Today’s Managing Health Care Costs Number is 72
National Public Radio reported yesterday on recently passed bipartisan California legislation, AB-72, awaiting Governor Jerry Brown’s signature. This bill would protect patients from “surprise” medical bills when they receive care at “in network” facilities which have “out of network” individual physicians who provider services.
Health plans often cannot achieve affordable contracts with certain specialties which often have geographic monopolies. When patients receive medical care at an in-network facility but one of the providers is out of network, they often are responsible for paying the provider’s full billed charges unless they can negotiate a discount. Patients have little leverage to negotiate a substantial discount after the procedure has already happened.
Public outcry is often directed at the health plans when patients get an outlandish bill from an anesthesiologist or other specialist who is out of network, but the underlying problem is the very high fee schedules from these out of network providers. Simply saying the health plans should pay the out of plan providers in full helps get the (often sick) patient out of the middle –but also has the potential to cause further escalation in health care costs. Further, such a move could encourage more physicians to remain out of network – which could cause additional access concerns.
The California legislation addresses this concern by creating a ceiling for out of network provider charges – at the higher of the average in-network charge or 125% of Medicare. This means that no expensive, time-consuming and futile negotiation with the out-of-network providers is required of the health plan or the patient. If the provider refuses to be in network, the most she can charge is 125% of Medicare.
The legislation allows out-of-network physicians to bill patients for their full charges IF the patient signs a waiver to agree to pay out-of-network rates . The waiver must be signed 24 hours before a procedure, be separate from any other informed consent, and be accompanied by an estimate of the charges. This would need to be enforced so that facilities with out-of-network providers didn’t simply present such waivers to all patients on a routine basis.
The legislation also requires health plans to keep accurate lists of participating providers, and to provide a full range of in-network providers at each participating facility. (That would be hard where the health plan cannot get to “yes” with an anesthesiology group – we’ll have to see how the regulations are written. Capping bills at 125% of Medicare might be enough to insure access and affordability even where the health plan cannot achieve a contract with certain specialists.)
Kaiser Family Foundation found that 7 in 10 individuals with unaffordable out-of-plan medical bills didn’t know the provider was out of plan when they received care, and these out of plan charges were a prominent factor in insured patients struggling with medical debt. Consumer Reports has promoted efforts to prevent such surprise medical bills across the country. CR notes that a number of states have language requiring advance notice or dispute resolution, but often have little enforcement mechanism.
Modern Healthcare suggests that this bill is likely to be a model for other states – as well it should be.
Don't celebrate too much, though. State regulation generally does not provide protections to the 63% of those with self-funded employer-sponsored health insurance. Providing protection for this large group of patients will require federal legislation or regulatory action.
EmoticonEmoticon