States' Surprise Billing Initiatives Pressure Health Insurers to Pay Their Own Bills !

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Reference : forbes.com | Gary Price, MD and Tim Norbeck

This post was contributed by Louis J. Goodman, PhD, CAE, Executive Vice President and Chief Executive Officer of the Texas Medical Association (TMA) and a board member of The Physicians Foundation.

Surprise billing, by any other name, is a perhaps unexpected bill from an out-of-network provider for an amount unpaid by the insurer. Frequently referred to as “balance billing,” surprise billing occurs when a patient receives medical or healthcare services by a physician or provider who is not in the patient’s insurance network. This means that the patient’s insurance company has not seen fit to include that physician in its provider network, or the physician has not signed a contract with the insurance company agreeing to their typically below market reimbursement payments.

Currently, insurers believe that narrow or “skinny” networks are necessary to reduce cost. There is scant evidence that this strategy is effective in reducing costs, and substantiated evidence that it reduces patient access to care and causes surprise bills. An unexpected bill from an out-of-network provider can be disturbing and stressful. But, as insurers continue to pursue narrowing networks in an attempt to reduce their costs and maintain their profit margins, more and more patients may receive a surprise bill.

Several states have proactively sought to address surprise billing. A recently passed New York law holds patients harmless from surprise emergency care bills. It allows patients to assign their benefits to their insurer for other surprise bills, thus removing them from the entire process unless the provider and insurer can agree on payment and initiate a mediation process.

In Texas, through several legislative sessions, significant public policy measures have been passed to prevent and address proactively unexpected bills:

• Insurers must maintain an adequate network of physicians and providers
• Patients can initiate mediation for surprise bills over $500
• Insurers must have current online network directories of physicians and other providers in the network and must be updated monthly
• Insurers must disclosure to the patient the network status of all providers of care.

The mediation provision is important – and it works. A 2016 GfK Knowledge Networks survey of 721 individuals found that 19% of surprise or out-of-network bills were subsequently negotiated with the provider of services, and one half of these individuals were successful in lowering their costs.

Emergency care is almost never planned for, and both federal and state laws require physicians to treat and stabilize a patient regardless of their ability to pay (which is an unfunded mandate on physicians). To address that, the Texas Department of Insurance implemented a rule on out-of-network emergency care that is fair for both the patient and physician. Should an insured patient seek emergency medical care that ends up being out-of-network, the patient's insurance carrier is required to pay the physician the usual and customary charge. This protects both the patient and the physician from the narrowing of networks for emergency care, which is often one of the most expensive forms of care.

Other states have taken more drastic steps by banning out-of-network bills for non-emergency services. Unfortunately, this extreme step rewards the insurance company that is likely offering an inadequate contract while punishing the physician for refusing to accept an insurers’ deeply discounted rate. In this way, a ban incentivizes the insurance companies to have narrow emergency care networks, which alleviates their accountability to pay for care.

The blanket term “transparency” is often used when describing out-of-network billing, surprise billing, balance billing and network adequacy. Transparency requires honest and up-front answers to the following questions:

• Is the physician or provider in network?
• What is the price for the services rendered?
• What will the insurers responsibility be, and what will they require the patient to pay?
• What amount will the provider be paid for the services rendered?

All of these questions must be answered to address and put an end to the issue of surprise bills.