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November 19 -- 2019 Preview, Part 1
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The practice among out-of-network healthcare providers of billing patients when the patients’ insurance carriers don’t cover the full cost of the providers’ services - known as “balance billing” - isn’t the healthcare story that has been dominating the headlines lately. But it’s become a big enough issue that 21 states had passed legislation addressing it by the start of this year. And that number is continuing to rise.
When someone with private health insurance seeks care from an in-network provider, their insurer typically covers the cost of any medically necessary procedures, apart from any premiums, copays and deductibles they’re responsible for. But those who obtain emergency care or even have a planned procedure at an in-network hospital can find themselves on the hook for thousands of dollars in charges for services rendered by out-of-network providers, including ambulance companies, lab services, ER doctors, anesthesiologists, radiologists and surgical assistants.
While in-network providers are required to charge the rates negotiated with the health plan they’ve contracted with, out-of-network providers have no such contract and, consequently, no negotiated rates. And in many states if a patient’s insurer doesn’t pay the full amount an out-of-network provider charges for their services, the provider can bill the patient for the balance, hence the name “balance billing.”
Just how widespread the practice is isn’t clear because healthcare providers haven’t been required to report whether they send patients balance bills. The Affordable Care Act mandated that health plans report data on out-of-network costs for enrollees, but that provision hadn’t been implemented as of March 2016, according to the Kaiser Family Foundation. A study published in Health Affairs in December of last year, however, found that 9 percent of hospital visits and 14 percent of emergency department visits were likely to result in balance bills. The likelihood was even higher for those admitted to a hospital via the emergency department, at 20 percent.
The rate in some individual states may be higher still. After Texas lawmakers began requiring information about emergency healthcare from insurers there in 2013, a study by the nonpartisan Center for Public Policy Priorities (CPPP) in Austin found that out-of-network payments to emergency room doctors amounted to 41 to 68 percent of the total spent on emergency care at in-network hospitals by the state’s three largest insurers, UnitedHealthcare, Humana and Blue Cross Blue Shield.
“It’s very common and there’s little consumers can do to prevent it and protect themselves - it’s a roll of the dice,” said Stacey Pogue, a senior policy analyst for the organization and one of the authors of that study, as the New York Times reported.
One major factor contributing to the incidence of balance billing is the fact that most hospitals contract out at least some of their ER and other staffing needs, often to out-of-network providers. Twenty-one to 56 percent of the hospitals participating with Texas’ three major insurers had no in-network ER doctors, according to the CPPP study. And the Kaiser Family Foundation said, “In some cases, entire departments within an in-network facility may be operated by subcontractors who don’t participate in the same network.”
Patients are often unaware that an in-network hospital’s or emergency department’s staff may be out-of-network. And those in need of urgent medical care and their families aren’t inclined to be in a position to ensure the care they’re receiving is only from in-network providers.
The size of balance bills can be substantial. A 2012 study of over 2,000 medical bill complaints in the state of New York found that the average out-of-network emergency services bill was $7,006, of which insurers paid $3,228, leaving patients with a $3,228 balance. Non-emergency care was found to be even more costly, with out-of-network assistant surgeons’ bills averaging $13,914 and insurers only covering $1,794 of that amount. Another study published last year in the New England Journal of Medicine, based on data from a large national insurer, placed the average out-of-network bill amount considerably lower, at $900, but the highest charge still exceeded $19,000.
The American College of Emergency Physicians (ACEP) says physicians are often blamed for balance billing, but the fault actually lies with the insurance companies.
“The real crux of the problem is that health insurers are refusing to pay fair market rates for the care provided,” Dr. Steven Stack, a Lexington, Kentucky-based emergency physician and then-president of the American Medical Association, said in an interview with Modern Healthcare in 2015.
According to the Wall Street Journal, ACEP sued the Obama administration last year, alleging that its final rules for implementing the Affordable Care Act allowed insurers to set out-of-network rates for ER physicians as low as they wanted and demanding that the administration require insurers to use an independent database like that provided by FAIR Health Inc. - created in 2009 as part of a settlement of an investigation into health insurance industry reimbursement practices in the state of New York - to calculate such rates.
“Health insurance companies have taken gross advantage of patients and emergency medical providers since the ACA, arbitrarily slashing payments by as much as 70 [percent],” then-ACEP President Dr. Jay Kaplan said at the time.
Prime Healthcare Services, which operates 45 hospitals in 14 states, leveled a similar charge against six insurers last year, filing lawsuits alleging they use “a flawed, secret and legally inappropriate” system to set rates for out-of-network providers, according to the Journal report.
But insurers counter that more physicians are refusing to accept in-network rates and opting to charge out-of-network fees that are much higher instead.
“This is as much about the prices that providers are charging as it is the insurance coverage,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans (AHIP), a trade association with over 1,300 member companies. “They are essentially demanding a blank check.”
AHIP also says hospitals have a responsibility to ensure that the outside providers they contract with belong to the same insurance plans that they do.
“This would go a long way to reduce and prevent consumers from receiving a big surprise balance bill,” Kristine Grow, another spokeswoman for the group, told the New York Times last year.
In a growing number of states, lawmakers have stepped in to try to resolve the issue, although federal law - the Employee Retirement Income Security Act of 1974 (ERISA) - exempts employer-sponsored plans, which cover 61 percent of privately-insured workers, according to the Kaiser Family Foundation’s 2016 Health Benefits Survey, from state regulation. An issue brief published in June by the Commonwealth Fund, a private foundation that advocates for better healthcare quality and access, indicated that as of January, 21 states had laws or regulations providing at least some direct consumer protection against balance billing. In six of those states – California, Connecticut, Florida, Illinois, Maryland and New York - the protections are comprehensive, extending to both emergency departments and in-network hospitals, applying to both HMOs and PPOs, holding consumers harmless from extra provider charges as well as prohibiting providers from balance billing patients, and providing appropriate payment standards or dispute resolution processes to settle payment conflicts that arise between insurers and providers.
The foundation’s brief noted there was considerable variation among the six states’ approaches. California, for example, requires insurers to pay either 125 percent of the Medicare rate or the average in-network rate they pay in the applicable region, whichever is greater, while Illinois hasn’t adopted a payment standard. But the brief also said discussions with insurance regulators in a few of the states “suggest that these protections have been relatively successful in limiting balance billing in the emergency and in-network hospital settings.”
According to the brief, the balance-billing protections in the other 15 states don’t always apply to both ERs and in-network hospitals, encompass both HMOs and PPOs, or include both consumer hold-harmless provisions and provider balance-billing prohibitions. In addition, as of January, none of the 15 states had payment standards and only one, Delaware, had a dispute resolution process.
The brief stressed that 29 states and the District of Columbia still had no laws or regulations explicitly protecting consumers from balance billing and also suggested the practice may be becoming more common due to the growth of narrow-network insurance plans that contract with limited numbers of physicians and hospitals to reduce costs. The foundation said a “federal solution would go farthest,” given the ERISA limitation on states. But recent events suggest Congress isn’t likely to accomplish that any time soon.
States continue to press the issue, however. As of late June, legislatures in 27 states had considered 66 bills and resolutions related to balance billing this session, 10 of which had been enacted, according to analysis by LexisNexis State Net Solutions Consultant Diana Ramsey. The enactments include Arizona SB 1441 and Texas SB 507, both providing for the resolution of disputes over billing by out-of-network providers; Louisiana HB 435, requiring healthcare facilities to inform patients when they register that they may receive care from out-of-network providers, for which they may be financially responsible; Maine HB 1073, prohibiting balance billing, limiting patients’ financial responsibility for out-of-network care, and setting the reimbursement rate for such care at the in-network rate of an enrollee’s health insurance plan; Montana SB 44, establishing hold-harmless provisions for patients transported by air ambulance services and resolution processes for disputes over billing for such services; and North Dakota SB 2231, requiring hospitals to notify patients of an air ambulance service provider’s health insurance network status prior to transport. Over 30 other balance billing-related measures were still pending.