This month’s Dateline DC takes a look at an issue with both federal and state implications: unanticipated (also known as surprise) billing. Under this practice, patients receive an unexpected bill from an out-of-network physician or facility (hospital, ambulatory surgery center, and so on). Media reports abound of bills in the tens of thousands of dollars sent to patients who, in many cases, received emergency services and were unable to select their physician or hospital or, in the case of non-emergency (elective) services, did their due diligence to select an in-network surgeon and hospital only to receive a large bill from an out-of-network anesthesiologist, pathologist, or radiologist.
Legislators are listening to constituents
From the halls of Congress to the offices of state legislators, legislative action is taking place to protect patients from unanticipated medical bills. In Congress, numerous senators and representatives and the relevant committees of jurisdiction have been holding hearings and meeting with an array of groups – physicians, insurers, hospitals, think tanks, and patients—to try to come to some consensus on what response is most appropriate from the federal government. The American College of Surgeons (ACS) is engaging in talks with these key committees and has provided substantive feedback as they continue to look for solutions. At the recent ACS Advocacy Summit, hundreds of surgeons met with their members of Congress to talk about this issue and others, and the College has been leading a coalition of specialty organizations to voice a consistent message to members of Congress.
What are the basic principles guiding the physician community as it grapples with the issue of unanticipated medical billing? Earlier this year, the College, American Medical Association, and 61 other national specialty societies, along with 41 state medical societies, signed on to a letter describing common principles endorsed by physicians. These principles, which are as follows, provide a framework for addressing unanticipated medical billing and out-of-network issues, and the College has used them to comment on proposed state legislation:
- Limits on patient responsibility. Patients should only be responsible for in-network cost-sharing rates when experiencing unanticipated medical bills.
- Keep patients out of the middle. So that patients are not burdened with payment rate negotiations between insurers and providers, physicians should be provided with direct payment/assignment of benefits from the insurer.
- Insurer accountability. Because overly narrow provider networks contribute significantly to this problem, federal and state governments need to provide oversight and enforcement of network adequacy. Robust network adequacy standards include, but are not limited to, an adequate ratio of emergency physicians, hospital-based physicians, and on-call specialists and subspecialists to patients, as well as geographic and driving distance standards and maximum wait times. Provider directories must be accurate and updated regularly to be useful to patients seeking care from in-network providers. In addition, insurers should be required to comply with the prudent layperson standard in existing law for determining coverage for emergency care, so that insured patients are not liable for unexpected costs simply because they were unable to accurately self-diagnose ahead of time whether their symptoms warranted emergency care.
- All patients who knowingly and willingly choose in advance to obtain scheduled care from out-of-network physicians, hospitals, or other providers should be informed prior to receiving care about their anticipated out-of-pocket costs. When scheduling services for patients, providers should be transparent about their own anticipated charges, and insurers should be transparent about coverage for those services.
- Setting benchmark payments. Caps on payment for physicians treating out-of-network patients in general should be avoided. If pursued, guidelines or limits on what out-of-network providers are paid should reflect actual charge data for the same service in the same geographic area from a statistically significant and wholly independent database. They should not be based on a percentage of Medicare rates, which have become increasingly inadequate in covering overhead costs, nor should they be based solely on in-network rates, which would eliminate the need for insurers to negotiate contracts in good faith. Any prohibition on billing from out-of-network providers not chosen by the patient should be paired with a corresponding payment process that is keyed to the market value of physician services.
- Alternative dispute resolution. Legislation should provide for a mediation or sequential alternative dispute resolution (ADR) process for those circumstances in which the minimum payment standard is insufficient because of the complexity of the patient’s medical condition, the special expertise required, comorbidities, and other extraordinary factors. Arbiters should not be required to consult in-network or Medicare rates when making final determinations regarding appropriate reimbursements, but rather should use actual charge data for the same service in the same geographic area from a statistically significant and wholly independent database.
State action in 2019
All state legislatures convened in 2019, giving them with substantial opportunities to consider out-of-network/unanticipated medical billing legislation. More than half the states (26) introduced a variety of pertinent bills: California, Colorado, Connecticut, Georgia, Hawaii, Kentucky, Louisiana, Massachusetts, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Nevada, North Carolina, Oklahoma, Oregon, Rhode Island, Tennessee, Texas, Virginia, Washington, and West Virginia. By mid-April, eight of these state legislatures had already adjourned, with out-of-network/unanticipated medical bill legislation passing in New Mexico and Virginia. As other state legislatures move toward adjournment in May and June, Colorado, Nevada, Texas, and Washington are likely to pass similar bills.
Common components of state legislation are as follows:
- Bans on balance billing in emergency and/or non-emergency situations.
- Requirements that insurers pay out-of-network physicians a benchmark amount (commercially reasonable rate, median in-network, full physicians charge, percent of Medicare, percent of billed charges in the same or similar geographic area and specialty as contained in an independent database, and so on). If the physician does not accept that payment as sufficient, the claim can go to arbitration, where the arbitrator may use similar benchmarks to reach a decision.
- Patient financial responsibility is limited to in-network cost-sharing amounts, such as copays and deductibles.
- Physicians, facilities, and other health care providers should inform patients of their network status so that patients can, in nonemergency situations, make an informed decision, and insurers should regularly update their network directories as well.
The issue of unanticipated out-of-network bills is complex and requires a balanced approach to resolve. State legislatures and Congress are hearing from multiple stakeholders with multiple solutions, some of which conflict with each other.