Provider contracting may sound dull, but it can have big impact on patients. Contracting may not be the first thing you think of when choosing a provider or facility. It may also not be something you have a lot of control over. But because of surprise billing, provider contracting can have a big effect on you and your wallet.
Contract Anesthesia Group
My husband and I recently had a baby. We chose our hospital for its location because I had nightmares of giving birth while in traffic on the Mass Pike. The hospital we chose was a terrific care center and included in our health insurance network. It also had 24-7 onsite anesthesia services.
A few weeks after delivering our healthy baby boy we received a bill for almost $9,000 for anesthesia services. My husband was aghast. After all, we had good health insurance. I knew, before we paid this bill, I had to make a few phone calls to understand why we were saddled with such a huge cost. I called the anesthesia group, who informed me they operate separately from the hospital where we delivered.
A private company employs the anesthesiology team, not the hospital. It is this private company that contracts with insurers for anesthesia services, not the hospital. Although my insurer may have an in-network contract with the hospital, they did not appear to have an in-network contract with the anesthesia company. The private anesthesia company informed me that if my insurer was not willing to pay the full amount requested, I could be responsible for the remainder.
What is Surprise Billing?
Providers and facilities set their own prices for services. They then use that price as the starting point of negotiations with insurers. Insurers often obtain a discount on services in exchange for including providers and facilities in their networks. When insurers and provider groups are unable to come to an agreement on prices during negotiations, the insurer may not include the provider in their network.
Providers may be out-of-network even when the facility in which the provider group operates is in-network. Finding out this information in advance can be difficult. In fact, health care information is notoriously difficult for patients to obtain online. As a result, patients may then have to pay the difference between what the provider group asks and the insurer covers. This occurs even if they obtain services from these providers inadvertently.
Billing patients the difference between what a provider group charges and what an insurer will pay is known as balance billing. Balance billing–also referred to as surprise billing–is unfortunately very common. A 2019 survey of 1,000 voters by Families USA found that nearly half (44%) had ever received a surprise bill [pdf]. And almost 50% of those bills were over $1,000.
State Laws on Surprise Billing
As of April 2020, 29 states [pdf] have imposed laws against surprise billing. Types of protections for patients mainly consist of “hold harmless” and “provider prohibition” provisions. Hold harmless laws mean that patients are not responsible for payments above the in-network rate [pdf]. And provider prohibition laws mean that providers are barred from sending balance bills to patients.
Roughly half of the 29 states have implemented a comprehensive approach. The others have more limited protections in place. States with a comprehensive approach have laws against balance billing in emergency and non-emergency settings and apply either a “payment standard approach” or dispute resolution process in instances of balance billing.
Under a payment standard approach, the state applies an algorithm to determine what should be paid to providers when insurers and providers cannot agree. A dispute resolution process allows both parties (insurers and providers) to access a mediator to determine a fair price.
Federal (In)Action
Just because a state has protections in place, it does not necessarily shield each patient in that state. Many employer-sponsored health plans are governed, not by state laws, but by the Employee Retirement Income Security Act (ERISA). ERISA regulates company health plans that use their own funds to pay health care bills (i.e., self-insure). But ERISA does not offer any balance billing protections. So federal action would be required to cover patients in states without protections and for all patients on plans governed by ERISA.
Congress was seriously considering surprise billing legislation in 2019 with several bills being debated. There is bi-partisan agreement that surprise billing is a problem. But there was no agreement on a solution. Legislation stalled as those in favor of a payment standard approach and those in favor of a dispute resolution process could not come to terms.
Ripple Effects on Access to Care
Surprise billing related to provider contracting can also have a negative effect on access to care. As Sarah Kliff of the New York Times explains, out-of-network labs bills are leading to big differences in the cost of COVID-19 testing. Most patients do not control the choice of lab to process their test. But it can have huge implications on how much the test will ultimately cost you. Not knowing whether a test will cost ten dollars or hundreds of dollars can deter people from seeking tests at all. Patients may then start to avoid testing, or other types of health care, because of these unpredictable costs. If this happens with testing during COVID-19, it will make this pandemic worse. It may also complicate future public health epidemics.
It is imperative that Congress act on this problem. By doing nothing we are leaving patients in charge of negotiating their own bills. It is unfair to ask this of patients, particularly when providers and insurers have professional negotiators who have failed to settle.
In the Meantime, Be Your Own Advocate
Federal inaction leaves the problem of surprise billing to the patient. This is an unreasonable ask. By definition, patients receiving a surprise bill have just had a health challenge (or in my case a colicky baby). I was able to rectify the problem with a call to the anesthesiology group and then to my insurer. I told my insurer what the anesthesiology group said and gave them the details from the bill I received. Luckily, the insurer was able to resolve the payment issues with the anesthesiology group without more involvement from me. Patients should be focused on recovery, not leading financial negotiations between providers and insurers.
As we wait for congressional action, you must be your own advocate. If you get a high bill, call the hospital, the provider, and your insurer before you pay it. They may be able to rectify the situation for you. If not, you can call the hospital or your insurer to ask a case manager for help. If none of that works, reach out to an advocacy organization.
In addition, Kaiser Family Foundation’s Bill of the Month, Vox, or the NY Times have all tracked and reported on surprise billing. They may use your experience in their reporting and give your case some national attention that may shame groups into coming to the table.
If you get an unreasonable bill, make a big deal of it. Surprise billing is unfair and provider contracting may be the cause.
Emily Gillen