TMA Strikes at the Heart of the Issue: Inadequate Health Plan Networks and Benefit Designs
Economics Feature — May 2015
By Amy Lynn Sorrel
Like on Groundhog Day, balance billing has come out of hibernation for the 2015 Texas Legislature, and the Texas Medical Association is poised to shed sunlight on the health plan practices casting shadows on the issue.
Renewed attention stems in part from interim charges that tasked the Senate State Affairs and House Insurance committees to look at whether existing laws dating back to 2007 are working to inform patients ahead of time when out-of-network physicians might balance-bill them for services their health plans don't fully cover. The issue is in the national spotlight, too, with the proliferation of high-deductible and narrow-network plans sold in the Accountable Care Act insurance marketplace. New federal rules take aim at ACA plans' inadequate networks and inaccurate physician and hospital directories.
TMA is pushing for similar health plan accountability measures at the state level, with a careful eye on legislation that could restrict out-of-network physicians' ability to balance-bill for services they legitimately provide.
While out-of-network issues occur across specialties, much of the debate focuses on emergency care because patients don't always have a choice of where to turn for treatment in such circumstances and because emergency care can be more expensive than routine, nonurgent services.
But Austin emergency physician Bruce Moskow, MD, says balance billing is part of a much larger problem revolving around shortcomings in how health plans design their networks and benefits and how they pay for patients' health care. New TMA research shows how it is health plans' shrinking networks, caps on payments for medical care, and inaccurate network directories — not physicians’ billing practices — that are bearing down on patients in the form of unexpected and expensive out-of pocket bills.
Focusing on balance billing "does not solve the problem, which is insurance companies selling products that don't cover people in emergencies," said Dr. Moskow, president of the Texas College of Emergency Physicians. "If people knew what their policies said, they would not be surprised. The problem is, that's disguised by the insurance company. And this ties back to network adequacy because they are pricing policies at such a discount that no physician can afford to stay in business for what insurance companies want to offer."
More Regulation, Same Problem
Health plans, on the other hand, contend hospital-based physician groups, such as emergency physicians, anesthesiologists, and pathologists, are typically unwilling to contract, even if the hospital where they provide care is in network.
The Texas Association of Health Plans (TAHP) declined Texas Medicine's requests for comment, but a statement on TAHP's website says state rules allowing balance billing "have helped fuel a negative trend of incentivizing hospital-based physicians to drop out of network."
Over the years, Texas lawmakers and regulators have responded to the back and forth with a host of patient protections. Among them:
- Senate Bill 1731 passed in 2007 requires physicians, hospitals, and other facilities to provide cost estimates when uninsured patients ask. Insurers must inform members of what they will pay for out-of-network services, and out-of-network physicians must offer payment plan options for balances owed.
- House Bill 2256 passed in 2009 allows patients in certain circumstances to dispute out-of-network bills from facility-based physicians through mediation, and led to the adoption of other consumer protections surrounding network adequacy.
- Revisions to Texas Department of Insurance (TDI) network adequacy rules in late 2013 allow patients in preferred provider benefit plans to get credit for emergency balance bills toward their in-network insurance deductibles and out-of-pocket maximums.
- The 2013 revisions also require health plans to regularly report to TDI on the adequacy of their networks.
Legislation filed in March by Rep. John Smithee (R-Amarillo) and backed by a coalition of consumer groups suggests Texas' existing remedies aren't enough. As filed, House Bill 1638 would bar out-of-network physicians from balance-billing patients for emergency services not covered by their health plans. Instead, the bill requires the noncontracted doctors and health plans to go to arbitration to settle payment. The loser pays the arbitration costs.
Representative Smithee could not be reached for comment. He and the consumer groups supporting him have said more regulation is needed to take patients out of the tug-of-war between insurers and out-of-network physicians.
"Surprise medical bills are an expensive and unfair burden for patients and their families. Texans deserve a health care system that adequately compensates providers but doesn't take advantage of consumers after health emergencies," AARP Texas Director Bob Jackson said in a statement.
A September 2014 report by the Center for Public Policy Priorities, which also supports balance-billing restrictions, concludes that "transparency alone does not provide a real solution for ending surprise balance bills because consumers do not proactively or knowingly choose to get health care out-of-network in many cases."
The report found no in-network emergency physicians at roughly half of the in-network hospitals for two of the state's three largest insurers: UnitedHealthcare and Humana. Blue Cross Blue and Shield of Texas (BCBSTX) showed 21 percent of its in-network hospitals lacking in-network emergency physicians.
The Heart of the Matter
A new TMA white paper digs deeper, however, to show physicians, in fact, are willing to contract with the health plans. (See "The Truth About Balance Billing.")
According to a TMA analysis, Humana contracted with emergency physicians at only three out of the 10 Austin hospitals that also contract with BCBSTX and United. The Blues, on the other hand, reached network agreements with emergency physicians at all of the facilities. United had in-network arrangements at all but two hospitals.
"Yet Humana is permitted to sell a network product to Texans in Austin," states TMA's white paper, "Network Adequacy and Unfair Discrimination in Insurance." The report also highlights errors in various health plan directories that would mislead patients to believe they are visiting an in-network physician group. Regulators also often rely on such lists to discern network adequacy.
Humana and United declined Texas Medicine's requests for comment.
"The question is not: Why is my doctor not in network? The question is: Why can't plans come to an agreement with my doctor?" says TMA Vice President for Medical Economics Lee Spangler.
It's not for lack of trying, according to James Scott Holliday, DO. The Dallas-based anesthesiologist is a member of TMA's Council on Socioeconomics and chairs the Clinical Governance Board for Pinnacle-US Anesthesia Partners.
He says his group is "committed to an in-network strategy with all major health plans because it's the right thing to do for our patients and their employers, and it lowers the overall cost to our health care delivery system. We do our best to engage with payers, but sometimes we don't even get return phone calls. If we can't get them to respond, we can't unilaterally sign a contract."
He's not alone. According to TMA's 2014 Texas Physician Survey, of those doctors who approach health plans in an attempt to join their networks, 28 percent receive no response from the plan, up from 23 percent in 2012. (See "Let Me In?")
"Unfortunately, it's the health plans' behavior that places more out-of-pocket responsibility on the patient. The longer the plans delay negotiations with us, or any other physician group for that matter, the more risk they can push off onto the patient," Dr. Holliday said.
Patients bear the burden, he explains, because insurers not only define their own "usual and customary" rates to pay physicians for their services, but they also determine how much of the patient's care they are willing to cover — referred to as maximum allowable amounts — instead of paying the actual charge.
"Insurance companies pay their portion of it and shift the additional cost to the patients," Dr. Holliday said. "The issue is not balance billing. The issue is network adequacy. The public should be able to have a significant amount of trust that insurance carriers are building networks with enough providers. That's the definition of network adequacy."
Bills that prohibit balance billing or remove the patient from the process would encourage insurers to shirk their responsibility to contract in good faith, TMA leaders say. Nor is such legislation designed to create a permanent solution for either party.
"It's a big incentive to pay poorly and pay late," said Dr. Moskow, also an attorney.
Physicians have a right to charge a reasonable fee for their services, he says, adding that most balance bills for emergency services range in the hundreds — not thousands — of dollars. But unlike mediation, which current law allows, Representative Smithee's bill calls for arbitration, a process that leaves no middle ground and forces the arbiter to pick one side or the other. And it sets no precedent, "so you could go 10 different times with 10 different arbiters and get 10 different results. That doesn't fix the underlying issue, which is rates are set in a nonsustainable manner," Dr. Moskow said.
Physicians also worry the loser-pays legislation makes it too expensive to fight mostly small-dollar cases, and if doctors do choose to arbitrate, insurers will delay payment until a resolution is reached.
If existing laws don't work, it's because they don't demand enough transparency and accountability from the health plans, TMA's white paper suggests.
TDI, which enforces state insurance rules, declined to comment for this story.
The agency's director of managed care quality assurance told the Houston Chronicle last December, "We can't verify that [health plans] do, indeed, have an adequate network and that's concerning." At the time, the Chronicle investigation found that only 25 of the 140 PPO plans offered in Texas had submitted the required network adequacy reports by the April 1, 2014, compliance deadline, and only three more reports had come in afterwards.
There are solutions, says Dr. Moskow, who served on a state workgroup that helped develop the transparency rules that came out of SB 1731.
For example, the state could take stronger laws that already exist for HMOs and super-narrow exclusive provider organizations (EPOs) and apply them across the board. In emergency situations, "current law is for HMOs and EPOs to find a way to hold patients harmless and come to an agreement with providers that keeps patients from having a balance," Dr. Moskow said.
In nonemergency cases, HMOs and EPOs must "fully reimburse the providers needed to fill network gaps," TMA's white paper notes.
"The onus is on the insurance company. After all, they are the ones offering the insurance product," Dr. Moskow said.
Instead, pending TDI rulemaking threatens to weaken existing protections, Mr. Spangler warns. TMA is opposing the proposal.
TMA also was analyzing other legislative solutions on the table as this report went to press. As filed:
- House Bill 3085 by Rep. Nicole Collier (D-Fort Worth) would codify some of the solutions proposed in TMA's white paper and allow the Office of Public Insurance Counsel (OPIC), along with TDI, to monitor network adequacy across the spectrum of HMO, PPO, and EPO insurance products, and permit OPIC to file complaints with TDI about inaccurate health plan directories.
- House Bill 1624 by Representative Smithee would require additional disclosures and transparency in health plan provider directories to help better inform patients of their coverage options and obligations.
- Under House Bill 616 by Rep. Greg Bonnen, MD (R-Friendswood), health plans would pay physicians' out-of-network charges based on a state-certified database of geographic-specific charges, such as FAIRHealth.org. TMA officials emphasize that the bill creates a voluntary process that gives physicians a choice as to whether they wish to pursue this avenue for claim payment for their out-of-network services.
Meanwhile, TMA officials remain active in national discussions at the National Association of Insurance Commissioners to beef up state network adequacy laws. They have drawn more attention with the advent of the ACA insurance exchanges and the more restricted coverage insurers tend to sell there as a way to keep consumer premium costs down.
At the federal level, new Medicare Advantage and ACA plan regulations released by the Centers for Medicare & Medicaid Services in February also recognize market shortfalls by requiring those plans to regularly update their network directories to accurately reflect which physicians participate and whether they are taking new patients. New audit and enforcement protocols — including monthly updates for ACA plans, quarterly updates for Medicare Advantage plans, and daily fines for inaccuracies — take effect in 2016.
Amy Lynn Sorrel can be reached by phone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.
The Truth About Balance Billing
A pair of newly developed TMA resources examine how insurance plans' network designs and payment decisions are leaving many Texans with "surprise bills" for health care services.
A new TMA white paper, "Network Adequacy and Unfair Discrimination in Insurance," explains how insurers limit their losses at the expense of the consumer. TMA staff has also prepared a detailed spreadsheet of network information gathered from large Texas health plans.
Download these resources on the TMA website.
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