November 2022, his 20-year-old son went to an urgent care following an injury in jiu-jitsu. He was told he injured a ligament in his foot and needed to wear a walking boot. They offered him one made by Breg, one of the largest orthopedic bracing providers in the country. Peck’s son signed for the boot and quickly recovered from the injury.

Eight months later, Peck received a bill in the mail from Breg. It said the walking boot cost $368.45.

“That boot does not look like a $400 boot, right? So I looked online and that's when I started to get a little frustrated,” Steve Peck said.

Breg’s boot isn’t a special product. It has an air cast with a hard sole and ankle support, but a similar boot online can be bought anywhere from $50 to $150, including places like Amazon, Walgreens, Walmart, and Staples.

KRDO13 Investigates even found the exact same Breg walking boot online through Brace Direct for $86.96 — four times less than what Peck paid. However, he said market research like this is nearly impossible when you are in a hospital or urgent care and in pain.

“He's not going to hop online to see if he's paying a competitive price for a boot,” Peck said of his son. “He just knows his leg is in pain, this will help fix it and that everything is set to go so sign here.”

Peck called and emailed Breg and his insurance company Simplified Benefits Administrators, which recently changed its name from UCHealth Plan Administrators, to dispute the charge. 

However, both companies declined to lower the bill, saying $368 was the negotiated contract price they agreed upon for that specific walking boot. The urgent care, which provided the boot, didn’t have a say in the price. It was just the boot they had on site.

Peck continued to fight the charge. He said he knew it was outrageous as he has been negotiating contracts for more than 30 years on everything from the procurement of military aircrafts to even the price of hospital services.

“I have never seen anybody able to pull something off like this before,” he said.

Yet the Colorado Consumer Health Initiative, a nonprofit that helps consumers navigate the healthcare industry, said these inflated prices are common.

“We see a variety of cases where very simple medical devices or supplies are charged at an exorbitant rate, and a lot of that ends up being agreed upon by the insurance companies.”

Even Breg itself acknowledges its equipment costs more than what you find online. The company has a page on its website titled “Why Your Brace May Cost Less Online.” It says their pricing is “established from product codes and rates that are set by the federal government or are negotiated with insurance providers, and used throughout the industry as a standard practice.”

Essentially Breg claims their products cost more because it is more convenient and tailored to the customer. 

“This immediate availability of product is a benefit that is not offered by purchasing the item online and then waiting to receive it,” the website said. “When buying a product online there is no professional fitting or instruction for the brace, there are no insurance billing services available and nothing goes toward satisfying deductibles or coinsurance.”

KRDO13 Investigates called Breg and Simplified Benefits Administrators about the $368 boot. Initially, both companies refused to talk due to client privacy laws. After obtaining a signed release form from Peck’s son, Breg still wouldn’t answer specific questions about Peck's overpriced boot. However, a customer service representative said their product prices are “largely dictated by the negotiated rates under our insurance contracts.” But she said those negotiated prices aren’t available to the public.

She said when a patient is given a device at a hospital or urgent care, they are also given an agreement form, which she said includes the price of the product. However, she said most patients don’t read the agreement and are “surprised to receive the bill.”

When pressed further on the contract negotiations between Breg and Simplified Benefits Administrators, she said to contact the insurance company. 

KRDO13 Investigates reached out to Simplified Benefits Administrators multiple times after receiving a privacy release form but they stopped responding to our requests.

“I think for too long these sorts of negotiations have happened behind closed doors,” said Adam Fox, the director of the Colorado Consumer Health Initiative. “What we see based on this case and many others is that those are not working to the benefit of consumers. Period.”

Peck is frustrated his insurance company isn’t working to get him and other members the best price possible for medical devices or services. One would think health insurers would make money by reducing costs to their members, but the $368 boot didn’t meet Peck’s deductible, so he is forced to pay for it out-of-pocket. 

“Insurers and providers have found ways to benefit themselves with increasing costs and not disclosing their negotiated rates,” Fox said. “As insurers grow or buy up other elements of health care, the more they can use a variety of methods to keep profits as high as possible without having to invest as much energy in controlling health care costs.”

Fox said these behind-closed-door negotiations and hidden prices create complexity for consumers in an already confusing and expensive industry. Nearly a third of Americans struggle with medical debt in 2023, according to a survey by the Commonwealth Fund.

"The hospitals, the providers, and the insurance companies don't want (these prices) to be upfront because they profit from the complexity," Fox said.

Any resolution to these surprise bills requires the consumer to do all the work by filing a complaint with the state or federal government. The Division of Insurance within the Department of Regulatory Agencies told KRDO13 Investigates these claims for surprise bills and inflated prices are common.

KRDO13 Investigates uncovered five complaints filed with the Division of Insurance against Breg since 2021. All of those customers claimed they received “surprise bills” from Breg for overpriced medical devices, including a $900 brace.

“Since I went to an in-network provider and this brace was given to me in the doctor’s office, I had no idea that a third party would be billing for the brace separately,” the complaint said. “Had I known this was the case, I would not have accepted the brace from my doctor.”

Another complaint said they were given a $153.37 splint with no disclosure of costs or options. “We could have gone to a store and purchased one for a tenth of the cost,” the complaint said.

The Colorado Division of Insurance confirmed all the consumers who filed the complaints against Breg didn’t have to pay their bills, as their insurance company reprocessed the claim or made an exception. The agency said it received 5,920 complaints and recovered $21.5 million for Coloradans in the 2023 fiscal year.

If you believe you have received a surprise bill, the Colorado Division of Insurance said to call them before filing an online complaint. Their analysts can help you work through the problem and explain the complaint process.

You can file an online complaint through this online portal. The Colorado Division of Insurance said the process will require you to submit documents, including an explanation of benefits, bills, and company policies.

The Colorado Division of Insurance said it takes about 30 to 45 days for them to review a complaint, which includes interviewing the insurer and the consumer.

Peck said he recently paid the $368 bill to avoid it going to collections. However, he said he plans on filing a complaint in the hopes of holding his insurance provider accountable for these inflated prices.

“How can they negotiate these prices that I'm not even a part of and then I'm obligated to pay," Peck said.