Out-of-network ER pay and charges fuel ire from docs and patients alike

The quarrel over surprise medical bills continues to escalate, and emergency room physicians are now suing the Obama administration in a bid to shift more of the blame to insurers.

The Affordable Care Act includes a provision intended to mitigate the negative impact on patients when they get emergency care from providers who aren't part of their health plan's network, and HHS' regulations on the provision lay out a framework for what those providers should get paid.

Providers are under intense pressure to avoid billing patients for the difference, or balance, between their charges and what insurers pay them for out-of-network services. That's true especially in cases where patients didn't realize an out-of-network clinician was involved in their treatment—or, as with emergency services, they had little or no choice about where they received care.

The American College of Emergency Physicians says its members have been cornered into choosing between balance billing and finding a new line of work. The organization argued in a lawsuit filed last week that HHS allows insurers to determine out-of-network rates based on their proprietary databases of historical charges.

For out-of-network emergency care, the law bars insurers from charging patients higher coinsurance and copayments. But it doesn't prohibit balance billing or require insurers to cover those bills.

HHS has interpreted the law to mean that health plans must reimburse out-of-network providers for a “reasonable” amount of their usual charges before a patient is on the hook for the balance. The government has decided that means providers should be paid whatever amount is the greatest of three options: the Medicare rate; the median in-network rate; or the usual, customary and reasonable charge, or UCR.

The UCR is usually the highest rate and has been the subject of significant controversy. The ACEP complaint, filed in U.S. District Court for the District of Columbia, argued that HHS has dismissed repeated pleas for an objective standard for UCR charges. HHS also changed the word “charge” to “amount” in the final rule, which ACEP said in the lawsuit gives insurers more room to game the numbers.

Clare Krusing, spokeswoman for America's Health Insurance Plans, said the trade group couldn't comment on pending litigation. But she said UCRs are significantly higher than Medicare rates and “emergency room doctors cannot demand a blank check from patients at a time when everyone is focused on affordability.”

In 2009, UnitedHealth Group agreed in a settlement with the New York attorney general to pull the plug on its Ingenix database of charge data that most insurers used to crunch their UCR rates for out-of-network care. UnitedHealth and several other companies also agreed to fund an independent not-for-profit organization to take the database's place.

ACEP said in its lawsuit that HHS ignored its concerns that insurers would manipulate the numbers unless they were transparent and could be independently verified.

“We should be able to say: 'How did you calculate this?' ” said ACEP President Dr. Jay Kaplan. Kaplan also said his colleagues are worried they won't have any protections in states such as New York that restrict physicians' ability to balance bill.

More state lawmakers are trying to police the issue. Florida recently enacted a law protecting patients from having to pay out-of-network bills when they go to a facility in their network and inadvertently receive treatment from an out-of-network provider there. Legislation similar to the New York law is pending in California, which already bars emergency physicians from balance billing.

Experts say it's difficult to achieve data transparency, and that the emergency physicians' complaint doesn't address the surprise medical bills customers receive.

Karen Pollitz, senior fellow at the Kaiser Family Foundation, said transparency would allow out-of-network costs to be easily tracked. But, she said, the customer is still going to be left with additional fees.

Betsy Imholz, special projects director at Consumers Union, said some states have protections that ensure emergency physicians are adequately paid for out-of-network services and that variation in physician charges from state to state would make it difficult to address data transparency unilaterally across the country. And, she added, the transitional period that the entire industry is experiencing makes it “unsustainable to get paid what they had received in the past.”

Correction, June 8, 2016:

A previous version of this story incorrectly paraphrased Consumers Union's Betsy Imholz as saying most states have protections in place to ensure emergency physicians are adequately paid. The majority do not.