New York is poised to solve one of the most pernicious consumer healthcare billing problems, and regulators think it could be a model. But for insurers, the new process may or may not be the ideal solution, especially when paired with new network requirements.
Surprise out-of-network bills are a not an uncommon problem for many Americans: A hip replacement with an in-network surgeon at an in-network hospital was expected to be affordable, until the bill came with a several thousand dollar fee for the out-of-network, hospital-contracted anesthesiologist.
Experiences like that are the impetus for a provision in New York State's pending budget agreement that would "hold the consumers harmless" if a provider unknowingly is out-of-network or in emergencies, sending the provider and health plan into meditation to determine "appropriate" reimbursement.
"Far too often we see New Yorkers who have insurance, do everything right, and try their best to stay in network, but still get hit with a surprise bill that can run into the tens of thousands of dollars," New York Financial Services Superintendent Benjamin Lawsky said in a media release.
Lawsky, the state's main insurance regulator and one of the proponents of the provision, said that his office has received at least 10,000 consumer complaints about surprise healthcare bills in 2008, many stemming from emergency care. In one case, a New Yorker with a severed finger was billed $83,000 bill by the plastic surgeon who reattached it.
The new proposal is included in a budget deal brokered by Gov. Andrew Cuomo that the state Senate and Assembly are set to the vote on soon.
According to a summary from Cuomo's office, consumers would not have to pay out-of-network fees when they receive emergency care or were unaware that a provider in a care team, like an anesthesiologist or radiologist, was out-of-network.
The provision would take "the consumer out of the middle of billing disputes between out-of-network medical physicians and health insurers," Cuomo's office said. Payers and providers would have to resolve reimbursement through an independent mediation process set up by the Department of Financial Services.
The provision would also try to limit the problem from occurring in the first place, with new requirements for insurers to maintain "robust provider networks" and new requirements for insurers, physicians and hospitals to disclose network status to consumers.
It would also set up a reimbursement rate workgroup at the Department of Financial Services to determine the availability and the adequacy of out-of-network coverage and rates.
The provision has the support of patient advocacy groups like the American Cancer Society, AARP, Consumers Union and New Yorkers for Accessible Health Coverage, and Lawsky, a former prosecutor specializing in white collar crime, thinks it could be a model for other states or even the federal government, since the problem of surprise medical fees from out-of-network providers isn't unique to New York.
But it's still not clear how New York insurers will be affected, particularly from network requirements that still need to be specified.
The New York Health Plan Association is "supportive of the overarching goals of the governor's proposal," said Leslie Moran, the group's senior VP.
But there is a "significant concern" for the new out-of-network product requirements, which have a mid-year 2015 effective date. Insurers in New York and elsewhere are already working on 2015 plan year plans, especially for public exchanges.
"If these changes take effect before 2016, plans will need to plan, account for and make assumptions now," Moran said. "Doing so at this late date is extremely difficult, if not impossible, and could create instability in the market and rates for 2015."