The Texas Medical Association (TMA) and its physician members recognize surprise medical billing is a problem, and are offering lawmakers solutions that address the root causes. Physicians point to a confusing health insurance system they say leaves policyholders/patients too-often unaware, subject to unexpected out-of-pocket costs, inadequate coverage, and physicians frustrated by limited access to patients and their health plan networks.
“Surprise! Your insurance doesn’t cover what it used to cover,” says TMA President Don R. Read, MD. “The patient is paying a lot of money for health insurance, but the insurance companies are covering less and less. Now, we have to do our best to find a solution.”
TMA’s recommendations to the 2017 Texas Legislature call for clamping down on inadequate insurance plan networks and much better consumer education.
“We don’t want our patients surprised by bills,” Dr. Read explained. “We don’t want our patients to suffer a financial crisis in the wake of a medical crisis.”
Background: The Problem and Its Causes
Sometimes insured patients seek health care and receive a “surprise” medical bill they did not expect from a physician, provider, or facility. They are billed for the remainder of the medical charges left unpaid by the health plan, hence the name “balance billing.” Balance billing or surprise billing has become so big a problem the Texas Legislature passed a law in 2015 to mitigate the situation, and held hearings about it this summer.
The problem with surprise billing, according to physicians, is the health plans established the system in which surprise bills occur, but they are not being held accountable. Insurance companies set up health plan networks with groups of physicians, hospitals, and health care providers who have agreed to provide medical services to the insurance plan’s members at a negotiated rate. However, many of the plans have limited networks of physicians and providers, limited care coverage, or high deductibles. As a result, patients often receive medical treatment out-of-network — resulting in the insurer paying less for services — or care that is not fully covered. When either happens, the patient discovers the insurance company pays less than what a doctor charges, leaving the patient to pay the “balance” of the bill; an unwelcome surprise.
One big way the health plans are cutting their costs is by severely limiting which physicians, hospitals, and providers they include in their networks. Physicians can be in-network under contract with a health insurer for some of the health plans it offers, only to be excluded by that insurer from other plans; or the insurer won’t contract with the doctor at all. Policyholders are left with fewer in-network physicians to see for care. These health plans have “narrow networks,” a cost-saving tactic insurers are using more and more often, especially in Texas. A recent University of Pennsylvania study rated 45 percent of the Affordable Care Act (ACA) networks in Texas as “x-small” and 27 percent as “small.”
Why does this matter? Health insurance pays more of a patient’s bill if he or she receives care from an in-network physician. If an out-of-network doctor provides the care, the plan pays a fraction of the bill, based entirely on what the insurance company chooses to pay. The policyholder — the patient — is left to pay the balance of that fraction. (See page 8 of this report for an example.)
Bottom line: the smaller the network of physicians, the more often the patient will receive out-of-network care, resulting in savings for the insurance company and surprise bills for the patient.
Most physicians want to be in-network with large insurance companies and a majority are in at least one network. In a recent TMA survey, about one in four physicians said they tried to join a local network during a two years. Of that group, 29 percent got no answer from the insurer to their request, 32 percent got a payment offer that was too low for them to accept, and just 39 percent received a contract to join the network.
Meanwhile, the plans sell insurance policies promising robust networks of physicians and providers, when often that’s not the case. Nearly two-thirds of Texas physicians (61 percent) report they had found times they were listed as being in a health plan’s network when really they were not. And insurers have hundreds of different plans, each with its own network. Unsuspecting patients visit that supposedly in-network doctor’s office (who might be under contract in some of the insurer’s health plans but out-of-network for this patient’s plan). Boom: Out-of-network benefits kick in, and the patient pays more.
Beaumont anesthesiologist Ray Callas, MD, chair of the TMA Council on Legislation, says physicians join networks to gain access to patients and business resources, but enrollment can be frustrating. “Doctors are honestly trying to negotiate with the insurance companies,” says Dr. Callas, “but I am concerned that physicians are not being allowed in because insurance companies don’t want to pay a fair or customary rate, or they are just deciding not to go in network with that physician or physician group.” He has experienced this in his own medical practice, which has successfully contracted to be in-network with nearly all plans offered in Beaumont. One outlier insurer, however, has repeatedly refused to contract with his group.
TMA supports legislation that would strengthen insurance plan networks and arm patients with more information to lessen the likelihood of receiving a surprise bill, while preserving physicians’ rights to bill for care they provide. So far, Dr. Callas says he is encouraged by the response to TMA’s proposals. “The biggest request I get from legislators and communities is that we keep our solutions short and simple,” Dr. Callas says.
During a State Senate Business and Commerce Committee hearing in May, Dr. Callas presented TMA’s proposal for the Texas Department of Insurance (TDI) to enforce insurance network adequacy, order the health plans to fix their notoriously inaccurate in-network directories, and require insurers to submit a report on network adequacy in April of each year. In the three years since insurance companies were required to publicly report their network adequacy, TDI has not once levied a fine on insurance companies for a lack of network adequacy.
- Increase TDI’s network adequacy oversight of health plan networks to decrease the number of out-of-network physicians and avoid the need for balance bills.
- Maintain the current $500 balance bill threshold for mediation to include all out-of-network physicians, health care professionals, facilities, and vendors.
TMA also says plans need to protect patients with better consumer education:
- Insurers, physicians, and providers would be required to inform patients “about the network status of the facility-based physicians and others who may participate in their care and bill for service” using a standard form.
- Insurers selling PPOs would be required to include “a clear and conspicuous” warning outlining the results of receiving an out-of-network service.
- Insurance brokers and agents would be required to educate patients on the health plans they buy and clearly outline out-of-pocket expenses for in-network and out-of-network care.
Dr. Callas says, “The House and the Senate see a lot of positives coming from Texas. They want us to be the ones that solve the problems and come up with solutions. Meanwhile, our patients trust us to hold people accountable and I want to maintain that trust.”
For more information about surprise medical billing, TMA’s legislative proposals, and an animated video explaining surprise billing in terms everyone can understand, go to https://www.texmed.org/surprisebills.
TMA is the largest state medical society in the nation, representing more than 49,000 physician and medical student members. It is located in Austin and has 110 component county medical societies around the state. TMA’s key objective since 1853 is to improve the health of all Texans.