Restrictions on Billing Anesthesia Patients Who Go Out of Network

Anesthesiologists are wondering how to respond to questions about an article that appeared in the New York Times on September 20, 2014, reporting on a $117,000 bill received by a spinal fusion patient from a neurosurgeon who had assisted in his procedure.

We cannot come up with a better justification for such a charge than can anyone else.  That includes the presidents of the American Association of Neurological Surgeons and of the Congress of Neurological Surgeons, who co-signed a letter to the editor of the Times declaring themselves “outraged” and the “practice of ‘surprise’ medical bills … indefensible.”  The orthopedic surgeon in the case was paid $6,200, or less than five percent of his $133,000 bill.  The anesthesiologist charged $4,300 and was presumably paid a smaller amount.  The difference is that the neurosurgeon did not participate in the patient’s health plan.  And the health plan eventually sent him a check for the full amount.

Accounts like this one, and comparable patient billing horror stories in the Times article and other media, are driving state legislatures to seek to protect patients.  New York State, where unexpected out-of-network (OON) charges have become the top complaint to the Financial Services Department, which regulates insurance, included the Emergency Medical Services and Surprise Bills law  (the "Surprise Bill Law”) in the 2014-2015 state budget.  The law, which the Medical Society of the State of New York supported, will go into effect on April 1, 2015.  Its major features are as follows:

1. Limits on charges for emergency services.  Patients who receive emergency services will not have to pay more than their usual in-network deductibles, co-insurance and copayments, regardless of the network participation status of the providers.
2. Limits on charges where no network provider is available.  Patients who receive OON non-emergency services—including anesthesia services—because there were no adequate in-network physicians available, or because they received a referral to an OON provider without the required disclosures, will not have to pay more than their usual in-network deductible and copayment.  The disputed bill must be negotiated directly between the physician and the health plan.
3. Independent dispute resolution (IDR) process after an insurer has made an initial “reasonable payment” for such care.  A surprise bill is a bill received by (i) an insured for services rendered by an OON physician where a network physician is unavailable or the patient had no knowledge that the physician was out of network, or did not consent to the referral of the OON physician; or (ii) an uninsured patient who did not receive the required disclosures.
• If efforts to settle the payment dispute informally are unsuccessful, either the physician or insurer can bring the claim to the IDR process.  To encourage reasonableness on both sides, the IDR entity will have to choose between the plan’s payment and the non?participating physician’s fee (“baseball arbitration”).  Where the IDR reviewer believes that a settlement is reasonably likely or both the physician fee and insurer payment represent unreasonable extremes, the reviewer can give the parties ten business days to negotiate a fee without consequence if one or neither party wishes to participate in a re?negotiation.  Claims for certain emergency services under $600 will be exempted from the IDR altogether. 
• The IDR entity will be comprised of licensed physicians in the same or similar specialties as the applicable provider.
• The IDR entity will consider, among other things, whether there is a “gross disparity” between the fee charged by the physician as compared to other fees paid to similarly qualified non-par physicians in the same region, the level of training, education and experience of the physician, and the circumstances and complexity of the case, including the time and place of the services.  Decisions by the IDR entity must be made within 30 days of the dispute’s submission.
4. Network adequacy standards.  Until the Surprise Bills law takes effect, only HMOs are required to have adequate networks in place.  The new law extends the requirement to all health insurers that are based on comprehensive provider networks (including preferred provider organizations (PPOs) and exclusive provider organization plans (EPOs)).  If a plan’s network does not have a geographically accessible provider with appropriate training and expertise to treat a patient’s condition, the patient can seek services from an OON provider without incurring OON expenses.
   • Patients will have the right to appeal to an external agency to go OON if the insurer network is insufficient to meet their health care needs.
5. Provider Disclosures.  Providers face new disclosure requirements, including:
   • Prior to providing non-emergency services, providers must disclose to patients their right to know what will be billed for the procedure and, if the patient requests, they must disclose the anticipated cost, warning patients that costs could go up if unanticipated complications occur.
   • Providers must provide patients with their network and hospital affiliations in writing or online
   • When patients make appointments, providers must indicate whether they participate in a patient's network.
   • If other professionals will be involved in a patient's care, the patient must be advised of who it might include and how to learn how much the network will cover for those doctors.
6. Additional Disclosures by Hospitals.  In addition to the provider disclosures listed in Paragraph 5 above, hospitals must do the following:
   • Publicly post a schedule of charges for various services on their website;
   • List the health plans in which they participate;
   • Warn patients that physician services may not be covered by hospital bills and tell them how to check with physicians regarding their network affiliations;
   • Post the names of practice groups for such services as radiology, anesthesiology, and pathology with which the hospital has a contract, along with information on how consumers can determine the network affiliations of those groups; and
   • Post information, including network affiliations, of doctors who are hospital employees (and give this information directly to patients when they register or are admitted for care).
7. Plan Disclosures. Insurers are currently required to give patients a participating provider directory that is updated annually.  Beginning next April, they will also have to have information in writing and on the internet that allows patients to estimate anticipated out of pocket costs for OON services in a particular geographic area based on the difference between what the insurer will be reimbursed for the OON services and the usual and customary costs for the OON services.  When authorization is sought for particular services, insurance companies must tell their members whether those providers are in-network, how much they will reimburse, and how that compares to the usual, customary, and reasonable ("UCR") fee.
   • “Usual and customary” (UCR).  The Surprise Bill law defines UCR as the 80th percentile “of all charges for the particular health care service performed by a provider in the same or similar specialty and provided in the same geographical area as reported in a benchmarking database maintained by a nonprofit organization specified by the superintendent.”  Such a database would include the one maintained by FAIR Health, a national independent, not-for-profit corporation whose mission is to bring transparency to healthcare costs and health insurance information and which “uses its database of billions of billed medical and dental services to power a free website that enables consumers to estimate and plan their medical and dental expenditure.”
   • Health plans that allow members to go OON must offer at least one product that pays for covered services at 80 percent of UCR. 

The New York Surprise Bill law goes considerably farther than most, if not all, current statutory schemes adopted to protect patients from OON bills over which they have little control.  The Affordable Care Act (ACA) requires health plans participating in the exchanges to cover emergency services as though they were provided in network, even when patients cannot get to an in-network facility for such care.  It also requires health plans to offer an adequate provider network.  When patients do receive non-emergency care out-of-network, the ACA does not limit the cost-sharing that plans can apply.  Nor does the ACA limit balance billing by non-network providers.

Thirteen states have enacted laws preventing providers from balance-billing certain managed care patients who are OON.  Most commonly, the restrictions only apply to HMOs and not to PPOs or EPOs Another 27 states prohibit in-network providers from billing patients for more than their cost-sharing amount.  Within those general observations is a considerable degree of variation.  Under Colorado law, for example, there is no explicit rule against an OON provider balance billing an enrollee, but since the enrollee must be held harmless, the managed care organization is in effect responsible for resolving the bill before the provider pursues action against the enrollee—thus precluding a balance bill.  In Florida, out-of-network providers may not balance bill an HMO enrollee when an HMO is liable for the services rendered (any service covered and authorized by the HMO) or when the provider knows in good faith that the HMO is liable.  In Delaware, OON providers are prohibited from balance billing HMO enrollees for (1) certain emergency care services; (2) medically necessary covered services "not available through network providers," and (3) medically necessary covered services not available "within a reasonable time period."  Some states such as Maryland, prohibit out-of-network balance-billing only for select services. In Texas, providers must disclose their network status.

What should anesthesiologists do to protect their legitimate interests?  Obviously, it is important to familiarize yourselves with the applicable law in your own state.

What about New York and the new statute?  Remember that the Surprise Bill law does not stop all physicians from balance-billing OON patients—but it may prevent them from collecting their full charges.

A large component of the law is the disclosure requirements.  If you practice in New York, you should plan to make sure that you are providing patients with the requisite disclosures, to the extent that you have any contact with them before seeing them in the holding area.  It is a good idea to post network affiliations on your website.  This is particularly true since hospitals will have to post warnings on their websites that (i) charges for physicians who provide services in the hospital are not part of the hospital’s charges, and (ii) physicians who provide services in the hospital may not be in the same networks as the hospital, along with information on the names of contracted specialty practice group providers and how they can be contacted to determine their plan affiliations.  You will want to verify the accuracy of the hospital’s information about your group, because OON patients who have not been given the proper disclosures will not have to pay more than their usual in-network deductible and copayment.

Meanwhile, it will be up to the anesthesia group and the health plan—not the patient—to agree on a reasonable payment amount for OON services, through “baseball”-style arbitration that tends to drive the parties away from the extremes because the IDR entity will ultimately choose between the plan’s payment and the non?participating physician’s fee.  Both the non-participating anesthesiologist whose status was not properly disclosed and the one who provides care to a patient where there are no adequate in-network physicians available may see their ability to collect their full fee limited through the IDR process.

It is too early to speculate on whether the prospect of pursuing full charges through IDR will be any less attractive than turning patients over to collection agencies and whether anesthesia groups will be more inclined, therefore, to participate in a greater number of health plans.  It is also too soon to tell whether the Surprise Bill law will cause hospitals to pressure their anesthesiologists to join all the hospitals’ networks.  The law’s network adequacy standards, however, may lead health plans to pressure hospitals to secure their medical staff’s—and anesthesia groups’—participation.

We will all have a clearer understanding of the Surprise Bill law’s consequences—intended and unintended—once it is in effect.