What Happens When a Healthcare Startup Leaves You With the Bill

The health insurance sector is what happens when companies no longer try to avoid seeming evil (think Facebook in 10 years). That's why Oscar, a venture-backed health insurance startup, has seemed to appealing—but one Valleywag reader's story is almost enough to make you miss Aetna.

Oscar, so far only available in New York, bills itself as an insurance alternative free from everything we associate with health insurance:

A new kind of health insurance company that is using technology to make insurance simple, intuitive, and human. In other words, the kind of healthcare we want for ourselves.

This sounds lovely—imagine if going to the doctor was like opening up a new iPad, and smelling the packaging. But then we received this letter from a Valleywag reader, who asked to not be named:

"Move fast and break things", that's the ideal held up and praised in tech culture but what happens when it ends up breaking people's lives?

In the emerging health and wellness markets, startups like Oscar intimately disrupt and destroy their customer's lives through incorrect datasets where an A/B testing mentality results in exorbitant fees, angry hospital administrators and patients with no recourse except to bankrupt themselves paying bills they didn't expect.

I signed up for Oscar's Silver Edge (middle ground plan) back in March, and experienced outrageous fees, patient confusion and anxiety due to poor customer service derived from bad data and stonewalling PR that Oscar was delivering to their customers and hospitals around NYC. Humane healthcare turned healthcare nightmare!

When searching through Oscar's in-network doctor search, their website incorrectly listed my doctor as covered, so after I signed up I had to immediately find a new doctor. This might be a mere inconvenience for general practitioner, but if you were seeing a specialist it would be much harder. As a user, I felt cheated and misled by Oscar's careless, fraudulent data.

So I went to my new Oscar-­approved doctor, who recommended routine blood work. The hospital called up Oscar and Oscar's operations department assured both the in-­hospital labs and administrators that this blood work would be covered by my plan so we went ahead with it.

On April 28th 2014, I received a first bill from the hospital detailing how Oscar covered none of the in­-hospital labs and I would need to pay $1640. A second round of labs before April 28th pushed the total bill to over $2000. After hours of back and forth with hospital administrators, hospital caseworkers and Oscar representatives, the bills landed on my shoulders. Both sides were convinced that they were right, and with no other recourse, I had to pay for the hospital lab bills as well as dealing with the anxiety and pain between Oscar representatives and irate administrators pushing blame.

If it was just one outlier user­ scenario, it wouldn't be so bad. But it's not just me, the hospital administrator I spoke to said "Oscar is ruining Obamacare..." by withholding and distorting information about what is covered in detail, and about Oscar's parent health network misleading patients and hospitals alike: "...this is not Magnacare's first time out of the gate." The admin explained that she's been personally investigating Oscar as others within the hospital's network have been equally deceived and overcharged.

After ranting on Twitter about Oscar's reckless behavior, I received a call from a higher up Oscar representative. He confirmed that the in­-hospital lab work miscommunication is a "hot item issue" for them that many of their customers are facing. He explained how difficult it is to merge all these datasets from Magnacare's network, and that it was a design decision to limit the information presented to hospital's on what is covered in detail (like in­house labs). When your health is on the line because of some 'design decision', you really start questioning the legitimacy of Oscar.

On April 29th, that high up Oscar rep sent an email to me including: "Long story short, you will not be responsible for the hospital lab charges, wahoo!"

On May 22nd, I got a call from the Oscar rep that backpedaled on our previous conversation. He tried to inundate me with pseudo­logic and pointless excuses on reducing my original first lab bill from $1640 to $1033. However, Oscar would not be covering it as if I went to an in­network lab (!) After a long discussion that was basically him stonewalling and not apologizing for misleading me and providing bad information, he said he's been "thinking about the issue often" and agreed that Oscar's policy was entirely illogical. I asked him to apply the co­pay as if I went to an in­network lab instead, and he said he will get back to me on that soon.

My concern is that those who have signed up for Oscar may not have the same persistence or social media expertise to lambast them on Twitter. It's unethical to do A/B test with people's lives, and treat users health like objects in a database. Bad data is dangerous especially in the highly regulated industries and Oscar is moving too quickly.

I'm plagued by being an early adopter. When I present my Oscar card, people are awed by its clean design and slick, well crafted persona. I want to love Oscar. They say in their subway ads that they, like me, hate traditional health insurance. They want to disrupt the industry. When you become a new subscriber, they send you an equally slick box designed like a new Apple product. They make you feel special, part of a trusted family. On the phone they reiterate this language. Make me feel special and wanted. Smart. I want to love them.

The general startup model is to gain user traction for investors and worry less about quality of experience. The problem when this is applied to startups like Oscar results in a dangerous game of user roulette where they assume that user experience can always be 'fixed'. However, this results in eroding public and institutional trust in an already tenuous industry wary of startup solutionists. It's hard to repair trust once it is broken. Move fast and break things doesn't work with people's actual lives and Oscar is quickly burning through its customer base.

The reader sent in a subsequent bill that has been adjusted down, but was still very pricy:

What Happens When a Healthcare Startup Leaves You With the Bill

Another (former) Oscar customer pointed me to the company's Yelp page, filled with scuzzy one-star reviews.

An Oscar rep couldn't comment on the specifics of this case due to the source's request for anonymity and medical privacy laws, but said it was aware of problems with some hospital testing. The spokesperson explained Oscar hadn't properly warned customers that in-hospital tests (which are hugely expensive) were not covered, but once it realized other users were making this mistake, it alerted them through several channels.

Which is good. But acknowledging a mistake and doing better the next time is little consolation if you're facing an unexpected thousand dollar medical bill.