Proposed Legislation Relating to Insurance and Unanticipated Out-of-Network Bills for Health Care Services
Consumers Union is writing to express our strong concerns about Senate Bill S.2077SUBAaa, which is pending before the House of Representatives. We are concerned this bill could increase billing by out-of-network providers for emergency and non-emergency health care services, drive up rates for in-network care, and in turn drive up health insurance premiums for consumers and employers.
Over the last several years, a number of other states including New York, California, Connecticut, Florida, Oregon and New Jersey have adopted comprehensive protections against surprise medical billing, that include a range of features to reduce the incidence of surprise out-of-network medical bills for emergency and non-emergency care and give patients tools for staying within their health plan networks to avoid them.
Common features of these other state bills include:
1. Requiring insurers to maintain accurate and up-to-date provider directories, with auditing and consequences for non-compliance;
2. Requiring providers to inform consumers whether they are in-network or out-of-network, in a way that preserves meaningful consumer choice;
3. Instituting a ban on “balance billing,” that explicitly protects the consumer from receiving or having to pay unavoidable or inadvertent out-of-network charges, known as balance bills;
4. Creating a well-defined process for determining payment of surprise bills, including some type of independent dispute resolution process; and
5. Developing effective ways to inform consumers about their surprise bill rights.
Because conditions vary from state to state, it is important to carefully analyze the incidence and severity of surprise medical bills, to make sure legislation is responsive to local conditions and needs. While protecting consumers from balance billing is always our key goal, we also are supportive of provisions that would encourage contracting between insurers and providers and, on the other hand, we are also mindful of avoiding features that would accelerate the underlying costs of care, which of course feed into premium increases.
In Rhode Island today, it is our understanding that most consumers get services from in-network providers and the state has received relatively few complaints about surprise out-of-network medical bills. The few complaints the Division of Insurance Regulation has received almost always involve out-of-state providers from Massachusetts, who are not part of the state’s health plan networks. Further, we understand that 95% of claims are paid on an in-network basis. While we realize that surprise out-of-network bills may be underreported, we believe the state’s approach to this issue should be carefully calibrated, based on the financial evidence and the marketplace realities, to respond to the true needs of the state’s patients.
From a consumer perspective, it is almost always better for the consumer to stay within their health plan network, to avoid billing hassles, to achieve better coordination of care, and get the advantage of lower rates that in-network providers have agreed to, in exchange for a higher volume of patients and more predictable patient flow. Further, health plan networks help insure that patients receive coordinated care and timely follow-up, including preventive services and regular treatment for chronic illnesses and conditions. On the one hand, S.2077SUBAaa takes some positive steps to protect consumers by ensuring that deductibles, co-payments, co-insurance and other out-of-pocket costs will be the same for unanticipated and emergency out-of-network care as they are for in-network care. That part of the legislation may be favorable and positive for consumers.
However, S.2077SUBAaa could hurt consumers in a different way – by creating a process that increases the frequency and magnitude of out-of-network payments to physicians, assistant surgeons, anesthesiologists, radiologists and other providers. We are concerned that the real purpose of S.2077SUBAaa is to shift payment parameters to favor providers, rather than protect patients. The incidence of “unanticipated out-of-network care” could increase under this legislation, as some providers could leave networks, and fewer providers could elect to join them, so they can seek higher billings by not contracting with health plans.
Consumers have an economic interest in avoiding the excess charges that higher-cost out-of-network providers impose, because they are not under contract to the health plan – and not just the charges related to out-of-pocket costs. Consumers also have an interest in avoiding higher base charges for medical services that will be passed along in the form of higher premiums.
In particular, we are concerned that section 27-82-5 (6) requires that insurance carriers pay the full billed charges assessed by out-of-network providers or take the case to a dispute resolution process. Other states that have passed surprise billing protections, such as New York, allow insurance carriers to pay an amount that they determine to be reasonable for a surprise out-of-network bill, instead of automatically defaulting to the billed charges rate. If the provider believes the payment is unreasonable, then the provider could take the dispute to a dispute resolution process. In California, the state requires that the insurance plan pay the higher of the average contracted rate or 125% of the Medicare rate, as the default payment for a surprise bill.
Out-of-network providers prefer charging rates based on a database populated with “billed charges” to set reimbursement. Yet such billed charges are assessed based on the individual provider’s choice, and can vary widely, and can be sharply higher than the “negotiated rates” that most in-network providers routinely accept for the same procedure or service. For example, the estimated cost for an Appendectomy with Related Anesthesia in Providence is $2,138 in-network, and $5,064 out-of-network – 237% more. The estimated cost for Epidural Anesthesia in Providence is $260 in-network, and $1,345 out-of-network – 517% more. If S.2077SUBAaa is adopted, the fees charged by out-of-network providers could be sharply higher than current in-network rates for many procedures, and these could In turn lead to increases in premiums for consumers and employers, and additional increases in contracted in-network rates.
In addition, the arbitration process proposed in the bill would allow the arbitrator to choose amounts somewhere in the middle of prevailing in-network rates – today’s status quo for most care provided – and billed charges – which can be ratcheted up over time by providers. By contrast, the “baseball arbitration” system developed in New York’s 2014 surprise bills law directs the arbitrator to pick one of the two amounts submitted by the provider or the health plan. The purpose of this system is to encourage both sides to be reasonable, by in effect driving the offers of each side closer to the middle. Under New York’s system, providers and plans both know if an offer tends to the extreme, the arbitrator may pick the other offer. We are concerned that the arbitration process proposed in S.2077SUBAaa would provide incentives for out-of-network providers to submit higher settlement offers, that over time will drive premium costs higher for consumers and employers.
As stated above -- consumers benefit directly from in-network care, and in-network reimbursement rates. To the extent that this bill creates a new, untested mechanism that could increase the volume of unanticipated out-of-network care and increase the frequency of billing at out-of-network rates that already are twice what consumers pay for in-network care -- this is highly problematic for patients.
Where consumers specifically seek out-of-network care, usually at higher cost, such care should be freely and specifically chosen, with full information about how much of the cost the health plan will cover, and the specific cost sharing and out-of-pocket costs that will be incurred. In some cases, patients have an out-of-network option in their health plan, but they may not realize it will not cover the full costs of service, and will be significantly more expensive than if provided in-network. Ideally, consumers should receive an advance cost estimate for any out-of-network provider’s expected charges, with the estimate to be provided to consumers in writing at least 72 hours before the time of service. (S.2077SUBAaa only says that consumers can receive an estimate of the provider’s expected charges, upon request.)
A related concern is that S.2077SUBAaa places the onus for avoiding out-of-network care squarely on the shoulders of patients. Section 27-82-3c states that it is strictly the patient’s responsibility to inquire of their insurance company about the details of their coverage, and how much they will have to pay if they go out-of-network. For elective, non-emergency care, the bill does not require hospitals or the scheduling physician to pro-actively inform consumers that there are specific out-of-network providers who will be involved in their care, as is required in New York’s surprise billing law. In doing so, the bill misses an opportunity to help consumers stay within their health plan networks, and avoid the hassles and higher underlying prices of out-of-network care.
In conclusion, while we appreciate that a substantial amount of time and effort has gone into developing this bill, we think it is skewed to favor the interests of providers and does not provide a fair and comprehensive approach to preventing surprise medical bills. In particular, Rhode Island should avoid creating incentives for providers to stay out of health plan networks, or to leave networks that they currently participate in. For these reasons, Consumers Union strongly urges you to oppose this bill and vote NO on S.2077SubAaa.
Sincerely,
Chuck Bell, Programs Director
Consumers Union
cbell@consumer.org
(914) 378-2507