Last week, we told you about a $4,999 surprise bill. I didn’t have a $4,999 surprise, but it was close. At 30 years old, I had a tonsillectomy. I was enrolled in an HMO product, and my hospital, ENT specialist, and surgeon were all in-network. Everything went smoothly until 3 months later when I received a $3,000 bill for the anesthesiologist. Unbeknownst to me, an out-of-network (OON) anesthesiologist administered the anesthesia for my 30-minute procedure. I called the insurance company and learned that in HMO products in the state in which I resided at the time, the insurance company is required to hold me harmless from any OON bills. Fortunately for me, the insurer paid the bill and that was the end.
But we know it doesn’t end this way for many consumers. The issue of surprise billing has caused significant stress for patients, and policymakers are taking notice with federal and state legislation. Whether you are an employer that is self-funded or fully-insured, it’s important to take note of how legislation can help protect your employees.
At the beginning of 2019, seven states had existing laws on the books to address balance billing. At least 22 states introduced legislation to address surprise billing, and as of June 2019, four new states passed laws to implement consumer protections against balance billing, and one state strengthened its existing protections. This Spring, Congress has sprung into action as well with at least four pending proposals. While states have led the way, they are limited in that the consumer protections do not extend to employees of self-insured plans due to the federal Employee Retirement Income and Security Act (ERISA). Only federal action can protect consumers in such plans.
There are three common elements in state and federal proposals 1) consumer protections, such as the type of services that are covered; 2) a dispute resolution mechanism, such as setting a standard rate or using baseball arbitration; and 3) disclosure or transparency into a provider’s OON status. As is the case with all legislation, the devil is in the details.
Let’s take a deeper look at each of these elements.
Consumer protections based on services received
Legislation addressing emergency room services is critical. Yet consumers should also be protected from situations where they do not have any control or choice in the OON service, such as services provided by what is commonly referred to as “hospital-based providers.” Such providers generally include emergency room physicians, radiologists, pathologists, and anesthesiologists. Consumers rarely – if ever – have a choice of these providers. In fact, some specialist provider groups have exclusive contracts with hospitals and elect not to contract with insurers even though the hospital is in network.
Dispute resolution mechanisms
Using arbitration might be a solution, but as the authors of a recent Health Affairs article noted, if the resolution is tied to an OON provider’s billed charges, then such providers have an incentive to increase their billed charges – the starting point for negotiation is higher. Additionally, setting a standard rate too high could create an incentive for OON providers to stay out of OON.
Disclosure of out-of-network status
Finally, requiring health plans to disclose OON benefits and provider status makes sense. Requiring hospitals to disclose to a consumer in advance that he/she might be seen by an OON provider also makes sense. At least the consumer is aware of the potential OON expenses. But remember the exclusive contracts held by some hospital-based providers? What if there isn’t an in-network option at the in-network facility or any in-network facility? The consumer may no longer be at risk of a “surprise” bill but still may end up in the middle of a contract dispute, trying to find an in-network facility with hospital-based providers that are also in-network.
State and federal proposals may take different approaches but are put forward with the good intention of removing consumers from disputes between insurers and providers. Employers should take note of the proposals that do the most to achieve this goal for their employees.
CPR’s Program Director, Andréa Caballero, wrote this blog.