Insurance Commissioner Tackles Surprise Balance Billing for Consumers

Physicians and insurers agree that a consumer shouldn’t be punished financially for mistakenly going outside a health plan network, but the two sides are at loggerheads over setting a fair payment for health services provided out of network.

Insurers, physicians, and consumer advocates all agree: surprise bills are a big problem.

Consumers are making numerous complaints about attempting to utilize their health plans’ networks, only to find some providers and services at Oregon hospitals are not actually in their network. If they mistakenly receive care from an out-of-network provider, they can be on the hook for hundreds or even thousands of dollars, which may not count toward their deductible.

“If they don’t pay them, they can be sent to collections or put on a payment plan,” said Laura Cali Robison, the state insurance commissioner.

Both providers and insurers think that patients should be held harmless by contracting disputes, but there’s wide disagreement about where the rubber hits the road.

Cali Robison has introduced House Bill 2339 to resolve the growing dispute between physicians and insurers, which is a side effect of narrowing networks, where insurers save money by excluding many providers who want to be paid on more favorable terms.

To add to the complication, some physicians may be in an insurer’s network for a gold-standard plan, but not for a more limited bronze plan, which have produced cost savings for insurers by restricting the number of providers available to consumers to just those who have agreed to the most favorable contracts.

“I may have a contract with an insurer, but I have no idea if I am in network for a particular plan,” said Dr. Sherif Zaafran, a Houston anesthesiologist and national advocate for payment transparency.

In the worst situations, consumer advocate Jesse O’Brien of the Oregon State Public Interest Research Group said some patients have done their homework, made sure everything was in network, but a last-minute substitution of an anesthesiologist can leave them with a $7,000 bill, as the insurer and the physician fail to agree on a reasonable payment, dumping the problem on the patient.

Medicare Rates vs Fair Health Data

Regence BlueCross BlueShield lobbyist Tom Holt and other insurance representatives want to index the out-of-network payment claims based on Medicare fee-for-service costs. One amendment would fix these provider reimbursements at 175 percent of Medicare.

But Dr. Mark Norling, an anesthesiologist, said Medicare reimburses some of his services at a rate of just a third of private insurance, and dictating such a rate would drive down the rates that all providers receive and discourage insurers from offering fair contracts. “Medicare rates are political and not market based,” Norling said.

Norling and other physicians want the state to index reimbursements according to data compiled by Fair Health, a New York nonprofit that has a massive database of private insurance claims from every part of the country, down to the zip code. Two states -- New York and Connecticut -- have resolved the payment problem by using this database.

On Wednesday, doctors including Zaafran suggested setting out-of-network payments at the 80th percentile of bills in the Fair Health database.

But O’Brien said the New York law uses Fair Health data for billed charges, and not the actual payments that insurers give physicians, although Fair Health gathers both sets of data.

Billed charges are arbitrarily set and have no relationship to actual cost or actual payment. Pegging the index to these made-up numbers, O’Brien said, would create a perverse incentive for providers to artificially inflate their charges.

If the rate for out-of-network payment is set too high, it could discourage physicians from signing in-network contracts with insurers, who staunchly oppose using the nonprofit database. But physicians still prefer Fair Health because it can be used to determine actual market conditions.

Zaafran told The Lund Report that the Fair Health database was much fairer because it’s calculated based on what insurers are already paying, and pegging it to a percentile could screen outliers and still allow insurers to set better rates for doctors who agree to their contracting terms.

Cali Robison intends to continue the negotiations between the insurers and physicians to determine a fair price.

O’Brien said the results of those talks may indicate whether the two sides care most about their patients or their bottom line.

“If they can’t come to the table and agree on something, then they care more about winning the reimbursement war than helping their customers,” he said.

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