May 31, 2016

For patients who undergo a surgical procedure, the anesthesiologist’s bill sometimes comes as a surprise.  If the hospital and the surgeon are participating in the patient’s health plan but the anesthesiologist is not in the network and bills the difference between his or her full charge and what the health plan paid, the amount that the patient owes can be a nasty shock.  Large balance bills are often stressful for patients and are a major source of medical debt.

Balance billing is a significant issue across the U.S.  As insurance companies have narrowed provider networks to keep premiums down, the number of patients who inadvertently receive out-of-network care has jumped at hospitals, particularly with regard to contracted physicians such as anesthesiologists.

In March 2015, the Consumer Reports National Research Center conducted a survey of 2,200 adults that revealed that nearly one third of privately insured Americans received a surprise medical bill where their health plan paid less than expected during the two years prior.  “Among those respondents, nearly one out of four got a bill from a doctor they did not expect to get a bill from. Survey findings also suggest that consumers overall seem largely confused when it comes to their rights to fight surprise bills.”  (Consumers Union, Consumer Reports survey finds nearly one third of privately insured Americans hit with surprise medical bills.)

State Legislation

More than half of the state legislatures have passed laws limiting balance billing at least when the patient goes out of network in an emergency situation.  Most recently, on April 14th, Florida Governor Rick Scott (R) signed a comprehensive bill to protect patients from surprise out-of-network medical bills into law. The new law will ensure that patients in both emergency and non-emergency situations are not held liable for out-of-network rates if they do not have the ability or opportunity to be treated by a participating provider. As stated by the ASA, which together with the Florida Society of Anesthesiologists strongly opposed the legislation,

Reimbursement for services shall be the lesser of:

• The provider’s charges;
   
• The usual and customary provider charges for similar services in the community where the services were provided (which is not defined in law and will be determined only if contested which involves a financial burden on the provider); or
   
• The charge mutually agreed to by the insurer and the provider within 60 days of the submittal of the claim.

This new law is very concerning as it removes any patient responsibility whatsoever, even in nonemergent settings, and places insurers in the position of independently dictating payment for emergency and nonemergency health services. Under this law, providers are at the whim of insurers’ determination on usual and customary charges as no independent benchmarking system is provided within the language.

There are four basic approaches followed by the states that have adopted restrictions on balance billing, in various combinations.  According to a report published by in June 2015 by Jack Hoadley and colleagues at the Georgetown University Health Policy Institute’s Center for Health Insurance Reforms (Balance Billing: How Are States Protecting Consumers from Unexpected Charges?), these four approaches are:

1. Disclosure and Transparency. It is the standard in many states to require insurers to have language in notices and plan summaries about the financial consequences of going out of network. Some states go beyond that to require notices to consumers at the point of service describing the potential for seeing a non-network provider and receiving a balance bill.
2. Balance Billing Prohibitions. Several states protect consumers more directly by prohibiting non-network providers from billing patients, beyond any allowed cost sharing, in certain situations. States are more likely to address the emergency setting, but some states have also sought to address surprise billing in circumstances where the patient has sought out an in-network facility and providers to perform a procedure, but is also treated unexpectedly by non-network providers. In some states, the ban applies only if the non-network provider accepts payment for the claim directly from the insurer based on an assignment of benefits.
3. Hold Harmless Provisions. An alternative to a ban on balance billing places the risk on the health plans, requiring that they hold plan members harmless by paying providers their billed charges (or some lower amount that is acceptable to the provider) in situations such as emergency care. 
4. Adequate Payment.  There are two ways that states may seek to ensure adequate payment:
   • Establish specific rules to set payment rates, for example requiring that insurers pay non-network providers at the usual and customary rates they pay to network providers; or
   • Refer providers and insurers to an independent mediation or dispute resolution process to settle on a fair rate of payment.

The new Florida statute, described above, employs both “adequate payment” strategies.  New York’s law, which went into effect on March 31, 2015, includes disclosure and transparency provisions, as well a process for the arbitration of payment disputes.  Balance billing is barred altogether for providers in emergency situations; if, in a number of other surprise billing scenarios, the patient assigns the provider’s claim to the health plan, he or she cannot be balance billed.  (See ABC Alert Restrictions on Billing Anesthesia Patients Who Go Out of Network,  October 13, 2014.)  Colorado treats covered services by non-network providers at a network facility as if they are in network and requires health plans to hold their members harmless in both emergency and surprise billing situations when patients are treated in network facilities, as well as for referrals when the plan’s network is deemed inadequate.

The foregoing is a general overview of the methods by which state legislatures have tried to protect residents from surprise bills.  Anesthesiologists and other physicians who balance-bill out-of-network patients should familiarize themselves with any applicable laws or regulations in their own states.  Medical societies and hospitals’ general counsels should have information readily available.

Not all attempts to pass legislation restricting balance billing are immediately successful.  This spring, members of the New Hampshire Society of Anesthesiologists worked with the New Hampshire Medical Society to derail a bill that would prohibit balance billing by out-of-network providers who provide services at in-network facilities, among other things.  The bill was sent for study and will not be reconsidered unless it is reintroduced in the next legislative session.  (ASA, Physicians Halt Out-of-Network Legislation in New Hampshire, March 4, 2016.)

Federal Legislation and Regulation

The Affordable Care Act (ACA) requires health plans to provide coverage for emergency services even if the providers are out of network. Specifically, the plan must pay these out-of-network providers the greatest of (1) the plan’s median payment amount for in-network providers, (2) a payment based on the methods the plan generally uses to determine payments for other out-of-network services (e.g., a percentage of usual and customary fees), or (3) the amount that Medicare would allow for the service.  Thus the ACA only protects patients against liability for out-of-network emergency care.

Within the last year, both Congress and the Administration have shown interest in restricting balance billing and surprise bills.

A bill introduced in the U.S. House of Representatives by Rep. Lloyd Doggett and 26 co-sponsors on October 20, 2015, the Ending Surprise Billing Act of 2015, would bar out-of-network physicians from balance-billing patients who receive emergency services in an in-network hospital. In the case of non-emergencies, patients cannot be balanced billed unless they are given 24 hours’ notice that an out-of-network specialist is providing care and an estimate of the charges and then provide written consent to those charges.  The Ending Surprise Billing Act has not been referred to any committee.

President Obama’s 2017 budget for HHS (PDF) contains a provision to “eliminate surprise out-of-network healthcare charges for privately insured patients.”  There are no details, but the Administration would require physicians who “regularly provide services in hospitals” to accept in-network rates, even if they do not participate in the given network. Hospitals would also have to “take reasonable steps” to ensure patients see in-network physicians. 

On March 8, 2016, the Centers for Medicare and Medicaid Services (CMS) issued a final rule (Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017)  to begin to address surprise medical bills for non-emergency services for individuals covered by ACA qualified health plans offered through the health insurance exchanges (HIEs) . New standards would apply when an enrollee receives care for essential health benefits from certain out-of-network providers in an otherwise in-network setting.  Applicable providers would be limited to those providing ancillary services (for example, anesthesia services for surgery performed in an in-network hospital) but would not include providers who render the primary service (for example, the surgeon.) 

Plans would be required to apply out-of-network cost sharing for such care toward the plan’s annual out-of-pocket limit for in-network cost sharing, beginning in 2018.  This requirement would be waived whenever plans notify enrollees in writing in advance that such surprise medical bills might arise. Plans can notify enrollees as part of the pre-authorization process for a service, if applicable, or up to 48 hours before the service is rendered, whichever is longer. Balance billing charges arising from surprise medical bills would not be limited or counted toward the enrollee’s annual out-of-pocket maximum spending. Significantly, this standard would not affect enrollees of HMO or exclusive provider organization plans that do not cover non-emergency out-of-network services at all. Such plans comprise 73 percent of all the qualified health plans offered through the HIEs in 2016.

The Department of Health and Human Services, on April 27th, convened a meeting of providers to discuss initiatives needed to tackle balance billing.  ASA First Vice President James D. Grant, M.D., and Sherif Zaafran, M.D., Chair of the organization’s Ad Hoc Committee on Out-of-Network Payment, represented ASA at the meeting.  According to an April 29th Washington Alert on the ASA website (ASA Leaders Participate in Federal Out-of-Network Payment Roundtable),

Dr. Zaafran highlighted the need for a Patient’s Bill of Rights, that an out-of-network deductible apply to an in-network deductible, and that insurers must have an adequate number of physicians in the plans that they sell. The Bill of Rights would outline patient rights, provide a solution for what really is an insurance gap, and advise how to know what the insurance product is as well as what is and what is not covered.

At the event, attendees shared that the challenge with this topic is as much about patients being unaware of what their plans actually covered as it is about the unexpected bill they received. As it stands, providers may know their charges but are not aware of a carrier’s payment for the health services to be rendered, especially with the complex array of different insurance products offered to consumers. As such, while patients are responsible for educating themselves on their coverage, the insurers must be made to be more forthcoming with information. Moreover, insurers should do more to educate patients that when they schedule a procedure/surgery, others - such as a physician anesthesiologist, radiologist, or pathologist - may be involved and it is important to determine their network status as well.

With the complexity of plans, the narrowing of networks and increasing use of network tiers where a provider may be in one tier and not the other, the carriers were again noted as the single source for where patients could go for such information. The group also discussed that while the media has promoted out-of-network payment as an emerging issue, the data still points to this being an important matter that impacts a very small percentage of patients. Proposed solutions to the challenge included references to states that are using an independent database of billed charges to address benchmarking for out-of-network concerns.

Conclusion  

The volume of activity on both sides of the balance-billing issue has been growing, and it will continue to grow.  Provider organizations like ASA and state medical associations are engaging in the political process and attempting to influence surprise-bill legislation.  On the patient advocate side, the Consumers Union launched the End Surprise Medical Bills campaign to help put an end to these unfair bills for good.  Consumers can visit EndSurpriseMedicalBills.org to share their surprise medical bill story, sign a petition, or use an insurance complaint tool for state-specific assistance, resources and information.  Consumers Union actively lobbied for proponent of the laws banning balance billing in California, Connecticut and New York, and is currently at work in other states.

What can anesthesiologists do to protect their professional income if and when balance billing is barred or severely limited in their states?  The obvious answer is, attempt to participate in all the plans with which your facilities are in-network.  There are likely to be some in which you will not participate.  If so, determine whether there are legal restrictions in your state, and exactly what is prohibited and what the exceptions to the law’s requirements might be. 

Focus on avoiding the surprise element.  Work with your hospitals to give elective surgical patients advance notice, in writing, that they will incur charges for the anesthesia service, and, if possible, an estimate of the range of those charges.

The shifting of financial responsibility onto patients and legislative efforts to shield them from at least the “unfair” consequences are part of the changing healthcare marketplace.  The ability to collect one’s full charges by not participating in given health plans seems to be disappearing in the rear view mirror.  Many anesthesiologists are already accustomed to such restrictions through their hospital contracts and/or medical staff bylaws.  You have in large measure adapted admirably—and will do so again.

With best wishes,

Tony Mira
President and CEO