Unexpected bills to patients for out-of-network medical care have been a problem for years. Patients, their providers – both in and out-of-network – and the insurance carriers (the “payors”)  have likely been involved at one time or another in the sometimes messy situation triggered by an out-of-network provider submitting a claim for charges. Payors have been trying to eliminate the instances when they are obligated to pay charges or a percentage thereof, while certain specialty providers are trying to hold out for as long as possible and obtain maximum reimbursement.

The exposure to patients for enormous balances remaining after applying their insurance coverage may soon be a thing of the past. When specialty providers refuse to contract with payors because they deem the fees offered inadequate, the payors have re-written the insurance policies to cap benefits based on a percentage of some benchmark fee. The payors also attempt to educate and incent their insureds to use only network providers lest they be exposed to large balances. The payors have also enlisted their network providers to not use out-of-network providers or be subject to takebacks themselves.  The payors want their insureds to become more active and aware in the selection of providers

For example, a person is injured and seeks treatment in the emergency department for a laceration to the forehead requiring the skills of the plastic surgeon on call. The plastic surgeon does not accept any insurance and simply bills the patient based on her charges, which are usually a multiple of Medicare and what the payor would pay under an agreement with a network plastic surgeon. Because the insurance company must indemnify the insured in such emergency situations, so begins the negotiation between the payor and the surgeon. The surgeon is not obligated to accept the fee offered by the payor, but may demand a greater fee provided it is reasonable and so the patient is stuck in the middle liable for the difference between the payor’s fee (low) and the surgeon’s charges (high) – which could be thousands of dollars.

Proposed Legislation

New York Governor Andrew Cuomo has been eyeing this issue. While his executive budget is silent on the point, the Senate’s budget bill is not.  The Senate seeks to insulate patients from balance billing for emergency services. It would require binding arbitration for disputes over physician fees for emergency services.

 The Senate would set a new standard by requiring health plans to offer products that provide coverage of 80% of the usual and customary cost of out-of-network services as defined by FAIR Health, an independent entity that publishes equitable charges for specific health care services.

Health plans and doctors also would be subject to various new disclosure rules. Hospitals would be required to disclose their standard charges for items and services they provide, including for diagnosis-related groups. They must disclose which insurance plans they accept, and the name, practice name and contact information for any physician whose services will be provided at the hospital but will not be billed as part of the hospital charges. They would have to make that disclosure at either pre-admission testing, outpatient registration, or non-emergency hospital admission, whichever is earlier. They must disclose whether physician anesthesiology, pathology, radiology or other services are billed as part of the hospital charges or separately.

With this information available, patients will have more opportunity to understand ahead of time their exposure for medical bills and perhaps make choices to mitigate the exposure.