TMA Testimony: Senate Bill 481 by Dawn Buckingham, MD
Senate Business and Commerce Committee
March 24, 2015
Good morning, Chairman Eltife and members of the committee. My name is Dawn Buckingham. I am a practicing ophthalmologist in Austin and also serve as chair of the Texas Medical Association’s Council on Legislation. I have clinical privileges at several inpatient and outpatient facilities in the Austin area. Today, I am testifying on behalf of the Texas Medical Association.
I would like to thank Chairman Eltife and committee members for the opportunity to testify “on” Senate Bill 481. The bill as filed expands the applicability of claim-dispute mediation to out-of-network assistant surgeons by adding them to the definition of “facility-based physician.” In addition, the bill removes the existing $1,000 balance-due threshold that makes a claim eligible for mediation after the patient’s copays, co-insurance, and deductibles have been paid.
TMA supports the continued use of mediation as the resolution process of choice. It has held insurers, hospitals, facility-based physicians, and even patients accountable since 2009 under then-Representative Hancock’s House Bill 2256. However, we have concerns about lowering or removing the $1,000 threshold that currently makes a claim eligible for mediation.
We agree that no one likes to be surprised by unexpected out-of-pocket costs. When a patient opts for an elective service or procedure and requests an estimate, network physicians are more than willing, as well as required by law, to provide one. For planned out-of-network services, physicians are more than willing to discuss the patient’s potential to receive a bill based on the amount of that service and what the patient’s insurer is willing to pay — but that can transpire only if the insurer is required to provide that information to the out-of-network physician. Insurers continue to contend that this information is proprietary and that they only are required to share it with their insured enrollee upon request.
Expanding the Applicability of Claims Eligible for Mediation
TMA supports the addition of assistant surgeons to the definition of “facility-based physicians.” No doubt this change was prompted by patients’ lack of unawareness that another physician might be participating in their care during surgery. Whenever possible, surgeons should inform their patients if they are going to use an assistant surgeon who will bill separately for his or her services. This applies regardless of whether that assistant surgeon is in or out of network — in either case, the patient will pay co-insurance out of pocket twice: once for the surgeon and once for the assistant surgeon.
Informal Settlement Teleconference — It Is Working!
Under current law, an informal settlement teleconference is available upon request to patients whose balance due is greater than $1,000 after they’ve met their copay, deductible, and co-insurance. This patient-triggered teleconference, which precedes any formal mediation, involves the patient, the facility-based physician, and the insurer. This preliminary approach to resolving what the patient may owe has proven successful for patients and is already required of insurers and out-of-network, facility-based physicians. This has greatly reduced the number of mediation requests that have gone on to formal mediation.
In fact, the success of the current teleconference/mediation process was confirmed through a Texas Department of Insurance open records request, which revealed that in the first nine months of 2014, 1,478 complaints were filed. Of all these complaints, after an informal teleconference facilitated by the Texas Department of Insurance (TDI) that included the patient, the insurer, and the physician, all were settled at the informal teleconference level except for one. As a side note: Seventy-six percent of the complaints were from policyholders of United Healthcare. Why does United Healthcare have such a large percentage of complaints?
Concerns With the Zero-Balance Threshold Amount
The zero-balance threshold in the bill as filed will allow patients to request mediation because of dissatisfaction with having to pay even the most insignificant balance amounts and was not the intended purpose of the legislation. The threshold has to be a balance that would make one pause: And that amount is $1,000.
The $1,000 threshold needs to be preserved to avoid teleconferences or mediation for de minimus amounts. A $1,000 threshold also is beneficial because it highlights for patients not only the shortfall of their health plan’s benefit design, but also what the insurer is willing to pay versus what the physician charges — thus holding both the insurer and the physician separately accountable to their customer, the patient. It is important for committee members to be aware that for balances greater than $200 owed to a facility-based physician after applicable copayments or deductibles, if the patient agrees to a payment plan within 45 days of receiving the first bill and substantially complies with the agreement, the physician may not furnish adverse information to a consumer reporting agency regarding the amount the patient owes.
More importantly, the $1,000 threshold preserves the intended purpose of the mediation — under the watchful eye of their customer, coupled with the shared payment responsibility for mediation, both the insurer and the physician are more likely to come to some agreement. The success of the informal teleconferences I mentioned earlier illustrates this likelihood.
Network Adequacy and Maximum Allowable Payments Set by Insurers
There has been some discussion about expanding mediation to include ANY out-of-network physician with clinical privileges at an in-network facility. Two important areas that must be addressed in concert with any expansion of mediation are:
- Network adequacy and increased enforcement of adequacy standards by TDI; and
- The impact of maximum allowable amounts and their role in the amount a patient pays in out-of-pocket costs.
A patient’s out-of-pocket costs for out-of-network services are impacted dramatically by:
- The adequacy of the insurer’s network;
- The more prevalent use of narrow and limited networks by insurers; and
- The amount the insurer pays toward the patient’s claim based on the insurer’s determination of its maximum allowable amount for the out-of-network service.
Increased enforcement of insurer compliance with network adequacy regulations is needed to ensure consumers are actually receiving the network benefit they are paying for. A TDI staff member was even quoted recently as stating, “We can’t verify that (the insurance companies) do, indeed, have an adequate network, and that’s concerning.” (Houston Chronicle, December 2014)
HB 2256 is effective in large part because of the establishment of both a mediation process and a command to the Department of Insurance to develop local-market network adequacy regulations. Without enforcement of both the adequacy and mediation provisions of HB 2256, TDI allows a lopsided process that delivers back-end resolution by pushing people into mediation, rather than the front-end protection a robust network provides. Front-end protection is more valuable to all participants and lessens the likelihood of mediation.
Due to the great variations in what each insurer pays out of network for services provided in a local market, it is evident that how insurers decide what to pay for out-of-network services compared with the actual monetary loss the patient incurs for the services is not consistent, nor is it well understood. In fact, as I mentioned earlier, insurers’ maximum allowable amounts are not readily available to the out-of-network physician because the insurers consider this information proprietary — even though these amounts show up on each and every out-of-network physician’s explanation of payment, only after the fact.
All of these are important reasons why patients need to continue to be the ones who initiate a mediation request. Otherwise they will never come to understand the coverage they purchased and how the financing behind it impacts their out-of-pocket costs.
Senator Eltife and committee members, SB 481 with some modifications can help patients who receive unforeseen out-of-network services. However, we also need to consider the many factors in the health insurance market that affect a patient’s out-of-pocket costs — not just the resulting balance bill. We are happy to work with Senator Hancock on committee substitute language to ensure that the successful mediation process his legislation implemented in 2009, and TMA supported, continues to be successful and accessed for the right reasons.
Thank you again for the opportunity to speak with you. I will be happy to answer any questions.
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