Physician and Insurer Negotiations Over Uncontracted Providers Fail

Starting March 1, uncontracted providers will no longer be able to bill consumers if they believe the insurer has not properly compensated with them. But without a formal agreement on payment levels, physicians may find themselves at the mercy of insurers

Physicians and health insurers met for several months last year to find an agreement on billing for providers without contract, but failed to reach an agreement, just as they had failed in the 2017 session with House Bill 2339.

“Providers will be at the mercy of their insurers. … The ramification for the entire contracting process is at stake,” said Courtni Dresser, a lobbyist for the Oregon Medical Association. “We need to find a way to reasonably and fairly reimburse providers for out-of-network care.”

The Department of Consumer & Business Services convened the negotiations, trying to reach that sweet spot that allows for a fair payment without either forcing physicians into unfavorable contracts or to pay uncontracted physicians so liberally that they have no incentive to sign a contract with the insurer.

The state agency also tried to regulate the health plans for network adequacy, but could not get the approval of a majority of the stakeholders, which also included AARP and the Oregon State Public Interest Research Group, to agree to their terms.

“The division will take a dim view toward potentially narrower networks, which may be addressed through other provisions of law,” according to the DCBS report on the negotiations. “It needs to be said that the department is concerned about the fact that it could not reach a negotiated solution with all parties involved. The department is particularly concerned of the downstream effects on consumers while providers, facilities and carriers continue complex negotiations regarding reimbursement, of which 3-5% of cases are covered by the provisions of HB 2339.”

A scaled-back version of House Bill 2339 signed by Gov. Kate Brown last June protected consumers by ending a notorious practice known as balance-billing, where physicians send patients a steep bill when the insurer won’t pay the rate they want. When patients don’t pay, they have been sent to collections.

Often, the consumer has no idea that the physician is not covered by their insurance, since many of these doctors, including anesthesiologists and radiologists, practice in hospitals that are covered.

Starting March 1, physicians will no longer be able to send bills to patients to recoup the payment for their work. Any dispute over payments will have to be worked out between the insurer and the physician.

“We are particularly concerned that DCBS produced a report without an actual solution,” Dresser said.

The two sides have engaged in a game of chicken -- coming close to a deal but neither side willing to settle, exposing both to a chaotic arrangement that leaves them to work out payments on a case-by-case basis.

The two sides agreed to use the historical data in the all-payer, all-claims database as a metric for the benchmark, but dug in over whether payments should be 100 percent of the median claim or 125 percent, adjusted for inflation.

Without a deal, the upper hand would seem to go insurers, who in the past have used their superior bargaining power to drive down rates for nurse practitioners and physician assistants.

”We are already hearing from providers that this bill is being used by insurers to tell potential out-of-network providers that the insurance company from now on will determine what they will pay providers,” said Dresser. “And for some in-network providers, renewal conversations are already leading to rate reductions based on this bill.”

Providence Health Plan spokesman Gary Walker did not respond to questions from The Lund Report for comment, but at a public hearing on this subject earlier this month, lobbyist Jessica Adamson was firm that her organization was unwilling to pay higher than the median of reported claims in the all-payer, all-claims database.

Adamson and Elise Brown, the lobbyist for America’s Health Insurance Plans, were also firm on not delaying the March 1 date to hold consumers harmless. Brown said the state’s other insurers supported the position of Providence.

In addition to the all-payer, all-claims metric, a rejected proposal from DCBS would have required insurers to provide a full list of providers that they have been unable to reach agreements with and to call upon provider licensing boards and insurers to determine the source of contract negotiation concerns and opportunities for increased networking.

Reach Chris Gray at chris@thelundreport.org.

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