Out-of-Network Balance Billing Battle Continues with the ER Right in the Middle

Out-of-network emergency department visits continue to play a central role in the ongoing battle over balance billing in which providers, patients, and insurance plans all point to the other and cry foul. And as more and more stories emerge about patients who are left with enormous bills after being treated by out-of-network emergency physicians at an in-network hospital, political pressure to fix the issue is growing.

Why Emergency Medicine Matters in the Balance Billing Debate

The issue of surprise bills affects all kinds of providers who provide services out-of-network. A 2016 Kaiser Family Foundation Issue Brief on Surprise Medical Bills highlighted the following 2012 study by the New York Department of Financial Services which found that “90 percent of surprise medical bills were not for emergency services, but for other in-hospital care.” Specialty physicians such as anesthesiologists, pathologists, surgeons, and radiologists accounted for the majority of out-of-network bills.

However, the KFF brief also cited a 2013 survey by the Texas Center for Public Policy Priorities which showed that among the top three insurers in Texas, as many as 56 percent of in-network hospitals had no in-network emergency physicians.

There are many reasons ER visits lie at the nexus of this issue, but the following three factors are especially critical:

1. Emergency physicians are required to treat all patients regardless of insurance status, which means they cannot turn away patients because they are out of network or even uninsured (KFF estimates around 10 percent of the nonelderly population were still uninsured in the first quarter of 2015). At the same time, emergency physicians often receive no payment at all for services rendered to patients who don’t have insurance and increasingly for insured patients who have very high deductibles (for both in-network and out-of-network plans).

According to the Kaiser Family Foundation, the Federal Reserve estimates that fewer than 50 percent of Americans “would be able to completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.” With the average annual deductible in job-based health plans exceeding $1,200 for an individual in 2014, that translates into a lot of bad debt for emergency physicians who are operating on very narrow financial margins.

2. Emergency physicians often are not employed by the hospital and instead work as contractors. Therefore, they are not subject to the same in-network insurance arrangements as the hospitals themselves. A 2014 New York Times article says as many as 65 percent of all hospitals hire emergency physicians in this way.

3. Left to negotiate their own contracts with payers, emergency physicians often feel forced to remain out-of-network when the payment rates offered are unfair or below market value. According to Mark Reiter, president of the American Academy of Emergency Medicine, most emergency physicians don’t want to be out of network.

“In my experience, the groups do anything in their power to remain in-network,” Reiter told Consumerist Magazine. “The last thing they want to do is go out-of-network because they understand how burdensome that is for patients.”

A September 2015 survey by the American College of Emergency Physicians (ACEP) found that 20 percent of respondents “reported contemplating or knowing other emergency physicians who opted out of health insurance networks, and 90 percent of them say the reason was because health plans were not willing to negotiate reasonable market rates for services.”

State and Federal Response

A December ruling by the Centers for Medicare and Medicaid Services (CMS), the Department of Labor, and the Department of the Treasury partially addressed the issue of balance billing with the “greatest of three” guideline, though emergency physicians felt the guidance lacks the protection of a neutral party determining fair out-of-network rates for services and allows the insurance companies to pay whatever they want for out of network services. ACEP is considering legal action to address their concerns.

As well, a bill introduced in the House by Rep. Lloyd Doggett [D-TX] back in October 2015would mean emergency physicians “may not charge the individual more than the amount that the individual would have been required to pay in cost sharing if such items or services had been furnished by a hospital or critical access hospital, as applicable (or by a provider of services or supplier, as applicable) that is within such network or that is otherwise such a participating provider of services or supplier.” What bills like this fail to consider, however, is that there is no standard rate for in-network charges because payers negotiate separately with each provider.

A New York law that went into effect back in 2015 basically removes patients from the equation of out-of-network billing disputes. As long as they sign a waiver accepting in-network cost-sharing responsibility, the providers and payers are then left to negotiate the difference. The law also established an independent resolution process to help providers and payers reach a fair settlement.

In a Wall Street Journal opinion piece, Drew Altman, president and CEO of the Kaiser Family Foundation, suggests that New York’s solution to the balance billing problem may be a model for other states. As well, the New York chapter of ACEP provided input on their state’s balance billing solution. Though they still have some concerns, according to a Healthcare Finance article, emergency physicians did “strongly support the law’s provisions that remove consumers from the balance billing process.”

Other states also are attempting to address balance billing legislatively. Here is a brief look at several others states’ responses:

In Oregon, a 2013 bill introduced by Sen. Steiner Hayward that would have limited balance billing failed to move out of the Senate Committee on Health Care and Human Services. (source: KGW.com Portland)
In 2015, Texas lawmakers passed Senate Bill 481 which allows patients who received a balance bill of at least $500 to pursue mediation. Before this new law, mediation was only available to patients who received a bill of at least $1,000. The original language of the law, which would have allowed mediation for a bill of any amount, was watered down during the legislative process. (source: San Antonio Express News)
A bill introduced in Florida in 2015 by Rep. Carlos Trujillo, a Republican from Miami, would prohibit balance billing in emergency situations for members of PPOs and EPOs. (Source: Miami Herald)
Earlier this week, House Bill 2447 (leg.wa.gov), requested by Washington Insurance Commissioner Mike Kreidler and sponsored by Rep. Eileen Cody, D-34thDistrict in Seattle, was introduced. If passed, this legislation would require patients to pay only in-network rates for emergency care provided at in-network hospitals by out-of-network physicians, and like the New York law, would place the burden of deciding a fair compensation on payers and providers. (source: Bonney Lake Courier-Herald)

What You Can Do

In December 2015, ACEP and the Emergency Department Practice Management Association sent a letter to Andy Slavitt, Acting Administrator of the Centers for Medicare and Medicaid, to express their concern over the recent “greatest of three” ruling. To get up to speed on the details of this issue, review that letter and consider contacting Slavitt yourself, as well as your Senators and Representatives to express your concern about out-of-network balance billing.

Learn more about laws (or proposed legislation) in your state that may limit out-of-network balance billing. Contacting your state’s ACEP chapter would be one way to become more informed.

Finally, you can create a Google alert on “balance billing” to have a daily email delivered to your inbox about any new articles around the web about the issue.