Out-of-network billing surprises
Patients get charged for unexpected services not covered by their insurance
MARYLOU SUDDERS, the state’s secretary of health and human services, was going through some paperwork for her late sister when she came across a bill from a doctor for thousands of dollars that wasn’t covered by insurance.
Sudders says the bill included charges for services that would have normally been paid by her sister’s insurer but weren’t covered fully because they were performed by physicians who were not in the insurer’s network.
“I was, frankly, taken aback by it,” says Sudders. “I was able to successfully resolve those bills, but my perspective was these are not things she would have authorized. Knowing my sister as well as I did, she was just too sophisticated.”
When the state’s Health Policy Commission issued its 2015 cost trends report in January, the issue was barely mentioned in the 102-page document. But Sudders’ story at a commission meeting about her sister nevertheless triggered an animated discussion among commission members, many of whom thought it was a very big issue. The commission determined the billing issue warranted much more scrutiny and asked staff to provide a deeper look, which was delivered to the board in early March, along with recommendations to seek legislation for patient protection.
The commission opted not to vote at the March 2 meeting and to mull the options over further, but there is clearly an appetite to enact some changes, either by asking the Legislature to pass a law or by pressuring health care providers to change their billing practices.
“If we’re going to make markets work, we have to make markets work in a transparent way,” says Stuart Altman, the chairman of the Health Policy Commission. “This type of billing is insidious and subtle. I think equally, if not worse, there clearly is a serious problem when you believe you are working within your prescribed network and you go to a network physician and hospital and then find out some other ancillary physicians who are not [in-network] participated in the procedure. That to me is unacceptable and should not be allowed, nor should the insurance company be required to pay the bill.”
It’s hard to know how pervasive the problem is in Massachusetts because no data are available. Other states have studied the issue and enacted regulations to hold patients harmless in surprise billing situations. New York enacted a ground-breaking comprehensive law last year absolving patients of responsibility for surprise billings and requiring insurance companies to pay “reasonable” out-of-network costs. Several other states — Connecticut, New Jersey, and California — have passed measures with various levels of protection for patients and mandates on insurers and providers.
Regulators at the New York Department of Public Health reviewed more than 2,000 cases arising out of complaints from patients receiving bills for out-of-network services they never authorized. In one case, they found that a man who severed his finger in an electric saw accident went to the emergency room at a hospital that was part of his network. But, without his knowledge, the surgeon who reattached the finger was not a member of his network and the patient was billed $83,000. In another instance, a man who had undergone surgery confirmed everyone involved was in his network. But during the operation his surgeon called for assistance from an out-of-network doctor and the patient got stuck with a bill in excess of $7,500.
“The Department’s investigation of unexpected bills to consumers by out-of-network providers revealed unacceptable opaqueness in the health insurance market,” says the 2012 report, which was the foundation for last year’s law and the evidence Massachusetts regulators are using to push for changes here.
Some regulators view the issue as an off-shoot of the overly complex health care billing system. Others, though, see it as an attempt by some providers to squeeze every dollar they can out of consumers by refusing to join networks with their lower reimbursement rates.
“I think in some cases there is ill intent,” says Altman. “I don’t have a good answer. It’s very subtle. It’s very hard to figure out.”
Most consumers are not aware of the problem. Insurance policies typically require a hefty copay and deductible for emergency room services. But if the patient is admitted to the hospital for treatment, the costs are capped and covered. Or so consumers think.
Nothing in Massachusetts regulations prevents balance billing. Out-of-network physicians, especially those located out-of-state, are not bound by a contract to which they are not a party. It’s solely up to the insurer whether to cover all out-of-network charges in such cases.
“Our policy is to indemnify the member from that balance bill,” says Matthew Day, senior vice president of network payment innovation and contract management at Blue Cross Blue Shield of Massachusetts. “It’s a policy choice we make.”
Day says the issue of surprise billing is part of the larger problem of out-of-network providers who have no cap on what they can charge. The state, he says, needs to set limits on what an out-of-network doctor or hospital can charge.
“Some of our out-of-network providers charge three times as much, five times as much as what an in-network provider will charge,” he says. “We’ve seen cases of 100 times [as much].”
Day says one way insurers such as Blue Cross limit the problem is by requiring hospitals to ensure all the doctors at their facilities are in-network. The company also negotiates contracts setting caps on what will be paid for procedures on an in-network basis only. A sticking point, he says, is when the bill comes from out-of-state, where Massachusetts regulations and contracts have no effect.
Health officials acknowledge the wider problem associated with out-of-network billing, with select specialists and emergency room physicians who refuse to sign network agreements. But officials say much of that has to be hammered out within the marketplace by payers and providers. It’s the situations where consumers have no idea they are going to be swamped with unexpected costs that they want to see regulated.
“This became very black and white for me last September, October, when I saw my sister’s bills,” says Sudders, who added she’s still unsure whether surprise billing can or should be regulated by the state. “I used to see this primarily as an insurance issue, but it’s pretty complex. It wasn’t difficult for me to have the charges dropped because I understand the system. But what about all those folks who aren’t immersed in this, the patient who gets an unexpected bill and sees no recourse but to pay it? What information did they have? What is the insurer’s obligation? This is complicated but I really look at this from the lens of consumers.”
Several hospital officials declined to comment on the issue directly, saying they have in-network contracts and anything beyond that is a matter for insurance companies to handle with individual doctors who are not under their control.But for Altman, the health policy commission chair, there’s enough anecdotal evidence to move forward with laws and regulations to protect consumers.
“What’s the negative of passing the law?” he asks. “Why should anybody object to it? No providers have come to us and said they should be allowed to do this.”