Since the passage and implementation of the Affordable Care Act, health care insurers have accelerated their efforts to reduce costs while providing coverage that is affordable and meets the mandates of the law. These efforts have led to the development of narrow and tiered provider networks and, as a result, created situations resulting in surprise billings for patients—an issue that has received considerable media attention. This article describes the key features of these networks and efforts to respond to the challenges involved in surprise billing.
Over the last few decades, physicians have grown accustomed to contracting with health care insurers and participating in provider networks as a condition of reimbursement. By being in-network, physicians accept the contracted payment rate and are prohibited from balance billing patients, although patients are responsible for any copayment and deductible set forth in their health care plans.
Out-of-network physicians, however, may bill patients not only for the copayment and deductible (which may be at a higher rate than for in-network care), but the physician also may balance bill the difference between what the health insurer has paid and what the physician normally charges. Physicians who choose to be out of network as nonparticipating providers generally do so because they believe the contracts offered to them provide insufficient reimbursement and because they believe they lack the power to negotiate with the insurer to get a fair fee schedule. As insurers narrow their networks, even fewer physicians are participating in them.
Physicians also may participate in the insurer’s broader network, but are unaware that they are considered out-of-network for patients in some specific plans that only cover services provided by narrow networks of providers. Hence, physicians sometimes provide care to patients who think they are in-network, and then have their bills rejected for being out-of-network. Although health insurers are required to have provider directories for patients to identify in-network providers, these listings are often out of date and provide incorrect information to patients.
Tiering of networks takes place when the insurer categorizes network providers in certain tiers, supposedly based on quality, and then restricts the patient to a particular tier for a service. For example, 10 general surgeons might be in a network, but only three are in Tier 1, while the other seven are in Tier 2. The insurance carriers may restrict patients in certain plans to receiving care from providers in a specific tier. In this case, patients who are restricted to physicians in Tier 1 would be restricted to the three general surgeons in that tier in order to receive full coverage.
ACS policy on tiered/narrow networks
The American College of Surgeons (ACS) Statement on Physician Tiering and Narrow Network Programs provides guidance for surgeons seeking to address problems with tiering and narrow network programs and emphasizes that these programs should be based on quality metrics, not cost.1
However, the College is aware that many narrow and tiered health care networks rank physicians based solely on cost. These protocols often are implemented improperly, rely on faulty data, use inappropriate cost measures, lack transparency, and lead to the misclassification of physicians. The ACS regards the provision of high-quality surgical care—particularly with the increased emphasis on performance measurement in health care today—as a top priority and urges federal or state agencies, hospitals, health care organizations, insurance companies, and other interested parties to develop policies to ensure patients receive optimal surgical care.
Although the ACS supports efforts that result in the efficient delivery of care, these protocols should be based solely on quality until reliable and valid methods are available to evaluate both cost and quality. As noted in the ACS statement, “Cost alone should never be considered an adequate metric, and patients should understand that access to reasonable care may be limited when such payor-based programs are imposed on plan benefits without regard to quality.”1
The College supports physician tiering and narrow network programs that meet the following criteria:1
- Use transparent methods and are rooted in logic that patients, physicians, and other stakeholders can comprehend.
- Use quality measures that meet nationally accepted standards based on importance, scientific acceptability, feasibility, and usefulness. Composite measures that account for both quality and cost should be held to the same standards and should include regular audits for reliability and validity.
- Have metrics that incorporate care from all appropriate providers and that comply with nationally recognized standards. Health care outcomes are the result of the actions of many individuals and the systems that support them.
- Incorporate accepted risk adjustments for outcomes and socioeconomic status to ensure ongoing access for patients who are at higher risk of complications and poor outcomes.
- Involve physicians and physician organizations in the development and implementation of any protocol.
- Use reasons other than just cost for tiering or removing physicians from health care networks. Payors should rely on nationally validated and reliable quality metrics, and even though cost data should be transparently available to patients, these data should not affect network decisions.
- Set appropriate benchmarks that incentivize physicians to achieve optimal clinical outcomes and provide high-value care.
- Impose minimal burdens on physicians to avoid impeding the provision of care or patient access to care.
- Provide an opportunity for patients, physicians, or other stakeholders in the delivery system to appeal any classification of the physician in the program.
According to the statement, to the best of the College’s knowledge, none of the tiering or narrow network programs meet all of these criteria at present. This gap is likely due, in part, to the lack of transparency associated with these programs. The ACS recommends that payors discontinue such programs and direct their focus toward the quality measures that are currently available from specialty societies, Medicare, or other recognized organizations to encourage providers to participate in learning health systems and quality improvement efforts. If measures of both quality and cost are used for these programs, the metrics used must be explicitly stated by the insurers who are doing the tiering. This transparency is necessary so that patients can understand that access to care may be limited when such programs impose restrictions without respect to quality. Plans should partner with physician organizations, such as the ACS, if they are interested in developing reliable resource-use measures that avert the possibility of denying patients access to quality care.1
Balance billing issues
As noted earlier, out-of-network physicians may balance bill for their services unless restricted by law. If a patient has an insurance plan that does not cover out-of-network provider services, then the patient is responsible for the full charge or whatever fee he or she negotiates with the provider.
This situation sometimes leads to surprise billing, which can take a number of forms. In one example, the patient is being operated on by an in-network surgeon in an in-network facility. However, it turns out the anesthesiologist is out-of-network, as is the assistant surgeon who was pulled in at the last minute to help with the case. The patient assumes that because the procedure is being performed at an in-network facility, all of the providers on staff are in-network. He or she is not notified ahead of time that an assistant surgeon may be needed, and then receives a surprise bill from the anesthesiologist and the surgeon. In a few cases that have been highlighted in the media, these bills, which the patient is responsible for paying, have ranged from $80,000 to $120,000.
In a second example, the patient has coverage with high deductibles and copayments but is not focused on those responsibilities because the premiums for the plan were low. After the surgical services are provided, the patient ends up with an unexpected bill in order to reach the deductible, which could be anywhere from $5,000–$10,000.
A third example involves emergency care. A patient ends up at an emergency room or trauma center that is out-of-network, receives necessary care, and then gets an unexpectedly high bill because he or she thought their insurance covered emergency services. These circumstances can be particularly frustrating because people who are experiencing an emergency health crisis are not always able to check whether the facility or the providers are in-network, and often have no control over the selection of the facility to which they are transported.
Responding to out-of-network issues
Over the last couple of years, policymakers and legislators at the state level have taken action to address the problems raised by the tiering and narrowing of networks. For example, New York lawmakers passed comprehensive legislation in 2014 that includes a requirement that insurers and providers be transparent in their coverage practices and use an independent dispute resolution process for emergency care and other surprise bills; the legislation also mandates that insurers keep their websites up to date. Specifically, the New York state statute does the following:2
- Defines usual and customary cost as the 80th percentile of all charges for the health care service among providers in the same or similar specialty and in the same geographic area. The statewide FAIR Health, Inc., database provides this cost information. Health insurers must describe out-of-network coverage in a manner that is based upon the percentage of this cost of out-of-network health care services, including examples of anticipated out-of-pocket costs for frequently billed out-of-network services.
- Requires that insurers update their websites regarding physician participation status with plans or hospitals within 15 days of a change. Hospitals must disclose on their websites certain standard charges for items and services provided by the hospital and the plans in which the hospital is a participating provider. Hospitals also are required to post on their websites and provide to patients at the time of registration or admission the names and contact information of the anesthesiology, pathology, and radiology services with which they have contracted; the names of the physicians employed by the hospital and whose services may be provided at the hospital and the health care plans in which they participate; and a statement informing the patient that a physician who provides services in the hospital may be out-of-network and that they should check with their physician to determine if that is the case.
- Imposes new disclosure requirements on physicians, hospitals, and insurers to help make medical billing more transparent and to alleviate and reduce surprise bills. Insurers and hospitals must, upon request, indicate the anticipated fee that a nonparticipating physician will charge the patient for scheduled services.
- Requires all insurance plans, not just health maintenance organizations (HMOs), to have adequate networks. Patients enrolled in all health insurance plans have the right to receive treatment from a specialist who is appropriately qualified to treat a patient’s particular condition at no additional cost to the patient if the network fails to include providers of that specialty.
- Makes all bills for emergency care and other surprise bills for care by nonparticipating physicians subject to an independent dispute resolution process after an insurer makes an initial reasonable payment for such care.2
In 2015, Connecticut’s legislature also enacted a comprehensive health care bill addressing issues including transparency and surprise billing. Key elements of this legislation are as follows:3
- Health insurers are required to provide the state’s health insurance exchange with information on how much they pay for the most common types of care.
- When nonemergency care is scheduled in a hospital, the hospital must let the patient know they have the right to request cost and quality information; such requests must be answered in three days.
- Health care providers must let nonemergency uninsured patients know how much their care will cost.
- Insurers must provide customers with a website and toll-free phone number to access information on cost of care, including out-of-pocket expenses, data on quality measures, and providers accepting new patients; provider directories must be updated at least once a month, and insurers must notify customers in writing within 30 days when a provider opts out of the health plan.
- Insurers are required to pay for emergency services at in-network rates to out-of-network providers; in surprise billing situations, patients pay whatever they would for an in-network provider, and the insurer reimburses at the in-network rate.
Earlier this year, Florida Gov. Rick Scott (R) signed legislation pertaining to surprise billing in emergency situations. H.B. 221, chapter number 2016-222, creates a dispute resolution program, requires hospitals to post on their websites all of the health insurers and HMOs with which the hospital contracts as a network/participating provider, and requires insurers to provide coverage for emergency services and to pay nonparticipating providers of covered emergency services in accordance with the terms of the health insurance policy. It also mandates that online provider directories be updated by insurers at least once a month.4
National Association of Insurance Commissioners
One factor that will drive the network adequacy and surprise billing debate in state legislatures is the National Association of Insurance Commissioners (NAIC) updated state model bill. The Health Benefit Plan Network Access and Adequacy Model Act is intended to establish standards for the creation and maintenance of networks by health carriers and to ensure the adequacy, accessibility, transparency, and quality of health care services. Most state legislatures were not focused on amending their laws to reflect revisions in the model act in the current legislative sessions, as it was just adopted by the NAIC in November 2015. However, 2017 may be a pivotal year for states to take up the model act.5
Any willing provider
During the early years of HMO development, similar issues came to bear with regard to network limits on access to physicians. Many patients were unhappy that they had to pick a gatekeeper in the HMO’s network in order to get a referral to a specialist. In response, states adopted “any willing provider” laws that require health insurance carriers to allow health care providers to become members of the carriers’ networks if certain conditions are met. Such statutes prohibit insurance carriers from limiting membership within their provider networks based upon geography or other characteristics as long as a provider is willing and able to meet the conditions of network membership set by the carrier. At present, 27 states have adopted “any willing provider” statutes.6
Preparing for the future
Because most state legislatures have yet to address the challenges of narrow/tiered networks and surprise billing, it is likely that this will be a hot issue at the state level in 2017. Until then, it is important for surgeons to be engaged in efforts in the medical community in their states, as it will be challenging to convince lawmakers to adopt legislation that will meet the needs of physicians, insurers, and, most importantly, patients.
The College encourages surgeons and ACS chapters to not only engage in the medical community’s grassroots advocacy activities related to this issue, but also to notify the State Affairs staff in the College’s Division of Advocacy and Health Policy at firstname.lastname@example.org if legislation is introduced or a legislative initiative is proposed by a professional organization in the state.
- American College of Surgeons. Statement on Physician Tiering and Narrow Network Programs. Available at: facs.org/about-acs/statements/79-physician-tiering. Accessed April 26, 2016.
- New York Department of Financial Services. Protection from surprise bills and emergency services. Available at: http://dfs.ny.gov/consumer/hprotection.htm. Accessed April 26, 2016.
- Becker AL. Cheat sheet: What’s in the big health care bill. Connecticut Mirror. June 1, 2015. Available at: http://ctmirror.org/2015/06/01/cheat-sheet-whats-in-the-big-health-care-bill/. Accessed April 26, 2016.
- Florida H.B. 221. An Act Relating to Health Care Services. Available at: www.flsenate.gov/Session/Bill/2016/221. Accessed April 26, 2016.
- National Association of Insurance Commissioners. Network adequacy. Available at: www.naic.org/cipr_topics/topic_network_adequacy.htm. Accessed April 26, 2016.
- National Conference of State Legislatures. Any willing or authorized provider. Available at: www.ncsl.org/research/health/any-willing-or-authorized-providers.aspx. Accessed April 26, 2016.