July 21, 2017

California Enacts Balance Billing Restrictions

After a long legislative battle, the California Radiological Society (CRS) is working with state regulators to implement a new law that bans balance billing while assuring fair compensation to radiologists and other physicians who provide noncontracted services to patients covered by narrow-network managed care.

“It has been a painful process involving six or seven legislative proposals in California over 10 years to address the issue,” said Bob Achermann, CRS executive director.

In 2016, Assembly Bill (AB) 72 was passed as a compromise solution. The bipartisan bill resolved the issue of patients seeking services at in-network facilities, mainly acute care hospitals where some physicians are out-of-network. CRS recognized the cost of “surprise” bills from out-of-network medical services in such in-network settings could be substantial.

Now gaining national attention, out-of-network billing has spurred controversy involving narrow-network managed care plans and specialty physicians. Narrow-network plans are criticized for cut-rate contracting policies that don’t attract enough in-network specialty physicians to serve their patients. Specialty physicians, including radiologists, are blamed for unexpected costs passed on to their plan participants.

AB 72 removes the patient from the middle of these disputes, Achermann noted. As of July 1, patients who are covered by narrow-network managed care and seek treatment at an in-network hospital or clinic in California, are protected against surprise bills. They are responsible only for their applicable co-insurance and deductible costs, regardless of whether their managed care plan contracts with their physicians. The law excludes out-of-network charges for emergency services.

“They will not be responsible for anything more than the fees that would apply if they had an in-network physician,” Achermann said.

Plans are now required to inform the providers about applicable deductibles and co-payments. Claims from noncontracted physicians must be processed according to the same guidelines for prompt payment that apply to contracted physicians.
CRS was heavily involved in talks that led to the selection of appropriate reimbursement rates for noncontracted radiology. The Medicare Physician Fee Schedule (MPFS) was selected as the standard after consumer advocates rejected usual and customary charges for that role. Final compromise was a formula that pays providers the greater of the insurer’s average contracted rate or 125 percent of Medicare rate.

CRS is working with the California Department of Insurance and Department of Managed Health Care Services on the mechanics of a physician appeals process to resolve payment disputes. It will be implemented Sept. 1.

And, CRS is helping regulators understand medical imaging billing and reimbursement terminology. Appreciating the relevance of global, technical and professional component billing, billing code modifiers and multiple procedure payment reductions (MPPR) will be important when the two agencies confirm the accuracy of average contracted rates submitted by the state’s narrow-network managed care plans.

Required data collection includes the number of payments made to noncontracting health professionals and the ratio of noncontracting-to-contracting health professionals at contracted facilities. Such data could help improve the measurement of network adequacy and identify the underlying causes for balance billing abuses, Achermann said.

“We certainly believe the problem is with the plans and not with the physicians,” he said. “But we need an accurate assessment to learn where the fault lies.”