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

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 flawed1. 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.

– 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

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

• http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=59980 (Accessed 12-5-09)

• http://www.nytimes.com/2009/01/13/health/policy/13care.html?pagewanted=2&_r=1 (Accessed 12-6-09)

• http://www.hmohelp.ca.gov/library/reports/news/prbbregs.pdf (Accessed 12-3-09)• 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. 2009 Jun;53(6):A23-5

• Bell, A; NY OKs Balance Billing; http://www.lifeandhealthinsurancenews.com/News/2009/5/Pages/NY-OKs-Balance-Billing.aspx (Accessed 12-5-09)

• Managed-Care; Wikipedia Entry; http://en.wikipedia.org/wiki/Managed_care (Accessed 1-6-09)

• Bodenheimer, T.S.; K. Grumbach; Understanding Health Policy: A Clinical Approach; Lange, a McGraw-Hill Company, 2002