Anesthesia Business Consultants

Weekly eAlerts Covering Regulatory Changes, Compliance Reminders &
Other Changes in the Anesthesia Industry

Ipad menu

Anesthesia Industry eAlerts

Sent to subscribers every Monday morning, our eAlerts deliver timely updates on regulatory, legislative and practice management developments of interest to anesthesia professionals.

Complete the simple form below to subscribe.

The Texas Department of Insurance recently fined insurer Humana $700,000 for failing to contract with a sufficient number of anesthesiologists to ensure that patients had the ability to receive their anesthesia care from in-network providers.  Some patients had received “surprise” medical bills as a result of the insurer’s failure to comply with the state’s network adequacy laws.  We provide an overview of network adequacy and its significance for anesthesia groups.

October 15, 2018

What are network adequacy laws, and why should anesthesia providers care about them?  In simple terms, these laws, currently in place in 46 states, require managed health plans, including HMOs, PPOs and POS (point of service) plans, to establish standards for provider networks that ensure the plans deliver the benefits they promise.

This includes giving patients access to needed medical services without unreasonable delay as well as access to a sufficient number of in-network physicians. Criteria for sufficiency can include provider-to-enrollee ratios, geographic accessibility, waiting time for appointments and office hours, among other things. 

These laws are important in part because network inadequacies can result in patients receiving out-of-network care (such as anesthesia care) at an in-network facility, followed by a “surprise” medical bill—an unexpected bill from the out-of-network provider for the difference between their charge and what the health plan will pay.

As we’ve written about before (see our eAlerts here and here), surprise bills have become a major consumer issue that has sparked a flurry of state legislation to protect patients. An analysis of out-of-network claims in large employer health plans by the Kaiser Family Foundation revealed that nearly 18 percent of inpatient admissions by enrollees in large employer health plans included at least one claim from an out-of-network provider.

According to the ASA, the underlying cause of surprise medical bills is the proliferation of narrow physician networks created by insurance companies—especially in emergency care. Mechanisms implemented to reduce costs, these plans offer participants lower premiums but, as a trade-off, restrict their choice of providers, creating, the ASA argues, “surprise insurance gaps” that “leave patients and their physicians to deal with the issue while insurers wriggle out of coverage they should be providing and reap record profits year after year.” A recent study by the Robert Wood Johnson Foundation also revealed a steep decline in the percent of managed care plans that offer out-of-network coverage, from 58 percent in 2015 to 29 percent in 2018.

“While balance bills are the symptoms of the issue, the cause is gaps in insurance coverage,” said Jeffrey S. Plagenhoef, MD, past president of the ASA. “Maintaining accessible networks with adequate numbers of physicians and all services, as well as a mechanism for fair out-of-network payment, are the keys to solving this problem.”

Network adequacy laws are designed to help in this regard. For example, the Texas Department of Insurance (TDI) recently fined the state’s fourth largest insurer, Humana, $700,000 for failing to contract with a sufficient number of anesthesiologists to ensure that patients received their anesthesia care from in-network providers.

Under state network adequacy law, health plans operating in Texas are required to submit network adequacy reports yearly and to notify TDI and consumers of any gaps. The insurer’s reports to TDI listed providers who were no longer in its networks, and the reports did not disclose the gaps in a prominent or timely manner to the regulatory agency or consumers. TDI contacted Humana after learning that several of its network contracts for anesthesiology services had been canceled. The health plan agreed to immediate corrective actions and to reprocess bills so consumers would not face higher costs for their care.

Early this year, Humana had a sufficient number of anesthesia providers, but by June, contract terminations led to a decrease in contracted anesthesia groups, leaving dozens of facilities in three counties without in-network, facility-based anesthesiologists. Some participants in Humana health plans received surprise bills from out-of-network anesthesiologists as a result.

According to attorney Marlena Grundy-Dietzway, writing in Washington Health Care News, “‘Network adequacy’ is one of those soulless terms used in the healthcare industry that does not convey how critically important the stakes are for patients and providers.”  She argues that providers risk exclusion and economic harm from narrow networks, stressing that “network adequacy protections are only as good as their enforcement,” and that the laws “must be applied diligently as provider networks narrow.”

Toward this end, the ASA reports that it is working with states to ensure that appropriate network adequacy laws are in place.  We recommend checking with your professional societies and legislative representatives to learn more about the network adequacy laws in your state.

With best wishes,

Tony Mira
President and CEO