New York this week extended patient protection laws to restrict out-of-network providers from “balance-billing” consumers for emergency care or when patients can’t choose their doctors. Balance-billing occurs when health workers who don’t accept a patient’s insurance try to collect the difference between their charge and the insurer’s reimbursement.
New York is one of 13 states that have restrictions on out-of-network balance-billing, according to the Kaiser Family Foundation. Patients most often receive these surprise bills in emergency cases, when they can’t choose the doctors who treat them. In California, a 2007 survey conducted before the state implemented patient protection laws found 1.8 million insured residents who visited emergency rooms over two years faced extra charges, according to the California Health Plan Association.
“It’s a pretty good bet that if you’re hospitalized or having any kind of surgery, somebody along the way who touches you or your slides or films will not be in network,” said Karen Pollitz, a senior fellow at the Menlo Park, Calif.-based Kaiser foundation.
New Yorkers previously were protected only from out-of-network ambulance bills and, for individuals in health maintenance organizations, in the ER. Under the new law, beginning next year all medical providers will have to notify patients before treatment if they don’t take their insurance. If not, patients will be required to pay only a regular co-pay as if the provider was in network.
Balance-billing happened to Abby Ives, a therapist and clinical social worker from Ossining, N.Y., when she fell in her front yard on June 24, 2012, and shattered a bone in her right leg.
As a health-care provider, Ives, 61, knew the importance of insurance.
“As I was laying in the front yard, I told my husband, ‘Honey, get the insurance card, we’re going to need it,’ “ she recounted in a telephone interview.
The ambulance took her to Phelps Memorial Hospital Center in Sleepy Hollow, which was covered by her insurance through Empire Blue Cross Blue Shield. Ives underwent surgery, then X-rays revealed her left leg was also broken, so she had a second surgery. During her monthlong stay in the hospital, she said, she wasn’t told that many of the providers treating her weren’t included in her insurance plan.
Ives was shocked when, after she was discharged, Empire notified her that both surgeons, the hospitalists who coordinated her care within the hospital and the cardiologists who read her electrocardiograms weren’t part of her coverage plan. One surgeon sent her a bill for $13,000, the hospitalists charged $1,500, and two electrocardiograms were an additional $100 each.
“My reaction is not printable,” she said. “I’m a provider, I see patients and bill insurance companies, I’m supposed to know how this works, but how did they do that to me?”
To pay the bills, Ives said, she would have to reach into her and her husband’s retirement funds. She appealed to the surgeon’s billing staff repeatedly, she said, before the surgeon agreed to accept the insurance company’s out-of-network reimbursement of $20,000 and stop pursuing Ives for the balance of $13,000.
As for the hospitalists and cardiologists, “I just paid them,” Ives said. “I wanted to be done, for them to go away.”
WellPoint’s Empire Blue Cross Blue Shield, Ives’ insurance, supports provisions in the new law that “will help protect consumers from outrageous, unexpected medical bills,” Sally Kweskin, a spokeswoman, said in an e-mail.
Phelps Memorial spokeswoman Tina Dorfman said in an e-mail that the hospital “has almost 500 physicians on staff, and only a fraction are employed by the hospital. The remaining physicians take various other combinations of insurance plans. Administratively it’s impossible for a hospital to have current information at all times about which insurance plans every physician is accepting.”
The need to protect consumers like Ives is growing as the Patient Protection and Affordable Care Act extends insurance to millions of Americans, said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York.
“It’s important to protect the consumer now, because there’s a little more chaos in the system and a lot more people,” Benjamin said in a phone interview. She said balance-billing is the most-common payment problem seen at her nonprofit advocacy organization, which handled 65,000 health-care cases last year.
New York’s new law creates an independent arbitration process between providers and insurers, taking patients out of the equation.
Some states, including Maryland, prohibit out-of-network balance-billing for select services. While Colorado doesn’t explicitly ban the practice, the state instructs insurers to “hold harmless” the patient and take responsibility for surprise bills. In Texas, providers must disclose their network status.
While the Affordable Care Act didn’t address surprise bills, the government has imposed network adequacy requirements that prevent health plans from having too few providers, which may reduce the number of cases where patients find themselves inadvertently out-of-network.
Ives counts herself as lucky because the surgeon backed down but, she said, “the process wasn’t easy and I had to appeal all the way around. It’s completely overwhelming.”
Other patients may not be as fortunate, especially in emergency situations. In some states, ambulance services are out-of-network, notes Cheryl Fish-Parcham, private insurance program director at Families USA, a nonprofit consumer advocacy organization.
“When you call the ambulance, you’re thinking about getting to the hospital fast,” said Fish-Parcham in a telephone interview. Network status “is the furthest question from your mind.”
New York will now require doctors and hospitals to disclose their network status before treatment in non-emergency procedures. Insurers will have to update online provider directories within 15 days of a change.
Andrew Kleinman, president-elect of the Medical Society of the State of New York, says he supports more transparency, but the onus to provide information should be on the insurers.
“A lot of doctors don’t know whether they’re in-network or not,” Kleinman said. The Society surveyed doctors in December and found that almost 40 percent didn’t know how many plans they were participating in on the New York public exchange, he said.
The American Hospital Association also pointed to the insurers. “Since hospitals deal with more than 1,300 insurers, all with their own policies, insurers are in the best position to provide the information on what a patients’ out of pocket cost will be,” spokeswoman Marie Watteau said in an e-mail.
Insurers, however, are eager to hand responsibility to doctors. Providers should know which contracts they’ve signed, said Leslie Moran, vice president of the New York Health Plan Association, in a telephone interview.
“Probably the best thing is for patients to call their doctor and ask if they’re participating,” she said.
Even when all parties agree that consumers should be well informed, disclosure alone may not be enough protection in emergency cases, says Georgetown University professor Kevin Lucia.
“When someone’s having a heart attack or a baby, you can tell them someone’s not covered, but can they do anything about it?” Lucia said in a telephone interview. “It still puts the consumer in the awful situation of thinking about insurance when they are supposed to be focused on delivering their baby.”
This means that providers and payers need to agree on a reimbursement rate in these emergency cases, which isn’t an easy task.
Insurers maintain networks of doctors who are paid at negotiated rates. In-network doctors benefit from promised patient volumes, while insurers typically can get a discounted rate through negotiation. Insurers say that raising out-of- network reimbursement rates would discourage doctors from joining health plans. Providers, meanwhile, don’t want to settle for lower rates.
Data from nonprofit health-care transparency organization FAIR Health shows a wide discrepancy in reimbursement rates. For example, the median charge for anesthesia services in Manhattan is $696.67, according to FAIR Health. The charge is more than twice the common Medicare-based formula rate used for out-of- network reimbursements, which is $285.40.
“It’s an extremely complex problem,” Dianne Longley, a principal at insurance consulting firm Health Management Associates, said by telephone.
Longley previously worked in the Texas Department of Insurance and oversaw the advisory committee that helped come up with Texas’s patient protection legislation. “Politically it’s a very precarious position when the state starts mandating medical payment rates” typically are set in private contracts, she said.
Still, Longley encourages lawmakers to persevere. “Everyone agrees it’s a problem for the consumer but unfortunately, without regulation and legislation, the consumer is the one left holding the bag.”
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