Taking the surprise out of surprise billing
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Too many patients are suffering from sticker shock when they receive bills for their visits to the emergency room.

The American Medical Association believes patients should not be caught in the middle of what is essentially a billing dispute between insurers and providers.

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Patients aren’t responsible for unanticipated out-of-network medical bills. Patients who seek emergency care – or who otherwise lack the chance to select their provider – should not bear costs above those they would face had they been seen by an in-network provider. Much like patients who may not have an opportunity to choose a physician in their network in an emergency, physicians often have little information on which networks patients have joined – but are legally and ethically compelled to provide care regardless of a patient’s coverage.

The insurance industry must own up to its role in springing these surprises. Most health insurance markets are highly concentrated, and the number of cities is increasing where a single insurer holds a market share of at least 50 percent. This undermines incentives for these insurers to negotiate payment rates in good faith. In fact, lower payment rates and higher patient co-payments and deductibles that plans impose for out-of-network care can financially benefit the plan when patients are unable to obtain care from an in-network physician.

Let’s consider solutions. The goal is to determine a fair payment from an insurer to a provider, while protecting patients from the financial consequences of an insurance network that does not have an adequate number of providers under contract.

Network adequacy is a prime consideration here. A physician’s out-of-network status is not always due to a disagreement over payment rates. Many physicians who wish to join a network are not offered contracts to do so, while others already participating are dropped without cause or explanation. Often, patients will select a health plan based on whether their preferred providers are in-network, only to experience a midyear network contraction. That means patients would have to accept higher out-of-pocket costs if they wished to keep their preferred physician.

To serve a community, an adequate network should include a proper ratio of hospital-based physicians as well as on-call specialists and subspecialists. Overly narrow provider networks – particularly those that lack sufficient numbers of specialists – are a major factor in unanticipated billing. The AMA believes state insurance commissioners and the federal government need to provide strong oversight and enforcement to ensure network adequacy.

At the same time, provider directories must be accurate and up to date so patients can make informed decisions when purchasing a health plan – and use the services of in-network providers whenever possible once that plan is in place. Providers need the same level of accuracy from health plans so they can refer patients to in-network specialists when further care is needed.

Transparency will enable patients to make prudent decision. When scheduling services, providers should inform patients of the anticipated charges – and insurers should make it clear to patients what portion of those charges they intend to cover.

In circumstances where payment rates themselves are the root of the problem, mechanisms can be put in place to arrive at a fair compromise. Some states tie out-of-network benchmark payment rates to a percentage of local charges determined by an independent claims data base. Others have established a binding arbitration process that incentivizes both providers and insurers to reach agreement on more realistic payment rates. In both situations, the dispute over rates is kept between the provider and the insurer, with the patient held harmless.

The AMA recognizes the financial burden an unanticipated bill can impose on individuals and families, and we support solutions that hold patients harmless when care from an out-of-network provider is unavoidable. We look forward to working with all members of Congress, and with lawmakers at the state level, to craft a workable solution that protects patients while treating providers and payers equitably.

Barbara L. McAneny, MD, is president of the American Medical Association.