Across the country, insurance companies are creating extremely narrow networks, removing physicians from their plans, and effectively decreasing access for patients while increasing their profits.
Patients are often caught unaware and forced by their insurer to pay higher out-of-pocket costs when seeing out-of-network physicians. This situation has been termed “surprise billing” by some, although the real moniker should be “inadequate networks.”
As specialty physicians, we 100 percent agree that patients should not be held accountable for inadequate networks created by insurers, nor should they be caught in the middle of payment disputes between insurers and physicians. As our congressional representatives debate proposals to address this issue, however, they must be careful not to create new problems that could wind up costing patients down the road.
Fair and effective federal legislation should consider state successes and failures.
Proposals to use government rate-setting as a solution for surprise medical billing — including the package currently being pushed by Sen. Lamar Alexander (R-Tenn.) and Reps. Frank Pallone (D-N.J.) and Greg Walden (R-Ore.) — remove any incentive for insurers to negotiate in good faith and incentivize even narrower networks. This government-set rate becomes the maximum amount that an insurer will ever pay, which in turn restricts access to live-saving specialty services.
As a California specialty physician, I’ve witnessed contract terminations with physicians who have historically participated in health plan networks, narrowing of networks and decreased access to care in the wake of my state’s 2016 law (AB 72) to address surprise billing. Beyond my personal experience, a RAND Corp. study published in the American Journal of Managed Care also reported that long-standing contracts were terminated by health plans after the passage of the law, and a recent report from the California Medical Association confirms these findings.
CMA has also reported that four large health plans closed their networks to new physicians, and patient complaints about accessing care increased 48 percent in California since the law’s enactment. Finally, CMA notes that more than 90 percent of physicians agreed that federal legislation modeled after AB 72 would accelerate consolidation of the health care market.
The New York surprise billing law does not rely on government rate-setting. It references an independent, third-party benchmarking database in an independent dispute resolution process, thereby protecting patients from surprise billing while incentivizing insurers to expand their networks and increasing access to necessary specialty services. What’s more, according to researchers, there has been a 34 percent drop in out-of-network billing since the law’s enactment.
When a patient is seen in the emergency room by an out-of-network physician in New York, the physician submits a bill, and the insurer pays an amount. If there is disagreement, the IDR arbiter chooses either the physician bill or the insurer’s payment as the final amount. This minimizes the incentive for insurers to pay extremely low or for physicians to charge extremely high.
The arbiter must consider case-by-case circumstances and geographic-specific, usual-and-customary rates as reported by an independent, third-party benchmarking database based on physician charges. For surprise billing legislation to be effective and fair, it is essential to incorporate the entirety of the New York IDR structure, including the independent, third-party benchmarking database, and not cherry-pick portions of it.
Federal legislation to protect patients must also include network adequacy standards to stop insurers from creating even-narrower networks that prevent patients from receiving the necessary specialty and subspecialty care they need when they need it. Such legislation should require transparency, accuracy and independent verification of the information reported by health plans.
The New York law applied time and distance rules for network adequacy to both HMOs and PPOs and required that all plans have out-of-network coverage options. But enforcement can be difficult.
In California, a recent review by the California Department of Managed Health Care found a 25 percent error rate in physician network data within insurance company provider directories. To ensure that this doesn’t happen on a national scale, insurers should be held accountable for their directories. They should be required to pay the entire amount billed for each instance that the insurer violates the network adequacy rules and is unable to provide an in-network physician within the specified time and distance.
Similarly, if a patient or physician relies on an inaccurate network directory, the insurer should also be obligated to pay the full amount. If there are no ramifications for inadequate networks, the health plan can continue to offer “in name only” health coverage to patients.
Finally, just like the New York model, federal legislation should ban balance billing for medical emergencies but should maintain patient choice and allow patients to choose out-of-network physicians for elective medical care as long as the patient is fully informed.
We all want to protect patients from surprise medical bills, but we must do so without creating new problems. Patients, physicians and even health plans in New York agree. As the president of the New York Health Plan Association said recently, “The existing Independent Dispute Resolution process has worked well to ensure reimbursements for emergency services are fair and reasonable while holding individuals harmless.”
Congress should model national legislation on what has already worked in the real world: the New York law, which has ended surprise billing, increased access and created a level playing field between insurance companies and physicians.
Lynn Jeffers, MD, MBA, FACS, is a board-certified plastic surgeon and president of the American Society of Plastic Surgeons and serves as spokesperson for the Alliance of Specialty Medicine, a coalition of national medical societies representing more than 100,000 specialty physicians in the United States.
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