By: Andrew Silverio, Esq.
Anyone who works in health benefits is familiar with surprise billing – the specific kind of balance billing which occurs when a patient visits an in-network physician or hospital, and receives an unexpected balance bill from an out-of-network provider that they didn’t have an opportunity to select, and in many cases, didn’t even know they had utilized. Common culprits are anesthesiologists, assistant surgeons, and outside lab work.
We often think of this as primarily a problem for emergency claims. This makes a great deal of sense, since when someone presents at an ER or is brought there via ambulance, they likely won’t have an opportunity to ask questions about network participation or request specific providers. However, according to surprising data released in the Journal of the American Medical Association on February 11, 2020 entitled “Out-of-Network Bills for Privately Insured Patients Undergoing Elective Surgery With In-Network Primary Surgeons and Facilities (available at jamanetwork.com/journals/jama/fullarticle/2760735?guestAccessKey=9774a0bf-c1e7-45a4-b2a0-32f41c6fde66&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=021120), these bills don’t actually seem to be more likely to arise from emergencies or other hospital stays where patients have less of an opportunity to “shop around.”
The study looked at 347,356 patients undergoing elective surgeries, at in-network facilities with in-network surgeons. These are patients who had ample opportunity to select their providers, and indeed did select in-network providers for both the surgeon performing their procedure and the facility in which it would occur. Shockingly, over 20% of these encounters resulted in a surprise out of network bill (“Among 347 356 patients who had undergone elective surgery with in-network primary surgeons at in-network facilities . . . an out-of-network bill was present in 20.5% of episodes...”) The instances that involved surprise bills also corresponded to higher total charges - $48,383.00 in surprise billing situations versus $34,300.00 in non-surprise billing situations.
The most common culprits were surgical assistants, with an average surprise bill of $3,633.00, and anesthesiologists, with an average bill of $1,219.00. In the context of previous research indicating that “20 percent of hospital admissions that originated in the emergency department . . . likely led to a surprise medical bill,” it seems that even when patients are able to do their homework and select in-network facilities and surgeons, they are just as susceptible to surprise billing. (See Garmon C, Chartock B., One In Five Inpatient Emergency Department Cases May Lead To Surprise Bills. Health Affairs, available at healthaffairs.org/doi/10.1377/hlthaff.2016.0970.)
Many states have enacted protections against balance billing and surprise billing, with Washington and Texas both recently enacting comprehensive legislation. However, these state-based laws have limited applicability, and there are to date no meaningful federal protections for patients in these situations. Until such protections are enacted, patients are left vulnerable to sometimes predatory billing practices, and plans are left to choose between absorbing that financial blow or leaving patients out in the cold.
Starting in 2020, Washington’s new law aimed at putting an end to a particular form of balance billing, known as “surprise” billing, will go into effect. This includes situations where a patient has no reasonable opportunity to make an informed choice regarding their utilization of in-network versus out-of-network providers, for example in the case of emergency services or non-emergency surgical or ancillary services which are provided by an out-of-network provider within an in-network facility. In these cases, the patient has no way of choosing what providers to utilize, or may not know (and would have no reason to think to ask) that they could be treated by an out-of-network provider while visiting an in-network hospital.
Washington’s law mirrors the approach we have seen in several other states – it takes the patient out of the equation entirely by prohibiting the provider from pursuing any balances from them, and leaves the provider and payer to sort out the issue of any remaining balances.
In resolving outstanding balances, the provider and payer must come to a “commercially reasonable” amount based on payments for similar services in the same geographic area, and in this regard the state actually provides a data set for the parties to reference. If the parties can’t come to an agreement, either can request arbitration, and the arbitrator will choose one of the parties’ last proposed payment, encouraging the parties to submit reasonable amounts (for fear of having to defer to the other party’s offer).
Importantly, the law does not (and cannot, because of federal preemption) apply to private, self-funded plans which are governed by ERISA. However, such plans can opt-in to the law via annual notification to the state. These plans should not expect to enjoy the benefits of the law’s balance billing prohibitions if they choose not to opt-in, and reference to the state’s claims database, available on the Washington Department of insurance website, should help them in determining whether it makes sense to do so.
The full law can be found at http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session%20Laws/House/1065-S2.SL.pdf, and a useful summary is available at https://www.insurance.wa.gov/sites/default/files/documents/summary-of-2019-surprise-billing-law.pdf.