The nastiest jolt that many insured hospital patients receive after a test or surgery is a surprise bill from a doctor they never asked for and may not even have met. But it can be hundreds or thousands of dollars -- the "out-of-network" rate for a doctor performing a service at a hospital that, in every other respect, is an in-network institution.
This week, California legislators took steps to eradicate the surprise, which typically involves the specialties of pathology, anesthesiology and radiology. A measure passed by the state Assembly would forbid ancillary providers from charging patients more than the in-network rate for their specialty, if they delivered service at an in-network hospital. It's now headed for the Senate, but as written, it's opposed by the California Medical Assn. and some other provider groups, so hang on tight.
Here's the background. in the good old days, doctors in those three key specialties were employees of hospitals, so if your hospital was in your insurer's network, they were too. Over time, many hospitals have outsourced these specialties to independent doctor groups, which may or may not be in the same network as the hospitals themselves. If they're not in yours, you could suddenly get a bill with an astronomical number at the bottom line.
"Our argument is that the patient shouldn't be in the middle of this billing dispute," says Anthony Wright, executive director of the patient advocacy group Health Access, which sponsored the measure.
The issue has erupted nationwide. In a recently published survey, Consumers Union found that 30% of privately insured Americans had received a surprise bill, and one out of four of those had gotten a bill from a doctor they didn't expect. In most cases, Consumers Union found, the issue wasn't resolved to the patient's satisfaction.
The problem may be worse in states outside of California. Thanks to a 2009 California Supreme Court ruling, emergency room physicians aren't allowed to "balance bill"-- charge patients more than an insurance reimbursement. The ruling doesn't apply to the other three specialties, and most other states don't have the ER protection Californians do. Some 13 states impose restrictions on out-of-network balance billing, the Kaiser Family Foundation says, but these typically apply to managed care, or HMO, patients.
The issue has also gotten worse in recent years because insurers have been shrinking their networks and widening the gap between what they'll pay for in-network providers and out-of-network care. Often the reimbursement in the latter case is nothing. Narrow networks have become a friction point for buyers of insurance under the Affordable Care Act, but the trend has been years in the making. "Today, the out-of-network charge isn't just an additional expense," Wright says. "It can be prohibitive."
The injustice, of course, is that patients typically have no control over the choice of their pathologist, anesthesiologist, or X-ray or CT scan provider; sometimes they don't even know they're being treated by one. It's unreasonable to expect them to vet every such doctor, even after they've taken all the proper steps to schedule a procedure at a network hospital.
The California bill, which is carried by Assemblyman Rob Bonta (D-Alameda), would limit charges to patients in such situations to whatever the in-network charge would have been.
The problem this leaves is who's going to eat the excess charge? That's the core of the medical association's problem with the bill. It's asking that the measure be amended to "require an efficient, equitable dispute resolution mechanism that guides parties towards a reasonable rate for services," in the words of an Assembly staff analysis. The California Medical Assn. says it favors the approach of a 2014 New York law, which requires arbitration between providers and insurers, leaving the patient out of it.
Wright says Health Access isn't opposed to that. "Most parties agree that the patient should be held harmless and family finances shouldn't be imperiled," he told me. "But then, what's a fair way to settle the dispute?"