Which State has Mitigated Provider and Patient Concerns on Surprise Balance Billing?

Authors:  Jason Davis & John Friedel

Balance billing or surprise billing has become an increasingly important topic in the eyes of consumers of medical services over the past several years. Many reports have publicized that patients covered by private health insurance continue to receive surprise and often unexpectedly high medical bills. In these instances, the patients may find themselves, unknowingly or unwillingly, in an out-of-network situation. Read on to discover which state is proactively working to mitigate both provider and patient concerns.

Breaking Down Out-of-network vs. In-network

Out-of-network

Out-of-network generally refers to patient care provided in a medical facility and/or by a medical professional (provider) who is not contractually bound to the patient’s (member’s) insurance plan. Being in-network is highly desirable for both healthcare facilities and medical professionals. Many hospitals and surgical centers sign agreements with medical professionals that require medical procedures are performed in-network for all insurance products with whom the hospital has agreements in place. 

This delicate dance between medical services and insurance carriers has traditionally served as a successful means to negotiate fair market payments for services performed and also prevent the patients from receiving additional bills outside of contractual co-insurance, co-payments or deductibles. While a contract with all insurance carriers may be desirable, individual facilities may be excluded from providing in-network care to patients due to the establishment of narrow networks between hospital organizations and insurance carriers. These networks can provide market share advantages for both the facilities as well as the insurance carriers. Likewise, but in a much narrower scope, the negotiation between the insurance carrier and the provider may not be agreeable, thereby preventing an agreement or resulting in the termination of an existing agreement.

In-network

In-network hospitals, surgical facilities and medical providers are typically published in the plans and offerings provided to members by the insurance carriers. Many patient procedures performed with anesthesia are scheduled in advance and are considered elective. In these scenarios, patients are informed or have time to review their plans to ensure that the facility, providers and the procedure(s) being performed, are covered under the terms of their respective insurance policy. However, patients may not always familiarize themselves with the plan information provided and, therefore, may not be aware that their provider or facility is in-network or out-of-network. With specialties such as anesthesia and radiology, their in-network status may not be as visible to the patient. Emergency procedures, on the other hand, are generally urgent and unscheduled.  This combination of unknowingly or unwillingly out-of-network is why the topic of balance billing has risen to the level of both federal and state legislative consideration.

Activity on the Legislation Front

Insurance Carrier Level

Insurance carriers are heavily lobbying for this legislation, while providers are concerned that such a bill will weaken or eliminate their ability to negotiate fair market pricing for services rendered to patients with insurance coverage. A recent article by the American Society of Anesthesiologists appears to substantiate this concern.

 Federal Level

The Federal government is preparing Surprise Billing Legislation that is intended to be brought forward for review. Their intent is to receive congressional approval later this year. This includes language that establishes:

1. Methodologies to determine monetary payment to professional medical providers for out-of-network services.

2. Independent arbitration for cases when payments to professional medical providers from insurance carriers are disputed.

A comparison of the Surprise Billing Legislation can be found here for additional insight.

State Level

While Federal Legislation may be nearing a vote, 28 states have enacted legislative reform and consumer protection that addresses surprise medical bills. Several states have enacted comprehensive protections, such as banning balance billing altogether, extending protections to in-network hospital settings, and adopting dispute resolutions. Others utilize various methods of determining benchmarks and have created arbitration panels for determining judgments on disputes.

In reviewing each states’ legislative direction, it becomes apparent that proposed bills and approved laws can vary dramatically from state to state. This variance is particularly pronounced regarding anesthesia. Bench-marking against government-based rates can potentially result in significant declines in anesthesia provider reimbursement or provide such leverage to insurance companies that they may feel compelled to terminate contracts or eliminate future increases.

How One State is Mitigating Provider and Patient Concerns

One example of a state that appears to have mitigated many of the concerns to both providers and patients alike is the state of Oregon. Oregon, a strong advocate of balance billing reform, passed surprise billing legislation into law in March 2018. Some of the highlights of the law include:

1. The requirement of health care providers to inform consumers about increased financial responsibility before choosing services from an out-of-network provider.

2. A fair market assessment of commercial insurance carrier rates by specialty, procedure and geographical sectors which was performed to establish out-of-network rates.

3. This “base rate” is set from the calendar year 2015 averages. (The intent was to ensure that contractual terminations do not occur that are designed to lower or reset market rates.)

4. Annual rate adjustments at the national cost-of-living adjustment (COLA) index from 2016 forward with modifications occurring at the beginning of each calendar year.

5. An online pricing tool that presents rate transparency at the procedure level.

6. Advocacy branches established to support fairness and transparency.

7. No arbitration panels, thus avoiding payment delays and administrative costs.

While the current Oregon law has had no amendments to date, evaluation of the effectiveness of legislation is ongoing. These findings have revealed that the law only covers out-of-network providers at in-network facilities — leaving a “loophole” where out-of-network facilities or providers at out-of-network facilities can continue balance billing at the rates they establish. Drafting of new legislation to correct this oversight is underway.

Closing Remarks

The ongoing efforts to provide legislation reform focus on the undue financial burden to patients while ensuring fair market payments to the medical professionals. These are positive reaffirmations of the importance of balanced and thoughtful legislative involvement at federal, state and regional levels. We encourage all anesthesia providers to get involved and attend congressional hearings on this subject so that your voice is heard and your concerns addressed.