Surprise insurance gaps are causing patients to walk away with unexpectedly high medical bills. What causes this, and how can radiologists help?
With headlines like, “Trouble Shooters Help Local Woman Reduce ‘Surprise Medical Bill’ by $22,000,” so-called “surprise billing” has garnered a lot of attention lately.1 States around the country are passing legislation to confront surprise billing. At the federal level, both the president and Congress have expressed frustration on this topic. There are currently multiple proposals in both houses of Congress to meet the challenge. So what is surprise billing (and why should you care)?
Insurance companies negotiate contracts with provider organizations to create care networks. As part of this negotiation, medical practices provide significant discounts to the standard charges for their services. In exchange for these discounts, in-network practices expect certain benefits — including a simpler revenue cycle process.
But what happens when a patient with private insurance receives care from a provider that is not in-network? In this scenario, there is no negotiated discount, and the standard charge is billed. Usually, insurance companies will reimburse the out-of-network (OON) provider a fraction of the billed amount, leaving the balance of the non-discounted charge for the patient to pay. When the patient does not anticipate receiving care from an OON physician, the bill for the balance of those services is referred to as a “surprise bill.”
Relevance to Radiology
Patients may incorrectly assume that all of the physicians within a facility in their plan’s network are in-network. Imagine a patient who needs elective surgery: they do their homework, find a well-respected in-network surgeon, and proceed with the surgery at an in-network facility. What they don’t know is that the radiology group at that in-network facility is OON.
What is the result for such patients? They end up with a bill for the balance of the non-discounted charge from the radiology group. In many instances, the only thing a patient knows about radiologists’ involvement in their care is that they delivered an unexpected, large bill. Of course, we as radiologists are unaware of a patient’s insurance network status when we read their exams or perform procedures. It’s only later that billing and insurance companies must sort this out, with patients unfortunately getting stuck in the middle.
The term “surprise bill” is itself a misnomer. In reality, it’s a “surprise insurance gap.” Often, enrollees do not understand deficiencies — or gaps — in their insurance coverage. This problem has been exacerbated by the proliferation of narrow network plans in recent years. These plans reduce their costs by greatly limiting the number of providers that are in-network. Those physicians that are in-network are expected to offer even more significant discounts from their standard charge. However, by doing this — and excluding large groups of providers — the network has coverage gaps.
Solutions to Insurance Gaps
There is widespread agreement that we need to address this problem of unanticipated OON coverage. Any solution should follow a few basic principles:
1. Hold patients harmless: For unanticipated OON care, patients should be limited to paying their in-network cost-sharing responsibility.
2. Provide transparency: Insurance companies should have easy-to-understand plans with appropriate network standards.
3. Ensure access: Protect patient access to care by preserving markets. The issue of market-based payment standards based on good-faith negotiations is crucial. If this is disrupted, and a payment standard is utilized that is significantly below market, groups will adapt to the new financial reality and patients may experience reduced access to care.
Moreover, a state-by-state approach alone won’t solve the problem; a national solution is required. That is because the Employee Retirement Income Security Act (ERISA) of 1974, which deals with private employer-sponsored health plans, is under federal (not state) jurisdiction. Since these ERISA plans are not subject to state regulation and cover more than half of the privately insured population, state-based fixes would leave large portions of the population exposed.
Here are some federal-level solutions that have been suggested to address the problem of surprise insurance gaps:
1. Network matching: This would require hospital-based providers (like radiologists) to be in-network with all networks with which the facility contracts. Potential legal questions aside, by interrupting good-faith negotiations between providers and insurance companies and disrupting markets, this approach would violate a core principle. For example, imagine the negotiating leverage an insurance company would have if they knew the radiology group was legally prohibited from going OON.
2. Bundling: This strategy would ban hospital-based practices (like radiology) from independently billing for their services. Instead, practices would rely on the facility to share a portion of a global fee with them. This would also disrupt markets and thus could limit access to care.
3. Rate-setting: While straightforward, this approach would disrupt markets by effectively picking winners and losers between payers and providers. If the rate is too high, groups could negotiate higher contracts or go OON to capture the better rate. If the rate is too low, payers could cancel contracts and re-negotiate lower deals, knowing that the providers’ only recourse would be to go OON, receive a below-market rate, and not gain any of the advantages of being in-network. Some have even proposed Medicare as a standard for payment, despite the fact that it was never intended to reflect market rates. The bottom line is that if groups experience a marked reduction in revenue as a result of rate-setting, it will force some practices to alter their operations — and some may even close. The result would be that patients may experience reduced access to care.
4. Alternative dispute resolution: This solution, which has been successfully field-tested in states like New York, establishes a binding arbitration process. If one side makes an unreasonable charge/payment, there is a mechanism to settle the dispute. Importantly, N.Y. uses “baseball style” arbitration, whereby the arbiter is not permitted to split the difference but must choose either the provider’s charge or the payer’s reimbursement. Since the arbitration loser also pays the arbitration fees, both sides are incentivized to keep their charges and payments reasonable.
What Radiologists Can Do
Since several of the options currently being considered at the federal level could have significant impacts on the practice of radiology, it is imperative that we make our voices heard. There are plenty of ways to engage, including through the ACR and its Radiology Advocacy Network (see sidebar). The problem of surprise billing isn’t going away. The ACR, through its advocacy efforts, is actively engaged in the current legislative process to ensure patients are protected and physicians, including radiologists, maintain their right to fair negotiations. We, as physicians, should advocate for sensible policies that take patients out of the middle, promote transparency, and preserve access to care. It’s critical for our future, and vital for our patients.
Richard E. Heller III, MD, MBA, is vice president of clinical services at Radiology Partners.
1. Avila J. Trouble shooters help local woman reduce ‘surprise medical bill’ by $22,000. NEWS4SA. April 25, 2019.