Gotcha. That seems to be the game healthcare providers and insurers are playing with consumers when it comes to surprise out-of-network bills. But it's not a promising business strategy. And it threatens to undermine support for the healthcare system's emerging consumer-choice/narrow-network model.
A recent survey by the Consumer Reports National Research Center found that 30% of privately insured Americans in the past two years received a surprise medical bill where their health plan paid less than expected. Among those who got one, nearly 1 in 4 received it from a doctor from whom they did not expect a bill. Only 28% of those who received a surprise bill were satisfied with how the issue was resolved.
Consumers get especially upset when they go to an in-network hospital for an emergency and later get a bill from an emergency physician who was not in their plan's network. A report last September from the Center for Public Policy Priorities in Austin, Texas, found that the percentage of in-network hospitals in Texas that had no in-network emergency physicians was an astonishing 56% for Humana, 45% for UnitedHealthcare, and 21% for Blue Cross and Blue Shield of Texas. It's likely the problem is pervasive in other states as well, but Texas has a rule requiring plans to report on this.
There also are shocker bills for out-of-network assistant surgeons and other clinicians who render services to patients in in-network hospitals, as Elisabeth Rosenthal has reported in her “Paying Till It Hurts” series in the New York Times.
Consumer advocates say these charges infuriate patients because there generally is no way for them to know these providers were out of network and thus they have no way to make informed choices. You can't shop around for a network emergency doc when you have crushing chest pain.
In these situations, patients are caught between insurers and providers who can't agree on contract rates. Some providers are consciously choosing not to enter contracts, giving them the leeway to balance-bill patients for amounts far above health plan rates. Even sophisticated consumers who strive to stay in network can get hammered because of the lack of accurate, accessible information on who's in the network.
The proliferation of plans with high deductibles has made consumers increasingly sensitive to these unexpected bills, especially since many plans have no out-of-pocket limit for out-of-network charges. A recent New York Times/CBS poll found that nearly half of respondents described paying for healthcare as a hardship, up 10 points from a year earlier.
“This type of surprise bill is so patently unfair to consumers that state legislators from both parties seem ready to jump on the issue,” said Lynn Quincy, associate director of health reform policy at Consumers Union. “So many people out there can't handle a bill of $1,000 or larger. They just don't have that kind of money lying around.”
New York's new system for addressing out-of-network bills may guide other states. A law effective in April protects patients who didn't agree to or unknowingly received services from out-of-network providers. Instead of patients receiving bills, insurers and providers have to resolve the issue through a dispute resolution process. Quincy said that will force plans and providers to compromise on charges, rather than allowing out-of-network providers to bill patients for amounts far above the market rate.
If more states establish such regulatory frameworks and insurers and providers know the likely outcome of out-of-network payment disputes—and that the bills can't just be shoved off on hapless patients—that will prod them to sign network contracts, Quincy said. Consumers Union also plans to raise the issue with the U.S. Labor Department, which has the authority to impose rules against surprise bills in self-insured plans that are not subject to state regulation.
But insurers and providers should take action on their own to head off surprise bills. If they don't, the public and elected officials may decide that limited networks are not such a good idea after all. Then industry players and policymakers would have to dream up a new model for making private markets work in healthcare.
