TMA Testimony Presented by Patrick Carter, MD
House Committee on Insurance
Interim Charge #1
Dec. 3, 2014
Good morning, Chairman Smithee and members of the committee. My name is Patrick Carter and I am a family physician with the multi-specialty physician group practice, Kelsey-Seybold Clinic, in Houston. Kelsey-Seybold Clinic is the first accountable care organization accredited by the National Committee for Quality Assurance. I am here before you today representing the Texas Medical Association (TMA) and more than 48,000 physicians and medical student members. I would like to thank Chairman Smithee and committee members for the opportunity to testify about the impact of the federal Affordable Care Act (ACA) and the challenges it has presented to both physicians and patients in Texas.
Kaiser Health News reported on May 1st, after the final deadline for signing up for insurance under the new requirements of the Affordable Care Act, that over 8 million people selected health plans through the health law’s exchanges nationally. Texas is currently going through open enrollment so the number is still out as to how many new enrollees and returning enrollees we will have.
The ACA brought both challenging administrative changes and decisions that must be made. Texas physicians were glad to have more of their patients covered, but that new coverage compounds and highlights the many administrative challenges that physicians and their staff currently experience with their existing patients covered by commercial and government programs today. A few of those marketplace issues and challenges include questions, such as:
- How do you distinguish which type of coverage the patient has?
- Is it a private, commercial HMO or PPO product or is it a subsidized qualified health plan product?
- How do I determine if the patient has/hasn’t paid the premium?
- Is the patient in a 90-day grace period?
- Are “narrow” or “limited” networks involved?
- Do patients understand the limitations of the network that came with the level of coverage they purchased?
Couple the administrative challenges with the lack of health care literacy in general about insurance coverage and you have a very confused health care marketplace for both health care providers and the newly first-time insured.
The TMA Payment Advocacy Division developed an FAQs (Updated December 2014 ) to assist physician offices in identifying patients with coverage purchased in the exchange and in handling the unique challenges they bring with them.
According to the Literacy Coalition of Central Texas website, more than 3 million Texans are of low health literacy with the average Texan reading at an 8th grade level. Most health materials are written at a 10th grade level or above. This high rate of low health literacy accounts for approximately $17 billion in additional medical expenditures annually.
When you combine the issue of low health literacy with the requirement of making a complicated health insurance coverage purchasing decision, additional time and education is warranted when the customer or client is either right there in front of, or speaking with the broker, agent or navigator about health coverage options.
In the current commercial health insurance market, even seasoned and experienced health plan enrollees and insureds (employees) are often not told by their employer, human resources departments, broker or agent about:
- How an HMO vs. a PPO vs. an EPO product works;
- How to use a provider network in general, much less the overlay of a “limited or narrow” network;
- The importance of adequate provider networks in general when looking at the various coverage options for their health care situation;
- The effect of in-network vs. out-of-network use on out-of-pocket payments, such as deductibles, copays and co-insurance; or
- How the above terms impact their out-of-pocket responsibility before they take the plunge and make that coverage purchase.
Impact of Narrow Networks on Access To Care and Greater Out-of-Pocket Costs
Narrow network plans have become increasingly popular in recent years, growing from 15 percent of the insurance plans that employers offered in 2007 to 23 percent in 2012. They have been very much utilized of late for products sold in the Exchange.
Often health plans will advertise they have certain physicians, hospitals, and health care providers contracted to provide services, making it appear they have very robust networks from which a patient may access health care. This can be misleading to consumers when the provider network advertised is not always applicable for certain products or services. Patients who purchase coverage with a low premium rate may find out later about the limited or narrow network they are required to use and end up paying higher out-of-pocket costs if they fail to use the narrow network. The use of narrow networks and the confusion around them is often compounded when physicians are misrepresented as part of the network when they are not and vice versa.
Below are preliminary results from TMA's 2014 Annual Survey.
Some health plans sold through the ACA’s health insurance marketplaces use “narrow networks” of providers. That is, they limit the doctors and hospitals their customers can use. Go to Doctor A or Hospital A and the plan will pay all or most of the bill. Go to Doctor B or Hospital B, and you may have to pay all or most of the bill yourself. Narrow networks mean that some newly insured people are no longer covered for visits to doctors with whom they have established relationships, or, if they didn’t have a doctor before, are limited in their new choices. Not infrequently, narrow networks exclude the more expensive doctors and hospitals in a community, including some specialists and academic health centers. For patients with complex health problems, like cancer or chronic conditions, such network restrictions can be problematic.
Coverage Differentiation Needed -- Patient Identification Cards/Electronic Eligibility Verifications
Many insurers are offering products both inside and outside the Exchange. Those products can encompass commercial Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) outside the Exchange and qualified HMO and PPO plans inside the Exchange that were purchased with and without premium subsidies. First and foremost, the physician office needs to be able to determine from the patient’s identification card or from standard electronic eligibility verifications whether the coverage is a private commercial plan, a qualified health plan (QHP), or a QHP that is subsidized. It will be imperative for a physician’s office to be able to discern what type of coverage each patient has, as well as whether or not the coverage was paid in part with a premium subsidy and subject to the 90 day grace period discussed further below.
Impact of the ACA’s 90 Day Grace Period
The importance of knowing whether a patient has a subsidized vs. a non-subsidized premium is due to the 90-Day Grace Period’s impact on services provided to patients with subsidized premiums.
Under the ACA, persons who receive an advance tax credit (commonly called a subsidy) also have the benefit of a 90-day grace period to bring premium payments current when they are in arrears. The federal government requires insurance companies to cover services for the first 30 days of the grace period. For the remaining 60 days of the grace period insurance companies are permitted to retroactively terminate the insurance policy should premium payments not be made by the covered person at the end of the 90 days. This means that insurance companies may demand that payments made to physicians for services be returned to the companies. Physicians are then left to attempt to collect directly from the patient for those services they may have already received months ago. This is not unlike what happens in the current commercial market today, with retro-terminations for ineligible employees who left employment, but that time frame is at least limited to a 30-day grace period.
Collection efforts are costly, disruptive, and not always successful. In any small business, when a customer receives services or goods but does not pay for them, the charges for those goods and services increases for those who do pay. The same is true for physician offices and the effect of the grace period may be increases on those who do pay for the services they receive.
Suggested TMA Recommendations
To better assist consumers, who are our future patients and health care providers with these challenges created by the ACA, the following recommendations are offered for your consideration:
- Require insurers to clearly disclose network limitations upfront and in their marketing information.
This is important because most consumers who purchase health care coverage eventually become future patients. This disclosure allows consumers to make better decisions about the coverage that best suits their needs and to understand network limitations at the time of purchase, as opposed to when they actually seek health care services. For physicians and their staff, it means less time trying to explain the limitations of the insurance plan the patient purchased and more time focusing on the patient and the health care problem or problems that need to be addressed.
- Recommend that health literacy instruction specific to guiding consumers in understanding health care coverage be required and recognized as a viable credit towards agent and broker continuing education requirements and amend those statutory requirements.
This is important because the ACA has brought a new challenge to the marketplace that requires brokers and agents to communicate and discuss complex benefit designs and choices with a clientele with whom they have not historically interfaced in the past. This would allow consumers to benefit from the many earlier opportunities that are presented as “teachable moments” when they interface with the health insurance broker or agent.
- Require insurers to clearly identify on the patient identification card/eligibility verification system if the patient is covered by an Exchange product, and if so, identify if the coverage is subsidized.
It is important for physicians to know this information for the correct collection of copays and deductibles as they can differ in a commercial vs. an exchange plan. More importantly, physicians need to know this information when discussing treatment options with patients that span several weeks or months. It will give the physician or his/her staff the opportunity to stress to these patients the importance of continuing to pay their portion of the premium that is not subsidized by the federal government so that they, and subsequently their treatment, will continue to be covered by the health plan. Patients who are in a qualified plan supported by a premium subsidy have a 90-day grace period to make good on their monthly premium payments.
As the committee considers recommendations on this interim charge, the physicians of Texas ask that you recognize that our recommendations bring much needed information and early education to consumers about the coverage they consider for purchase and the impact of that purchase on their out-of-pocket payment responsibilities. In addition, physician offices will have better information to allow them to counsel their patients about the importance of premium payments. Thank you for the opportunity to testify and provide our perspective. I will be happy to answer any questions.
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