Balance Billing Prepared by: D. Ross Patrick, MD LSUHSC - Shreveport

Objectives Policy on Balance Billing Definitions Balance Billing Problem California versus New York Other States Handling

ACEP Policy Statement The claims of all physicians who provide emergency care for commercially insured services are often paid by health plans at rates that are substantially below the reasonable and customary value of these services. This occurs in part because plans base payment on usual and customary charge data that is flawed 1. Health plans know that emergency medical care must be provided to their enrollees no matter how poorly the plans pay for these services. Systematic underpayment of emergency services without a corresponding system of ensuring fair payment has led to the need to preserve balance billing. This ensures the viability of patient care services where there are no enforced laws or regulations requiring health plans to pay emergency care provider claims at appropriate rates sufficient to maintain the financial viability of our nation's emergency care safety net. 1 –Ann Emerg Med. 2009:54:14

Key Terms Managed Care Organization (MCO) –An organization which provides managed health care with the purpose of reducing costs –Multiple forms: Health Maintenance Organizations Preferred Provider Organizations Independent Practice Associations Point of Service

Key Terms Hold Harmless –A requirement (primarily of HMOs) which requires that subscribers are not billed beyond predetermined cost sharing measures (ex. Co-payments) In-Network –Physicians, Allied Health and Hospitals which have partnered with a managed care organization Out-of-Network –Physicians, Allied Health and Hospitals which have not partnered with a managed care organization

Brief Understanding of Insurance Early days of health insurance –Insured patients were sent a bill for care. –Insurance company paid the patient directly –The patient was left with the balance. Advent of managed care –Contracted directly with providers –Rates were negotiated below local market averages –Providers agree to “hold harmless” the members

What, then, is Balance Billing? Balance billing is when a patient receives a bill for the difference between the MCO rate and the traditional rate. –Limited to “out-of-network” visits often Balance billing is specifically disallowed under Medicare

Wait?!? I thought insurance was supposed to Prevent ALL health care bills? Only when in-network care provided does the hold harmless clause apply Depending on the MCO’s contract a client may be liable for all out-of-network billing

In-Network vs. Out-of Network In Network Out-of-Network Contracted Physicans/Groups Contracted Hospitals Most Referrals by Contracted Physicians Hospital Services Non-Contracted Physicians/Groups Non-Contracted Ancillary Services at Contracted Facilities (e.g., Radiology, Anesthesiology) Non-Contracted Hospitals

What would make a provider choose to or not to contract with a MCO? Access to HMOs network of subscribers Faster payment Ease of Billing Reasons TO Contract Reasons NOT to Contract Rates are not sufficient Stipulations of contract are too stringent Network of subscribers is small

Understanding Each Position (In Simple Terms) Patients: –I’ve paid my premium and made every attempt to stay within network…so why am I receiving this bill? Insurers: –It doesn’t make financial sense to pay full charges for services at a non-contract hospital when we pay much less for the same services at a hospital within our network. However, patients who are receiving balance bills are unhappy with our insurance and may leave for another provider. Providers: –This insurance company doesn’t have a contract with us, and now won’t pay what we’re owed. How do I receive appropriate payment?

States Efforts on Balance Billing Many states have balance billing laws However, most of these pertain only to bills within the network. States now are enacting laws pertaining to out-of-network visits. Lets take a look at how two states have handled this issue recently…

California vs. New York

California 2008 Legislative session, Cal/ACEP brokered bill SB981, which passed the state legislature –Ended balance billing, but out-of-network physician fee equivalent to 250% of the 2007 Medicare Rates. –This bill splintered physician groups; concern for locking the rate too low –SB 981 was vetoed by Gov. Schwarzenegger October 2008: –California’s Department for Managed Health Care (DMHC) issued a regulation banning balance billing. –Rationale being that billing issues should be resolved between insurance companies and providers

California January 8, 2009: –The California Supreme Court ruled that Balance Billing was illegal in the case of Prospect Medical Group vs. Northridge Medical Center Overturned rulings by trial court and a court of appeal. No formal ruling on fair payment ACEP, and other California medical associations, are working for a reversal

New York In February 2008 Attorney General Andrew Cuomo began investigating Ingenix –Alleged that insurers colluded through Ingenix to under-reimburse out-of-network vendors. This left the patients responsible for the remainder Subpoenas were sent to major carriers

Cal/NY Summary Service providers are unable to balance bill No laws regarding fair payment for out-of- network providers Billing must be settled between insurer and provider California New York Balance billing not implicitly forbidden Insurers investigated for “collusion” on rate setting practices Focus placed on payment practices

How Other States Handle the Issue… Texas: –Balance billing by out-of-network providers is allowed. –SB 1731 (passed on 2007) requires that insurers provided increased access to pricing and network participation data. Maryland: –Providers may not balance bill for covered care. –Urgent and emergency care is considered covered. –Under Maryland law, out-of-network reimbursement rates are standardized.

How Other States Handle the Issue… Florida: –Balance billing by out-of-contract providers is illegal in emergency situations. –Providers are paid the lesser of a) billed charges, or b) the “usual and customary” fee. –A dispute resolution process has been established but is deemed not helpful by many. Colorado: –The HMO is required to either maintain an adequate network or provide payment at billed rates

Conclusion Balance billing is an issue nationally Many potential solutions exists Only a small handful of states have addressed the issue of out-of-network billing

References elatedProducts&prodId=59980 (Accessed ) elatedProducts&prodId= (Accessed ) (Accessed ) Vesely, R; Balancing act: N.Y., Calif. raise hackles with differing plans to regulate balance billing.; Modern Health Care; 2008 Aug 18; 38(33): 30-1 ACEP Policy Statement on Balance Billing; Published in the Annals of Emergency Medicine 2009:54:14 Green, J; California Court Bans Emergency Physician Balance Billing: Emergency Physicians Decry Major Blow to Beleaguered Emergency Care Safety Net; Ann Emerg Med Jun;53(6):A23-5 Bell, A; NY OKs Balance Billing; Billing.aspx (Accessed ) Billing.aspx Managed-Care; Wikipedia Entry; (Accessed ) Bodenheimer, T.S.; K. Grumbach; Understanding Health Policy: A Clinical Approach; Lange, a McGraw-Hill Company, 2002