In the past several years, there has been a dramatic increase in media attention concerning bills patients receive from health care professionals who are not in the network of providers their insurance company contracted with to provide health services. The out-of-network bills these patients receive have been termed “surprise bills” by the insurance industry, but are also often termed “balance” or “out-of-network” billing. Balance billing occurs when a patient receives a bill for the amount remaining between the out-of-network provider’s charge and the payment made by the insurer after copay and deductibles. However, a more accurate label for this undesirable circumstance is “surprise insurance gaps.”
The focus of concern with out-of-network billing has often been with facility-based providers that patients assumed would be covered like their in-network surgeon and hospital. Facility-based providers include radiologists, pathologists, physician anesthesiologists, and emergency room physicians. Patients of scheduled and unscheduled procedures can find it difficult to ensure these physicians are within their insurer’s network. Instead of researching why insurance companies are contracting with fewer and fewer providers, lawmakers are being called on to fix this issue. Examples of legislation they are asked to promote include bans on out-of-network payments, requirements for cost estimates delivered to patients prior to procedures, and detailing dispute resolution measures. On the surface, each legislative approach looks reasonable. However, like most legislation, there is much more than meets the eye.
Are there truly fewer in-network providers and if so, what are the circumstances behind this? In recent years we have seen the rise of a myriad of different types of insurance networks and products that have made it confusing and difficult for consumers, providers, and legislators to understand. These include tiered networks, narrow networks, and high deductible plans that insurance companies have developed that seem to focus on increasing profit margins at the expense of network adequacy. Insurance companies are failing to create adequately supported networks, or are deliberately narrowing networks to force a conversation with legislators to regulate and set prices.
Furthermore, “surprise bills” would disappear if insurance companies were forced to adhere to a “fair payment” in an out-of-network payment setting. Maintaining an adequate network for all providers and all services is the key to solving the problem. Put simply, if insurers were required to have adequate networks and regulators held them responsible for maintaining an adequate network, there wouldn’t be situations where patients are surprised to learn they had or could be treated by an out-of-network provider. In instances where a provider or service is out-of-network, a mechanism must be created to determine fair payment.
What would an appropriate out-of-network payment approach look like? To begin with, Medicare is not an appropriate benchmark for many medical specialties. The U.S. Government Accountability Office (GAO) has already established that Medicare significantly underpays physician anesthesiologists. Additionally, pegging to in-network rates in certain settings can essentially turn into rate setting by the carriers. One must understand that these in-network rates are negotiated, discounted rates that are established primarily based on an established market value. Turning that process upside down eliminates any incentive for insurance carriers to negotiate a fair in-network contracted rate.
Benchmarking to an independent database of billed charges within a specific geographic region for a specific service (not payment rates, not pegging to in-network rates in a certain setting, nor a percentage of Medicare) is the preferred approach. Fair Health has not only been cited as an example of a database that could be appropriately used; it was established as a result of a lawsuit against the insurance carriers that were found to be deliberately manipulating data to their advantage. In spite of this, insurance carriers still deliberately skirt the intent of Fair Health to be used for establishing benchmarked usual and customary charges. According to the New York Times, “Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. By the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially.”
The deception continues today as the statute of limitations on the settlement had a two-year window, and magically at the end of that window, a new database is being heavily promoted by the insurance companies. The database includes non-contracted and contracted rates which skews the data in a negative fashion. In the confusing myriad of this environment, insurers attempt to convince legislators that the actual database created for the specific purpose of a fair, impartial entity should not be used, but the entity that they created which is a rebranded company of what was disbanded is the more legitimate one.
While insurance companies are trying to promote a narrative based on numbers by their own research tools, pushing benchmarking approaches that don’t relate to real numbers, and continuing to try to convince the public that this is a provider-driven problem, the health care community is pushing back to protect patients. Patients work hard to pay for their insurance policies, some of which are not transparent as to what the premium charged actually provides.
Nonprofit medical and specialty organizations across the country are working together to promote the rights of patients to have minimal standards that are clear to understand for the policies they purchase. Insurance companies are being closely scrutinized by lawmakers that were asked to prohibit out-of-network payments in settings created by these inadequate and narrow networks. In many cases, these bills are being sent to study committees for a real objective analysis of the problem and for real consideration of real solutions for these surprise coverage issues.
Legislation that would solve these issues should hold insurers accountable for providing an adequate network for all providers and services, and in instances where they fail to do so, hold them accountable to making payments based on real market values, therefore preventing patients from having to deal with grossly inadequate and surprise coverage.