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Clampdowns on out-of-network billing climb

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Anne Paxton

June 2016—To the average reader, “out-of-network billing” might seem like a technical concept that should mainly concern hyperaware insurance wonks. Media outlets from NBC News to Time to the Huffington Post have found that phrases like “surprise medical bill,” “angry patients,” and sometimes “sticker shock” in recent stories are much more likely to grab attention.

But out-of-network billing is what those stories are about—and it’s not being painted in glowing terms.

In fact, a growing number of states have imposed curbs on out-of-network billing, and the implications for pathologists could be serious. However, pathologist awareness of the trend is lagging, says Margaret Havens Neal, MD, president of the Florida Society of Pathologists. “There are pathologists out there who don’t recognize this as a major issue for them yet.”

“We don’t particularly want or choose to be out of network, but as the insurers’ networks have narrowed, we find ourselves out,” says Dr. A. Joe Saad.

“Anecdotally, we hear about surprise medical bills more and more,” says Emily E. Volk, MD, MBA, chair of the CAP Council on Government and Professional Affairs and chief quality officer, Baptist Health System, San Antonio. And pathologists, along with other hospital-based physicians such as radiologists, anesthesiologists, emergency physicians, hospitalists, and neonatologists, are among the billers being highlighted.

Almost one in every three privately insured adult patients had received a surprise medical bill in the previous two years, a 2015 Consumer Reports survey found. When such patients find out they owe unexpected amounts because the provider who took care of them is not part of the network covered by their insurance—even though the facility may be covered—it’s the provider who often gets the blame.

Why are such out-of-network bills on the increase? “It’s because insurance companies are creating narrow networks, limiting the number of physicians patients see, so more and more physicians become ‘out of network,’” says Robert DeCresce, MD, MBA, director of clinical laboratories at Rush University Medical Center in Chicago and chair of the state affairs subcommittee of the CAP Federal and State Affairs Committee.

“Even if you go to an in-network hospital, the hospital may not give you a choice between an in- or out-of-network pathologist because their contracts are usually exclusive.” Then the patient gets billed for the difference between what the insurance company allows and what the pathologist charges. “Is it a deceptive practice by the hospital or the insurance company? That’s a reasonable question to ask,” Dr. DeCresce says.

Some of the rise in such cases may be linked to the Affordable Care Act, Dr. Volk says. “There are ACA provisions for controlling costs of patients seeing in-network providers, but the same provisions are not extended to care received from out-of-network providers, even though the patient has no real choice in determining what providers are in or out of network. Patients often have no idea whether or not their provider network is broad enough to begin with. Often patients don’t know they don’t have adequate coverage until after they’ve received treatment and are discharged.”

Whatever the cause, states are exploring various proposed solutions to the problem, says Dr. DeCresce. “One solution is to ban balance billing, and some states have done that.”

Confusion can arise over use of the term “balance billing” to describe out-of-network billing. The older and more traditional definition of balance billing, explains attorney Jane Pine Wood of McDonald Hopkins LLC, Dennis, Mass., is the billing of a patient by an out-of-network health care provider for the difference between the provider’s list charge and the amount that the patient’s payer approved as the maximum allowable charge—not including deductibles, coinsurance, or copayments for which the patient is responsible.

More recently, balance billing has been used at times to refer to any difference between what the provider charges and what the patient pays, including deductibles, coinsurance, or copayments.

As Wood points out, traditional balance billing can be, and sometimes is, banned by states as a response to surprise medical bills, but pathology and laboratory providers risk violation of fraud and abuse statutes if they either waive or reduce the amount owed by the patient for an applicable copayment, deductible, or coinsurance. “Under federal law and under most state laws, the routine waiver or reduction of the amount the patient owes for the out-of-network copayment, deductible, or coinsurance amounts can be considered as a violation of false claims laws.”

A significant concern facing pathologists and laboratories in this context is “how to lower the patient out-of-network balance while not engaging in a routine waiver of copayment, deductible, or coinsurance amounts that could lead to allegations of false claims,” Wood says.

Dr. DeCresce

A ban on balance billing would appear to be the most simplistic approach, but it leaves unanswered who will pay the balance, Dr. DeCresce says. “Depending on what state you’re in, there could be an arbitration or negotiation between the doctor and the insurance company to determine what would be a fair payment for the out-of-network doctor. You could have an arbitrary fee schedule set up for balance billing, as New York state does. Or you could say the doctor has to take what the insurance company pays him—tough luck.”

New York physicians also have to provide patients with a written estimate of what the charge is going to be. But, Dr. DeCresce notes, “With pathology, it’s hard to determine what the charge will be, because it varies a lot by what happens and the physician can’t predict that. New York also says with non-emergent surgery or care, if the patient goes to a place with out-of-network doctors, there’s a responsibility to give the patient an estimate so they can decide whether to go to that hospital or not. But that’s a lot of onus to put on the patient.”

Having the patient ask questions about whether a provider is in network is also unlikely to be an effective intervention, Dr. Volk points out. “I think that’s asking quite a bit of a patient beneficiary, frankly. Certainly at the time of emergency care, who’s going to remember to ask every possible provider ranging from emergency physician, anesthesiologist, pathologist, radiologist, and surgeon: ‘Are you in my network?’”

Dr. Volk

Insurance carriers have gotten a bit of a free ride on this issue, she says. “They’re saying how terrible it is for patients to receive high out-of-network bills and there should be limits. But the real answer for patients is to have an adequate network. When you have surgery, you don’t just need the surgeon or the facility in your network. You need everyone who’s going to potentially touch the patient.” In her view, the proliferation of less expensive insurance plans to meet the needs of the ACA has possibly driven the emergence of narrower networks.

The CAP, which keeps members posted on state legislation via its weekly “Statline,” is advocating for state measures that address the problem of network adequacy rather than the symptom of out-of-network billing. “We’re working very hard to frame this appropriately as a patient access to care issue and patient coverage adequacy issue rather than a ‘selfish doctors wanting to be paid’ issue,” Dr. Volk says.

“When patients are purchasing insurance plans with networks so narrow that not all providers they need are covered, they don’t get the benefit of what they thought they bought.” Both anatomic and clinical pathology are affected, Dr. Volk adds. “When a network covers a patient’s lab services only through a commercial lab, the pathologist’s work doing medical oversight at the hospital lab has to be billed to the patient. But that’s work that, arguably, should be appropriately reimbursed as part of patients’ coverage.”

For physicians trying to respond to patient concerns, options can be limited. Most insurers prohibit physicians from waiving out-of-network charges in an effort to “punish” the patient for choosing a non-network provider. Says Dr. DeCresce, “That may be okay when patients affirmatively choose an out-of-network physician—but not so fair when the patient had no choice.”

Medicare subscribers are not affected by the out-of-network billing issue because physicians accepting Medicare are automatically considered to be in network. However, says A. Joe Saad, MD, chair of the CAP Federal and State Affairs Committee, Medicare Advantage plans, administered by companies like United Healthcare or Aetna rather than by the Centers for Medicare and Medicaid Services, do have networks that are restricted, and new federal legislation passed in 2015 will be pushing more Medicare patients into those plans. So he thinks network problems will compound.

What the health plans are doing, “mostly to keep their profits up but they say it’s to keep their costs down, is narrowing their networks, tailoring them geographically and excluding hospitals and physicians in many areas of a city,” says Dr. Saad, who is chair of pathology at Methodist Health System in Dallas.

The CAP position on out-of-network billing, developed in 2013, is that if the health plan does not provide the patient with an in-network provider option, the patient should be paying the in-network rate and the health plan should be responsible under law for the balance billed amount.

Informally, Dr. Saad says, a network that includes 70 percent or more physicians in a community is considered a broad network, between 70 percent and 30 percent is considered narrow, and less than 30 percent is considered ultra-narrow. “A lot of these narrow networks just came into existence with the passage of the ACA in 2010 and the changing insurance environment as a result of that. In the past three years, the problem has gotten much worse.”

An additional wrinkle is tiered networks. “You may find yourself, as a hospital-based physician, to be in network for someone who has a Gold plan but out of network for someone with a Bronze plan. They have so many different products, it’s very difficult for us to figure out if we’re in or out of network. And quite honestly, it’s hard for insurance companies to figure it out. I can’t imagine how a patient could do it.”

Separate deductibles for out-of-network providers are another way insurance companies can avoid payment. “In network your deductible may be $5,000, while out of network it might be $10,000,” Dr. Saad says by way of example. “So they’re not saying, ‘We’re not covering pathology.’ They’re saying, ‘This is an out-of-network service and it’s covered at our out-of-network rates.’”

“The bottom line is they’re trying to make consumers more accountable and to think of health care as a service that needs to be shopped for, just as you’d shop for a car. And most people would shop around. But this is a difficult market. It’s not as transparent as it needs to be with the physician directories, coverage of services, and how a patient can actually access the most cost-effective care. So this is shifting the burden of shopping onto patients who are ill-educated in this field, not through any fault of their own.”

State insurance regulators, represented by the National Association of Insurance Commissioners (NAIC), have abrogated their responsibility, in Dr. Saad’s view. NAIC convened a group to look at network adequacy, which the CAP believes should be a priority. “But even though they’re well intentioned, they figure it’s a lot easier to regulate physician billing than it is to regulate health plan network adequacy.” In Texas, for example, insurance regulators have testified before the legislature that they’re actually certifying networks they know are inadequate, he says. “They may not have the manpower, or they may be convinced this is what they need to do to keep costs down.”

The CAP had many conversations with the NAIC, Dr. DeCresce says, “to get them to want people to enforce network adequacy. And the NAIC’s response was, well, any network that is approved must be adequate, and it’s not necessarily their responsibility to enforce it.” Similarly, “We wanted the NAIC to agree that patients should be held harmless when networks are inadequate, and they rejected that too.” So the NAIC wouldn’t put it in its model bill (although in some states, such as Illinois, that provision is in state law). However, the NAIC did agree it was impossible for certain specialties to provide a written estimate, he says. “They understood, and that requirement was deleted from the model bill, even though New York state requires it.”

Dr. Saad objects to the NAIC’s unwillingness to recognize hospital-based physicians as a separate class of physicians. “We are a little bit different from other physicians. We’re not like a primary care doctor or even a specialist where they look at, within a network, the time and distance it would take a patient to travel to see a specialist. Once you’re admitted to a hospital for a procedure, then time and distance don’t apply; that pathologist is either in network or not in network. So they need to establish different criteria for us, but we couldn’t get the NAIC to recognize that.”

Some states are starting to see that the fundamental problem is inadequate networks, and even in Texas there has been an intermediate step, Dr. Saad says. “If a patient gets a bill from an out-of-network hospital-based provider—and it used to be if the bill were over $1,000; now it’s if the bill is over $500—the patient can request mediation.” He wishes other states would adopt Texas’ step before that mediation, which is a three-way conference call among the patient, provider, and insurer. “Around 90 percent of the time, they agree on a solution to who is going to pay what. The other 10 percent of the time it goes to mediation.” (The Texas Department of Insurance’s website has a section on surprise medical bills and explains how patients can handle them, at http://bit.ly/tdi-surprisebill.)

In other states, such as New York, out-of-network balance billing (after the patient has covered deductibles and copayments) is banned. “If you send a bill out of network, then the insurer has to cover it at the 80th percentile of a database of billions of charges called the Fair Health Database,” Dr. Saad explains.

That’s not a perfect solution for pathologists, though, because New York law also requires hospital-based physicians to give upfront estimates of what the charges will be. “For pathologists, that’s problematic because we never know ahead of time what the charges will be. We don’t control the specimens, and we have no way of knowing how many specimens the surgeon is going to send to us,” Dr. Saad says.

In addition, “If it’s a breast biopsy and it’s benign, that’s one thing, but if it ends up being cancer, we need to do a whole lot of other tests on it.” Getting consent from a patient before the test is a problem too, “because as pathologists we never see the patient. We never know up front who is coming in to have surgery, so Medicare, self-pay, Medicaid, Blue Cross—anyone who comes through the door—we treat the same.”

Patients themselves have rarely been the source of complaints, in his experience. “Texas has a law that if a patient requests an estimate of charges we’re required to provide it, but I’ve never had a patient request that. I’ve gotten a handful of complaints for an out-of-network bill but most of the time we’ve worked with the patient and reached a satisfactory accommodation on an appropriate charge.”

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