Thanks to cost pressures exacerbated by the Affordable Care Act, narrow-network plans have increased in popularity because of their lower premiums, but plans using such networks need to think about associated potential problems with poor provider access, balance billing and provider directory information.
Detailed information about the latest regulatory and legislative measures to prevent balance billing of patients were discussed by attorneys from the law firm Epstein Becker & Green in a Nov. 16 webinar.
‘Surprise’ Billing of the Patient
Surprise bills can arise in the surgical context when patients are treated by a care team but not all members of that team are part of the same provider network. Non-participating providers may want adequate compensation and may refuse to participate on the plans’ stated terms. The patient’s health plan either underpays or doesn’t pay the non-participating provider and the provider sends the bill to the patient.
Example: A patient gets scheduled care at an in-network hospital, and the surgeon is in-network … but the anesthesiologists and pathologists are out-of-network. The patient expects the whole amount will be covered because he or she is in an in-network facility. Instead, the two ancillary providers send the patient a surprise bill to cover amounts the plan would not pay.
Regulators are especially concerned when balance billing occurs in connection with emergency services, because then patients are not in control of which providers are treating them and can’t necessarily stay in-network, according to EB&G attorney Helaine Fingold. Because of concerns with consumer protection, regulatory authorities at the federal and state level have responded with preventive rules.
NAIC Act on Network Sufficiency: The National Association of Insurance Commissioners will finalize its model act on network sufficiency on Nov. 22. It is non-binding, and will only be adopted if states agree to it in whole or in part. For example, if a state wants to allow or prohibit balance billing, it may do that. Elements of the model act include:
- Written notice within 10 days of scheduling non-emergency services and at admission, that services may be provide by an OON provider.
- OON emergency services must include a notice that the patient only has to pay the in-network cost-sharing amount.
Under the model act, insurers also must state that some services may be provided by OON providers; and must set up a mediation process for a provider that objects to rates set by the insurer’s OON billing process.
Federal Protections: Under the Affordable Care Act, if a plan or policy includes emergency services benefits, then it must cover them by both in and out of network providers; OON ER benefits must not have more restrictive administrative requirements or benefit limits than in-network ERs do. And OON ER services must be reimbursed at a “reasonable” level. “Reasonable” is defined as the greatest of: (1) the in-network amount; (2) the amount the plan generally uses to pay for other OON services (for example, the “usual/customary/reasonable” amount); or (3) what Medicare would pay for the emergency service. This applies to all group plans — large, small, insured and self-funded. The ACA allows balance billing, if allowed under state law.
The ACA says OON costs don’t apply to out-of-pocket limits; plans are not required to count such costs. If a plan doesn’t have a network, then all emergency services providers would be considered in-network for applying the out-of-pocket maximum.
Several states mandate coverage for emergency services provided at OON facilities. A few (including New York and New Jersey) mandate coverage for OON services provided at in-network facilities, according to EB&G attorney Lesley Yeung. She discussed rules in states with strong consumer protections of this kind.
Texas: Under 28 Tex. Admin. Code Section 11.204, HMOs must pay a negotiated or UCR rate for emergency services performed by OON providers. Balance billing for OON emergency services is still allowed, even though the state is considering H.B. 1638, which would eliminate it. Disclosure by health plans and providers about OON providers is required under 8 Tex. Ins. Code Section 1456.004. Tex. Ins. Code Chap. 1467 has a mandatory binding dispute resolution system for patients who want to dispute a surprise bill of more than $500.
Illinois: Under 215 Ill. Comp. Stat. 5/356z.3a, coverage of OON emergency services is mandated at the same level as at in-network emergency-service facilities. The covered patient also is held harmless from balance billing. The health plan and the OON provider must disclose to each other about proposed reimbursement, and arbitration must settle disputes between health plans and OON providers.
Also, when a plan member has made a good-faith effort to see an in-network provider of any class of service, but one is not available, then plan must reimburse the OON provider at in-network rates.
Florida: Under Fla. Stat. 642.513, HMOs must pay for OON emergency services and balance billing is prohibited (not applicable to PPOs). It also prohibits balance billing by OON providers for ancillary services at an in-network hospital if the patient was admitted by an in-network physician. The law includes disclosure requirements, and all plans are under a state-administered optional dispute resolution process.
California: Under Cal. Code 28, Section 1300.71.39, all emergency services are treated as in-network services, and balance billing by emergency service providers is prohibited. California has prescriptive rules telling plans how to determine payment for OON emergency service providers. It has a voluntary non-binding dispute resolution process for billing disputes.
New York: EBG attorney Jackie Selby said the Empire State’s “Emergency Medical Services and Surprise Bills” law may be more thorough than any state or federal law.
Group practices and outpatient facilities must post the names of the health plans with which they participate and names of the hospitals with which they are affiliated. They must give an estimate of amounts they will charge for out-of-network services on request. See this link for more information on New York’s law regarding out-of-network emergency service billing.
Under New York rules, health plans must update their websites within 15 days of the addition or termination of a provider from its network, or a change in hospital affiliation. They must disclose the approximate amount they will pay for OON services, as a percentage of UCR. They must tell members how to determine their out-of-pocket costs.
Hospitals must post on their websites a list of their standard charges for services, even for bundled diagnosis-related groups. Also under state rules, they must post a notice that physician services provided in the hospital may not be included in charges; and that such physicians may not participate in the same health plans as the hospital. Therefore the patient should check with referring physicians to see the extent of coverage by all members of the care team.
Network Adequacy Definition
Under New York Public Health Law Section 4403 (the state’s network adequacy rule) all health plans, whether HMO, PPO or EPO, have to obtain network adequacy certification.
- a sufficient number of geographically accessible participating providers;
- the opportunity to select from at least three primary care providers;
- sufficient providers in each area of specialty practice;
- no exclusion of any appropriately licensed type of provider;
- no penalizing providers for unfavorable case mix; and
- other factors must be considered, including cultural/linguistic; the number of grievances filed by enrollees; and other indicators of plan capacity.
Under this rule, health plans must provide at least one option that covers at least 80 percent of the UCR cost of OON health care services.
A safeguard that networks and plans might consider: Referring, in-network physicians should get explicit written consent from the patient that a referral is (or may be) to a non-participating provider and it may result in balance billing. In the New York law, having a signed notification of that kind makes it permissible for a non-participating provider to balance bill the patient.
Click here for more information about balance billing; for more information on plan administration go to Section 500 of the Guide to Self-Insuring Health Benefits.