Kayla and Mikkel Kjelshus carefully orchestrated the arrival of their first-born child, Charlie, including planning for her to be covered through Kayla's health insurance. But after Charlie needed NICU care, the couple received hospital bills totaling $270,951—all because of an esoteric health coverage regulation called "the birthday rule," Cara Anthony writes for Kaiser Health News.  

Learn the 3 major factors driving surprise billing

A $270,951 bill

When the Kjelshuses delivered their daughter on February 15, 2019, they learned that delivery complications had put Charlie in danger of brain damage. As a result, Charlie was transferred from St. Luke's Community Hospital to HCA Overland Park Regional Medical Center, where she was treated in the NICU for seven days.

At the time, the couple wasn't worried about coverage, Anthony writes. Both Kayla and Mikkel had health insurance—Kayla through Blue Cross Blue Shield of Kansas City (Blue KC) and Mikkel through CommunityCare of Oklahoma—and the couple had decided early on to have Charlie enrolled under her mother's plan, which had better rates and a lower deductible than Mikkel's.

The couple provided Kayla's policy number and assumed the insurer and hospitals would take care of things from there, but then, as Anthony put it, "the bills came," eventually totaling $270,951.

What happened?

According to Anthony, the issue stemmed from two common health coverage regulations that are "little known by the general public," called "coordination of benefits" and "the birthday rule." These are regulations were established as a model by the National Association of Insurance Commissioners and have since been adopted by a majority of states—including Kansas, where Kayla gave birth.

Under these policies, a couple with two separate insurance plans are obligated, when they have a child, to disclose to both their insurers that the child has double health insurance eligibility. Then the birthday rule kicks in: In general, a child with double coverage eligibility will be covered primarily through the insurance of the parent whose birthday comes first in the calendar year, Anthony explains, while the other parent's coverage will be considered secondary.

And that was the issue at play in Charlie's case. Her parents had given Kayla's policy number to the hospital, but the birthday rule stipulated that Charlie be covered first by Mikkel's plan—a plan with a $12,000 deductible, high coinsurance, and a provider network tailored to a different state. Kayla's plan, under this regulation, was secondary.

Untangling the knot

As a result, once Blue KC learned that Mikkel also had insurance, the insurer promptly canceled its payments for care. In turn, Mikkel's plan, CommunityCare of Oklahoma, started to pick up some of the bills from the two hospitals and various care providers. For example, the insurer covered $16,605 of HCA Overland Park's $207,455 charge for the NICU. According to the insurer, the negotiated rate on the bill was $35,721, which—after accounting for Mikkel's deductible and coinsurance—would have left the family with a more than $19,116 for the NICU stay alone.

The Kjelshuses then turned to the Kansas Department of Insurance to fight the bill, but the department could not help because Kayla is covered by a self-funded employer plan, which is subject to federal rather than state regulations. The couple spent the next year and half in discussions with their respective insurers and the hospitals. Ultimately, Blue KC paid $19,116 of the families' bill as a secondary insurer. The couple had a remaining balance of $7,504.51 from HCA Overland Park, which Blue KC said they would not have to cover. But the family continued to receive bills—and then, starting in 2020, got collections calls from the hospital.

Finally, after Kayla's employer had a human resource officer step in, the couple received a zero balance statement.

For its part, HCA Overland Park in a statement said, "We made an administrative error and an automated billing call system for payment occurred, causing the family undue frustration during an already stressful time, and we apologize. Once the issue was identified and resolved, the insurance companies processed the claim and we informed the family that there is a zero balance on the account. Again, we are sorry for the stress and inconvenience, and wish them well."

Separately, Blue KC noted that the regulations at play can be confusing, adding that the couple's future claims would be covered appropriately and that a "dedicated service consultant" would keep working with Kayla.