April 22, 2016

Out of Network Benefits and Surprise Medical Bills

Many states are grappling with efforts to address surprise out-of-pocket costs for consumers, as is evidenced by a large number of legislative proposals in 2016. Among the states with legislation related to out-of-network benefits, network adequacy and balance billing are: CA, CO, CT, FL, GA, HI, IL, KS, LA, MA, MD, MN, MS, MO, NH, NJ, NY, OK, RI, TN, UT, and WA.

Health plans and health care providers negotiate fee schedules for the insured population in advance. In-network fees are generally set with a substantial discount from provider’s full billing charges and in-network participation mandates adherence to the agreed upon fee structure and typically prohibit providers from billing patients the difference between the discount charge and the full charge. On the other hand, out-of-network providers have no such contractual prohibition in place and patients can be liable for the balance bill in addition to any cost-sharing (co-pays, deductibles) for the services they receive. Some confusion was created by erroneous use of the term of “surprise medical bill.”

Most accurately, this term is used to describe charges when an insured individual inadvertently receives care from an out-of-network provider (anesthesia, radiology, pathology, etc.) within an in-network facility. However, some media sources referred to any bill received by a patient, including bills for co-pays and deductible amounts that elicit a reaction of surprise as “surprise bills.“

A patient surprised by an emergency room bill of several thousand because they have not yet met the threshold of their high-deductible health insurance plan is not the same scenario as a patient who has a planned procedure in an in-network facility, but may have received ancillary services from an out-of-network provider. A patient may be subject to a “surprise medical bill” if he or she received services in an emergency when the patient has no ability to select the providers (i.e., while on travel) or surprise medical bills might also arise when a patient receives planned care from an in-network hospital/ambulatory care center where some treating providers within those facilities are not in the same network. Often these services include anesthesiologists, radiologists, pathologists, surgeons and others.

The consumer lobby supports an outright prohibition on balance billing from medical providers or otherwise restricting consumer financial responsibility. Others argue for cost disclosure requirements, implementation of network adequacy standards, accuracy of maintaining provider directors and transparency in sale of health insurance plan products. The issue of surprise medical bills is likely to get worse as health plans put in place more narrow networks and the pressure on the legislators to take action will be mounting as well.

See legislation tracked in your state HERE.