On April 15, 2015, Ed Hagan spent a sleepless night trying to cope with a sharp pain in his back.

When morning came, Hagan, then a teacher at a Dallas middle school, was too sick to work. He headed to the emergency room at Texas Health Presbyterian Hospital, which he knew was in-network for his health insurance company, Aetna.

Medical tests revealed Hagan had kidney stones. But the news quickly got worse: Doctors suspected Hagan had a rare form of leukemia, and told him he needed to be hospitalized immediately to get tested.

It was the beginning of more than a year of intensive cancer treatment for Hagan, now 66 and in remission. But the very first day of that ordeal left a lasting — and costly — impression: thousands of dollars in surprise medical bills.

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Despite choosing an in-network hospital, the emergency room doctor who treated Hagan wasn't in-network. Neither was the anesthesiologist who worked on Hagan’s bone marrow sampling. Combined, their bills totaled $2,000.

“Most people don’t know to fight this stuff, or how to write a letter, or how to kick it back at them, saying, ‘You guys got a scam going,’” Hagan said.

State lawmakers have long sought a solution to surprise medical bills — also known as balance bills — as doctors, insurance companies and patients argue over who is responsible for the phenomenon.

Health insurance companies and doctors often fail to go into business together because they can't agree to what a fair payment for service is. Insurers say doctors want to charge unnecessarily high prices. Doctors, meanwhile, say insurers strong-arm them into taking less than their services are worth.  

“They’re trying to pay us so minimal to where I can’t keep my office open,” said Ray Callas, a Beaumont anesthesiologist and member of the Texas Medical Association, which lobbies for physicians. “I can’t maintain even employment of other physicians or nurses to maintain access for patients.” 

The takeaway is that patients sometimes end up paying the difference. 

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If doctors and insurers agree on anything, it's that patients should read the fine print when they go to a hospital so they know what services they will be billed for and what they won't. But patients who have been stuck with balance bills say the practice is far from transparent.

As lawmakers prepare to take up the issue again in 2017, some are setting their sights on one of the doctors' key arguments: that health insurers don't have robust enough networks of doctors to prevent patients from getting stuck with out-of-network costs. The state requires health insurers to contract with a minimum number of physicians in a geographic area.

Health insurers call this "network adequacy" claim a red herring. Jamie Dudensing, chief executive of the Texas Association of Health Plans, said the state's requirements for physician access are "among some of the most stringent in the nation" and that surprise medical bills are "rarely tied to issues with network adequacy."

But lawmakers with key posts on the legislative committees that shape health care laws have raised concerns about how well the Texas Department of Insurance polices state rules on network adequacy. 

At a May public hearing, Charles Schwertner, a physician and Republican state senator from Georgetown, said in 2014, only 25 of 140 health plans turned in required network adequacy reports in to the insurance department on time.

“How are y’all dedicating your staff to making sure the plans fulfill their requirements regarding the laws in Texas about network adequacy?” he asked department officials. “I’ve been told y’all are deficient." 

Doug Danzeiser, a director at the department, said he thought the agency had done a good job enforcing Texas’ rules. He explained the late submissions by saying the rules were still new as of 2014.

At a subsequent hearing, state Rep. Greg Bonnen, a physician and Republican from Friendswood, questioned whether state officials were appropriately going after health plans with narrow networks. 

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Debra Diaz-Lara, an insurance department official, said “a lot of work goes into” reviewing insurers’ network adequacy claims and that the agency’s enforcement efforts could be ramped up “with resources.”

Stacey Pogue, a senior policy analyst at the liberal Center for Public Policy Priorities, agreed that the insurance department could do a better job enforcing adequate networks if the agency had more staff devoted to the issue.

But Pogue said going after health insurers alone was insufficient to protect patients from surprise medical bills. She said lawmakers should pass blanket protections for consumers that require doctors, insurers and hospitals to provide up-front information about whether they'll be covered, and at what cost.

The health insurance lobby says it shares that priority for the 2017 legislative session.

“The keys to curbing balance billing are to remove the consumer from the dispute, expand consumer access to mediation to challenge surprise bills, and to enhance transparency,” Dudensing said in a statement.

Disclosure: The Texas Medical Association, the Texas Association of Health Plans and the Center for Public Policy Priorities have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

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