Medicare patient wrongly sent to collections in dispute between two UnitedHealth Group entities

Stu Erck said he checked ahead of time with his health insurer and surgery center to make sure he was in-network for a knee replacement operation two years ago.

The 70-year-old Monticello man heard the same response from the St. Cloud Surgical Center and his UnitedHealthcare Medicare Advantage plan: The facility was part of the network, so Erck would owe a copay of $275.

The procedure was a success.

But more than six months later, the surgery center said it actually was out-of-network and that Erck owed an additional $3,300. But UnitedHealthcare continued to say the surgery center was in-network.

As Erck disputed the charge last summer, the facility sent his case to a debt agency. The agency went on to collect about $1,800 from him.

On Wednesday, Erck heard he was finally getting a refund — a little more than a week after the Minnesota Star Tribune started asking questions of the companies.

St. Cloud Surgical Center and UnitedHealthcare, it turns out, are both owned by Minnetonka-based UnitedHealth Group.

"We apologize to Mr. Erck for the issues with his bill," the company said in a statement. "We have been in touch with St. Cloud Surgical Center, and Mr. Erck will be reimbursed."

A UnitedHealth Group spokesman would not discuss details about what led to the protracted dispute, except to acknowledge it took too long to get resolved. Erck's story is "a rare exception and not representative of the experience we deliver to our members," the company said.

Medicare Advantage plans like Erck's are an increasingly popular alternative to the original Medicare program. It's a way for seniors to receive their government benefits through a private managed care company.

For UnitedHealthcare, it's been an important and growing business for many years that recently has been embroiled in controversy, including a contract dispute with Bloomington-based HealthPartners.

The federal Centers for Medicare and Medicaid Services (CMS) has consumer protection rules governing these insurers that should have prevented Erck from being billed and then having to wait so long for reimbursement, said David Lipschutz, co-director for law and policy at the Center for Medicare Advocacy.

The case raises questions about whether CMS should provide more support and protections for seniors when they're billed incorrectly, said Gretchen Jacobson, a vice president who studies Medicare issues at the New York-based Commonwealth Fund.

"We don't have data on the prevalence of the problem, but with a growing share of Medicare beneficiaries enrolling in Medicare Advantage plans, these types of situations may become more common," Jacobson said.

"Many people on Medicare live on fixed incomes and have multiple conditions that would ... make it especially difficult to fight these situations."

In explaining why he pushed for so long to win full coverage of his medical bills, Erck said there were times he considered giving up and moving on with his life, recognizing that UnitedHealthcare had covered the vast majority of knee replacement charges that exceeded $50,000 overall.

But the handling of the surgery center bill just felt wrong.

"I'm fortunate. I can afford this," he said. "But there are a lot of senior citizens out there who — a $3,000 bill is going to crush them."

'It's crazy'

Erck is a retired salesman who was enjoying an active retirement two years ago when doctors said it was time for a knee replacement. He had lived most of his life in Minnesota, but at that point was spending summers here while making Arizona his primary home.

When he selected a Medicare Advantage plan at the time, Erck said, he was careful to make sure his United Healthcare Medicare Advantage policy included coverage for health care providers in Minnesota.

He said that before the knee replacement, he talked with the health insurer about whether to have the procedure done at St. Cloud Surgical Center or a nearby hospital. The copay at the hospital would have been slightly more than $300.

Doctors performed the operation in August 2022. A few weeks later, Erck received a notice that he owed an additional $3,305.80 because the surgery center had discovered it was out-of-network for his health plan. He said he called and was told to disregard the bill — there'd been a mistake.

Then in April 2023, he started getting messages from the surgery center: He had a balance to pay, the center said. It was confusing and frustrating, Erck said, because UnitedHealthcare at the time kept telling him the facility had been in-network and he didn't owe any more money.

At one point, Erck said, he was mystified by a message from a surgery center official. In the message, the official relayed her understanding of the problem from an official at Optum, which is UnitedHealth Group's division for health services that includes surgery centers.

UnitedHealthcare might tell patients the surgery center is in-network, Erck said he was told, but the facility actually was out-of-network for OptumCare — an entity that Erck had never heard of. He said the surgery center official described OptumCare as "the payer for your plan."

"You wouldn't believe how many times I went back and forth with these people," Erck said. "It's crazy."

UnitedHealth Group would not comment on whether or how OptumCare was part of the confusion. The company said it runs Optum as a distinct entity from UnitedHealthcare, the nation's largest health insurer.

'They weren't going to give me my money back'

Last summer, St. Cloud Surgical Center sent Erck's case to a collection agency. After noticing a hit to his credit score, he agreed to make payments. The agency and surgery center assured Erck that he'd be refunded if the billing dispute was resolved in his favor.

Erck also filed a grievance with UnitedHealthcare. Last March, the insurer said in a ruling on the appeal that it had identified a clerical error. The claim was being reprocessed at the in-network level, the insurer said, and St. Cloud Surgical Center had been paid. A letter listed Erck's additional costs as $0.

But when he called the collection agency, Erck said, officials told him they hadn't been cleared by the surgery center to issue a refund. Erck called the surgery center and heard that while it had received a payment from UnitedHealthcare, the facility didn't receive information on how to process it.

"I said, 'OK, well, you got paid. Who cares?'" Erck said. "She said, 'Let me look into this.'"

Erck said he learned in subsequent calls that the surgery center was reluctant to have a refund issued because OptumCare wanted money back from the facility.

"They weren't going to give me my money back — no way, no how," he said. "I'll put my hand on a stack of Bibles in any court of law."

The Minnesota Star Tribune contacted UnitedHealth Group about the situation on Aug. 20 and was told two days later that Erck would be reimbursed. The company said Erck had been billed the incorrect amount because of its confusion about his co-insurance at a surgery center in Minnesota, since his coverage came via one of the company's health plans in Arizona.

"That made it look like [St. Cloud Surgical Center] was out of network," the company said Thursday. "[Erck] did the right thing by appealing, at which point we discovered the error, and had it fixed."

The company also said, "Mr. Erck's report to the credit bureau was completely deleted [in April], removing any items turned over to collections. There is nothing on his permanent record."

Erck said he appreciates that. The chief executive at St. Cloud Surgical Center called him Wednesday to apologize.

"I'm really glad I stuck it out," Erck said. "Not for me, but, really — frankly — for society. Senior citizens can't afford this."