Sha’Ron James Insurance Consumer Advocate

Tasha Carter, Director Division of Consumer Services Department of Financial Services

Balance Billing: The Impact on Consumers Tasha Carter, Director Division of Consumer Services Department of Financial Services

Division of Consumer Services v More than Advocated on behalf ofThe Helpline has recovered consumer calls answered since 2011 to insurance consumers since million 82,000 Floridians$123 million

What is Balance Billing? The practice of a healthcare provider billing a patient for the difference between what the patient's health insurance chooses to reimburse and what the provider chooses to charge.

Scenarios for Balance Billing Emergency Settings Surprise Billing Situations in a Network Hospital Unintentional Use of Non-Network Providers

The Impact on Consumers Financial Stability Forego Medical Treatment Stress

Current Consumer Protections Balance Billing Prohibition Applicable only to HMOs: Emergency Services Covered Services in In-Network Facilities Affordable Care Act All Emergency Services are Processed as In-Network Does not Prohibit Balance Billing DFS, Division of Consumer Services

Challenges to Assisting Consumers Administrative and Regulatory Limitations Lack of Administrative and Regulatory Authority Lack of Standardized Fees

Questions?

David Rogers, Ph.D. Assistant Professor of Chemistry

Toma Wilkerson, Director Division of Rehab and Liquidation Department of Financial Services

Balance Billing Issues In Receiverships Presented by: Toma L. Wilkerson, Division Director Division of Rehabilitation and Liquidation

Mr. Smith’s Bill Amount due from you is $43, as of 09/22/2013 for Inpatient Services performed on March 31, Total Charges$119, Discounts/Adjustments Given-$76, Insurance Payments Received$0.00 Amount You Paid$0.00 “…this is a frustration I don’t need. Please can you help.” “…this is a frustration I don’t need. Please can you help.”

Receivership Overview As Receiver we: Are appointed by a court to oversee a troubled insurance company Receiver’s duties in liquidation generally include: Take control of the insurer Collect/control assets Pay claims/bills based on priority scheme

Reasons for Receivership Grounds for Receivership: Impaired or Insolvent Criminal activity- fraudulent transactions Failed to comply with OIR order to make good on impairment of capital or surplus Continued operations hazardous to policyholders, creditors, stockholders & public Consent to receivership

Balance Billing In Receivership Surprise balance billing (unexpected bill from out of network provider) Difference between the provider’s billed charges and the amount the HMO paid for the services Charges which should have been paid by the insurance company in receivership but for which the provider is holding the member responsible

Consumer Protection in Health Receivership Florida Life & Health Insurance Guaranty Association (FLAHIGA) Pays health insurance claims up to limit of $300,000 or replacement health coverage obtained Florida Health Maintenance Organization Consumer Assistance Plan (FHMOCAP) Pays health insurance claims up to limit of $300,000, six months or replacement health coverage obtained

Health Company Liquidations Balance billing claims of commercial members may be covered by FLAHIGA & FHMOCAP No similar protection for Medicare beneficiaries No similar protection for Medicaid recipients

HMO Member Exposure to Balance Billing

HMO Liquidations 1997 – 2015: 14 HMO receiverships All except one resulted in liquidation Impacting over 270,000 HMO members Majority HMO liquidations over the past 10 years involve Medicare/Medicaid

Problems Faced by HMO Members Delay in payment on claim/no payment on claim Problems when no guaranty association coverage Member/patient referred to credit agency Credit ratings potentially impacted Statutory prohibitions have little impact Inability to enforce statutory prohibitions

Balance Billing HMO Receivership Data – PAID Over $313, Members 8 receiverships PEND About $26, Members 2 receiverships TBD Evaluate over $330,000 claims filed by members 3 receiverships

Balance Billing & Consumer Inquiries In 5 year period, we have received 25,787 inquiries from consumers relating to health care receiverships. Of these, 7.5% - or 1,923 - calls and other inquiries have related to balance billing

Specific Member Examples

Example … Please be advised that your account in the amount of $ has been referred to collections by the above named creditor(s). A check made payable in full to Pearl Law Offices, LLC should be sent to this office in the enclosed envelope. At this time, no attorney with this firm has personally reviewed the particular circumstances of your account. Although this letter is from an attorney, the attorney is acting solely as a debt collector and not in any legal capacity when sending the letter. This letter should not be construed as a threat that any attorney in this firm will file a lawsuit against you… Law Offices, LLC Attorneys at Law 1234 Olde Ninth Street, Dayton, OH Phone: /26/15

Receiver’s Handling of Balanced Billing Analyze the facts regarding the bill Inform consumer of prohibition against balance billing Send educational letter to provider informing of statutory prohibitions Encourage Provider to file a claim in the estate in lieu of balance billing Refer matter to Department of Health for additional action, if necessary

Questions

Joy Ryan America’s Health Insurance Plans

Charges Billed by Out-of-Network Providers: Implications for Affordability Charges Billed by Out-of-Network Providers: Implications for Affordability Florida Insurance Consumer Advocate’s Forum: Finding a Balanced Approach to Unexpected Medical Expenses October 15, 2015 Joy Ryan, AHIP Retained Counsel

Key Takeaways Our study identified a pattern of average billed charges submitted by out-of- network (OON) providers that far exceeded Medicare reimbursement for the same service performed in the same geographic area. These findings reinforce conclusions from our previous reports that used the three highest billed commercial charges in a geographic region. There was wide variation in out-of-network charges from different providers for the same procedure. For example, billed charges for "muscle-skin graft trunk" differed from $3,565 for the 25th percentile to $14,998 for the 75th percentile, and for "low back disk surgery"—from $3,013 for the 25th percentile to $10,216 for the 75th percentile.

Key Takeaways Among the 97 procedures studied, average out-of-network billed charges, as a percentage of corresponding Medicare fees, ranged from a low of 118% of Medicare (“eye exam new patient") to a high of 1382% of Medicare (“electrocardiogram (ECG)/monitoring and analysis”). For many procedures, we found regional patterns in the ratio of out-of-network charges to average Medicare fee at the state level. For example, states that had high out-of-network charge-to-Medicare fee ratio for gall bladder surgery also had high ratios for other gastrointestinal (GI) procedures.

AHIP’s new report, “Charges Billed by Out-of-Network Providers: Implications for Affordability,” is available online: Thank you! Joy Ryan, AHIP Retained Counsel Office:

Jack Hoadley, Ph.D. Health Policy Institute Georgetown University

Balance Billing: How Are States Protecting Consumers from Unexpected Charges Jack Hoadley, Ph.D. Health Policy Institute, Georgetown University Florida Insurance Consumer Advocate’s Forum: Finding a Balanced Approach to Unexpected Medical Expenses October 15, 2015

Today’s Talk on Balance Billing What it is and when can it happen Elements of consumer protection Seven state approaches Cross-cutting issues Snapshot of other states State action in 2015 Questions & discussion 38

IN-NETWORKOUT OF NETWORK $$ Covered Services $ $ 39

Balance Billing Scenario #1: The Informed Consumer 40

Balance Billing Scenario #2: Emergency Services in a Network Facility 41

Balance Billing Scenario #3: Non-Network Providers in a Network Facility (Non-Emergency) 42

Primary Elements of Consumer Protection Disclosure and transparency Prohibition on providers’ balance billing Hold harmless requirement for insurers Ensuring fair payment 43

Elements of Consumer Protection: Disclosure and Transparency Disclosure – Insurer notices and plan summaries – Provider notices at point of service Transparency – Provider directories – Hospital data with out-of-network providers 44

Elements of Consumer Protection: Balance Billing vs Hold Harmless Prohibit balance billing by providers – Assignment of benefits: transferring right of reimbursement to out-of-network provider – Limits providers from getting full payment Require insurers to hold members harmless – Can result in higher premiums 45

Elements of Consumer Protection: Ensuring Fair Payment Rate regulations using different methodologies: – Usual and customary – Percentage of Medicare – Prior out-of-network payments Independent dispute resolution (IDR) 46

State Approach: Florida Prohibits balance billing for emergencies (Scenario #2) under HMO plans – Insurers must pay lesser of provider charges, usual and customary, or agreed upon amount For HMO plan, prohibits balance billing for any covered services at in-network hospital provided by out-of-network provider (#3) (Dept. of Insurance interpretation) No provision for PPOs 47

State Approach: California Prohibits emergency room providers from balance billing members (Scenario #2) Applies to health plans regulated by Department of Managed Health Care (HMOs and most PPOs) Established by California Supreme Court - Prospect Medical Group case “Unfair billing practice” under Dept. of Managed Health Care regulations 48

State approach: Maryland Requires insurers to hold harmless HMO members (Scenarios #2 and #3) – Also applies to PPO members with assignment of benefits Prescribes payment methodology for out- of-network physicians in certain situations Requires disclosure at point of service for certain physicians who want to balance bill 49

State Approach: Colorado Hold harmless when consumer is unaware of out-of-network provider: emergency (Scenario #2) and surprise billing scenarios (Scenario #3) Also applies to referrals with inadequate networks Issue with high deductible health plans 50

State Approach: Texas Prohibits balance billing – Emergency scenario (#2) for HMO members – Surprise billing scenario (#3) and inadequate network situations for EPO members Disclosure requirements for PPO plans Reporting requirements for in and out-of- network claims Mediation process with $500 threshold 51

State Approach: New York Implemented in 2015 Prohibition on balance billing in both emergencies (Scenario #2) and surprise billing (Scenario #3) with assignment of benefits Has guidelines on reasonable payment amounts Establishes IDR using “baseball” approach Requires disclosure by health plans, and hospitals and providers at point of service 52

State Approach: New Mexico No laws on balance billing Insurers address on case by case basis One insurer generally holds consumers harmless 53

Summary of State Approaches CA*COFL*MD*NMNYTX* Hold harmless or prohibition, Scenario 2 (emergency) Yes NoYes Hold harmless or prohibition, Scenario 3 (surprise bills) NoYes NoYes Hold harmless or prohibition in other situations NoYesNoYesNoYes Mediation or dispute resolution process YesNoYesNo Yes Disclosure beyond standard notice No YesNoYes *Application of hold harmless/prohibition provisions vary by type of plan; see full report for details 54

Degree of Consumer Protection Some approaches more effective at keeping consumer out of dispute between plan and provider Some gaps in protection are based on segments of market not covered 55

Health Care Setting Emergency vs. surprise billing situations (Scenario 2 vs. Scenario 3) Greater support for emergency situations but growing attention to surprise billing Narrowing networks could increase likelihood, drive interest in addressing surprise billing 56

Rate Setting Maryland sets specific requirements for payment levels to be paid by insurers New York sets guidelines for reasonable payment – Fair Health Role of assignment of benefits 57

Dispute Resolution New York uses independent dispute resolution: provider or insurer can initiate Texas requires consumers to initiate Other state processes (CA, FL, TX) rarely used 58

Disclosure and Transparency Texas: in lieu of more direct protections New York: complement to other measures Value – To consumers – To media and policy community 59

Impact on Providers and Insurers Balancing provider and insurer interests Impact on market – Health plans & ability to negotiate with providers – Adequate networks – Increase in premiums 60

Source: Kaiser Family Foundation, State Health Facts, State Restriction Against Providers Balance Billing Managed Care Enrollees Blue: Study states with balance billing laws Green: Other states with balance billing laws Snapshot of State Laws Addressing Out-of-Network Providers 61

State Action in 2015 Passed (as of October 2015) – CT: address ER scenarios and rate setting, surprise billing scenarios, disclosure requirements – TX: lower threshold to $500 for mediation Failed or Pending (as of October 2015) – CA: extension of prohibiting balance billing to surprise billing scenarios – FL: extension of prohibiting balance billing for emergency scenarios to PPOs – NJ: establishing dispute resolution process for surprise billing scenarios – CO: prohibit out-of-network providers from balance billing at in-network facilities 62

NAIC Model Law Initiative to create a new network adequacy model law Intent to address balance billing for out-of- network services Negotiations still in progress 63

Georgetown report available at: billing--how-are-states-protecting-consumers-from- unexpe.html Questions?

Forum will resume at 1:00

Kyle Simon, Director of External Affairs & Communications Florida CHAIN

Insurance Consumer Advocate’s Forum: Finding a Balanced Approach to Unexpected Medical Expenses October 15, 2015 Kyle Simon, External Affairs and Communications Director Florida CHAIN Community Health Action Information Network

Protecting consumers from unfair surprise bills Consumers with protection – Medicaid enrollees – Medicare beneficiaries – Worker’s compensation – HMO members in an ER No protections for PPO subscribers Community Health Action Information Network

Consumer uses in-network facility & surgeon In-network surgeon Completes pre- authorization Confirms in-network hospital Out of network anesthesiologist Out of network pathologist = Large out of network “balance bill” CHOICE When consumers have no choice insurers and providers must hold consumers harmless Community Health Action Information Network

Consumers cannot protect themselves Community Health Action Information Network

Out-of-network ER docs at in-network Hospitals Texas 2013 Data from Pogue S, Randall M. Surprise medical bills take advantage of Texans: Little known practice creates a "second emergency" for ER patients. Center for Public Policy Priorities; Community Health Action Information Network

Prevalence of OON providers at in-network facilities Percentage of in-network hospitals with no in-network provider type, by physician specialty Average percentage of dollars billed OON at in-network hospitals, by physician specialty Community Health Action Information Network

Charles Baker had chest pain The hospital is in network The ER docs are out of network Balance billed $1,235 The ER physician group practices at hospitals throughout the area ER physicians are OON for major insurers Community Health Action Information Network

Deciphering the balance bill In-networkOut-of-network Billed from the ER doctor $1,550 Insurer’s in-network contracted amount agreed in advance $670n/a Insurer’s “allowed amount” paid out-of-network n/a$450 What your insurer pays 80% coinsurance $550 x.8 = $536 70% coinsurance $450 x.7 = $315 Your coinsurance/cost-sharing 20% coinsurance $550 x.2 = $134 30% coinsurance $450 x.3 = $135 Balance bill –difference between billed charge and allowed amount out-of-network n/a $ $450 = $1100 Total amount consumer owes co-insurance plus and balance bill $134 $135 + $1100 = $1,235 Example assumes annual deductible has been satisfied. Adapted from Pogue S, Randall M. Surprise medical bills take advantage of Texans: Little known practice creates a "second emergency" for ER patients. Center for Public Policy Priorities; Community Health Action Information Network

One third of consumers had surprise bills USAFL Had surprise bills after hospital/ER visit 37%35% Was surprised to learn a doctor, lab, or facility believed to be in-network was actually out-of-network 14%18% Total Of those that had surprise billing issues Charged out-of-network when thought the provider was in-network 14%12% Total Source: Consumer Reports® National Research Center. Surprise medical bills survey: 2015 nationally-representative online survey Community Health Action Information Network

Consumers are unaware of remedies for problems USAFL Know what state agency handle health insurance complaints11%13% Understand the right to external appeal if health plan denies coverage21%22% Total Why consumers didn’t take any action - I didn't think it would make a difference42%48% I didn't have time/it wasn't worth my time18%13% I was confused about what to do or found it too complicated14%8% I didn't know how to take action/where to complain12%10% I was afraid of creating trouble with the plan or physician4%2% Total22972 Source: Consumer Reports® National Research Center. Surprise medical bills survey: 2015 nationally-representative online survey Community Health Action Information Network

Solutions to the surprise balance bill Insurers and providers must hold patient harmless from out-of-network charges in any case where the consumer has no choice – – Patients should be responsible for their in-network share of costs only – Resolution of out-of-network charges should exclude consumer participation – Surprise out of network providers cost-sharing apply to in-network deductible Provider directories must identify in-network facilities without in-network contracted hospital-based providers At point of purchase insurers should disclose – Percent of out-of-network ER physicians at in-network ERs – Percent of all out-of-network hospital-based providers at in-network hospitals Community Health Action Information Network

Solutions to health insurance literacy gaps Every EOB should contain process for internal and external appeal for benefits and payment determination Community Health Action Information Network

Jeff Scott, General Counsel Florida Medical Association

Audrey Brown Florida Association of Health Plans, Inc.

Ashley Norse, MD, FACEP Florida College of Emergency Physicians

Balance Billing Ashley Norse MD Immediate Past President Florida College of Emergency Physicians October 15, 2015 Daniel F. Brennan MD Chair, Medical Economics Committee Florida College of Emergency Physicians

Patients Caught in the Middle

Extreme Variability in How Insurers Pay Out of Network Payments all over the board: 0, 125, 150, 170, 200, 250, 325% Of Medicare allowables Patient liable for balance bill Martin Gottlieb and Assoc., All FL OON payor data 4/2014 – 12/2014 0%

$679 $372 $307 $49 Patient Payment $ = UCR CPT th %ile 336xx MGA data 850,000 ED visits July 2013-June2014 Average Patient Responsibility Insurance Payment Average Physician Out Of Network Charge Average Insurance Payment Average Patient Responsibility Average Patient Payment Copay - Co-insurance Deductible Balance Bill Emergency Physician Billing  $180

Balance Billing A burden for patients – “Surprise” bill – expect ED coverage – Out Of Network + low payor payment = balance billing – A symptom of the inability of providers to contract for an adequate payment from insurers

Balance Billing Even without balance billing, patients (both in and out of network) often face large bills by insurance plan design – High copays designed to deter ED use – High deductible plans

Florida Emergency Medicine Volume Mix 1 CONTRACTED IN NETWORK 88% OON 12% COMMERCIAL/ MANAGED CARE 26% UNINSURED 20% MEDICAID 30% MEDICARE 23% FL has 3 rd largest uninsured population 3,600,000 – Henry J Kaiser Family Foundation, CDC Out Of Network = Less than 4% of all FL ED visits This 26% subsidizes the other 74% MCR/MKD/UNINS Reimburse < cost of care 1 MGA data, 850,000 FL ED visits, July June2014 OON 12% AHIP Feb2013

HB 221 (Trujillo) 2016 Similar to SB 516 Bean/Garcia / HB 681 Trujillo 2015 Balance Billing Ban Proposed OON Payment 1.Negotiated amount 2. Insurer’s UCR 3.Medicare Also modifies existing HMO law Compounds problems of last session’s proposals

History of Insurers Manipulating “UCR” Payment Database Ingenix Database UHC Aetna Cigna WellPoint Underpaid providers Patients left with balance bill

Medicare is Not a Reasonable Basis for Physician Reimbursement CPI – US All Item, US Dept of Labor Bureau of Labor Statistics (+45% / 17 years) Medicare Allowable, 99284, FL Loc 1 / 2, and MGA data (+23% / 15 years) Average Annual Family Health Insurance premiums (+66% / 10 years) Health Insurance CEO’s 2013 compensation – Center for Public Integrity 10/8/15http:// Health Insurance CEO’s largest for-profit companies Compensation packages $125 million plus

EPs seek FAIR Payment Tow + inpound fee: $300 + mileage Miami Dade Critical care st hour $ Medicare 2015 Allowable FL Loc 1 /2

Unintended Consequences HB 221 Insurers fully control payment – No incentive to contract above Medicare – Even narrower networks Providers and Access at risk – Medicare/Medicaid/Uninsured reimburse < cost of care Gross revenue decreases 30-35% at Medicare rates 1 Net physician compensation drops by 50% Community safety net placed at risk 1. MGA / EPCF data, Managed care at Medicare rates vs. current contracts Typical ED Payor Mix

Problem #1 = HB 221 Payment Provisions Solution – Define UCR required OON payment – Mimic HMO Law – “usual and customary charges”

Problem #2 Emergency Medicine CoPay /Co-Insurance & Deductibles Unique to Emergency Medicine - EMTALA / patient advocacy – Emergency Physicians see all patients irrespective of ability to pay – Emergency Physicians are unable to collect copays / co-insurance or deductibles at point of service Solution – Insurers “front the money” – Insurers directly reimburse ED providers – Insurers collect co-pays, co-insurance and deductibles from subscribers according to their plan design

Problem #3 – Dispute Resolution MAXIMUS – Rarely used (9 claims accepted for review in 2014) – Viewed by providers as unreliable, arbitrary Solution: – Standard dispute resolution procedures Arbitration – ie AAA Legal recourse Prevailing insured or beneficiary costs recoverable (e.g., F.S )

EPs are Patient Advocates 24/7/365 Seek FAIR Payment to Maintain Access to Care With FAIR Payment No Balance Billing Occurs

Bill Bell, General Counsel Florida Hospital Association

Forum will resume at 2:45

Public Comments

Closing Remarks