Keep Monetary Threshold for Mediation

TMA Testimonmy by Isabel Menendez, MD 

House Committee on Insurance
House Bill 3133

April 8, 2015

Good afternoon, Chairman Frullo and members of the committee. My name is Dr. Isabel Menendez. I am a solo-practice radiologist with clinical privileges at Care Regional Medical Center. This is a 75-bed acute care medical facility and is the only hospital that covers the community on the north side of the Corpus Christi Harbor Bridge. It serves Aransas Pass, Rockport, Fulton, Port Aransas, Ingleside, Ingleside-on-the-Bay, Gregory, Portland, Sinton, and Taft. This hospital is vital to a service area with 90,000 residents who need quick access to emergency and health care services.

Today, I am testifying on behalf of the Texas Medical Association and the Texas Radiological Society. We are in opposition to House Bill 3133 as filed. 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.” It also eliminates the $1,000 balance threshold for out-of-network claims eligible for mediation. We can support the addition of the assistant surgeon to the definition of “facility-based physician.” However, we have continued concerns about and oppose the elimination of the existing $1,000 balance-due threshold that makes a claim eligible for mediation after the patient’s copays, coinsurance, and deductibles have been paid.   

Informal Settlement Teleconference — It Is Working!
Our organizations support the continued use of mediation that is initiated by the patient as the resolution process of choice for out-of-network claim disputes. It has held insurers, facility-based physicians, and even patients accountable since 2009 under then-Representative Hancock’s House Bill 2256.

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 coinsurance. This patient-triggered teleconference, which precedes any formal mediation, involves the patient, the facility-based physician, and the insurer. This 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 one. 

As a side note: Seventy-six percent of the complaints were from policyholders of UnitedHealthcare, which is your contract administrator for state employees. This statistic alone should make one ask: Why did UnitedHealthcare have such a large percentage of complaints compared with other insurers in the market? TDI and the Employees Retirement System of Texas should pursue the answer to this question.  

Expanding the Applicability of Claims Eligible for Mediation to Assistant Surgeons
As I mentioned, TMA supports the addition of assistant surgeons to the definition of “facility-based physicians.” No doubt this change was prompted by out-of-state news reports and some patients’ lack of awareness 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 — because in either case, the patient will owe two coinsurance amounts: one for the surgeon and one for the assistant surgeon.

Concerns With the Zero-Balance Threshold Amount — The $1,000 Threshold Should Be Kept 
The $1,000 threshold needs to be preserved to avoid teleconferences or mediation for amounts that patients have decided they shouldn’t owe, even though the policy they purchased says differently. The bill modifies the law so that even copayments (which are $25) and deductibles are subject to mediation.  These are amounts that under the insurance plan are very clearly the enrollee’s responsibility. If the dollar threshold is removed, then every out-of-network, facility-based physician encounter at a network hospital can be mediated — without regard to how small the claim is and without regard to whether the amount is part of the patient’s clearly defined out-of-pocket responsibilities under the plan design.  

A $1,000 threshold also is beneficial because it highlights for patients: (1) the realities of their health plan’s benefit design (including any shortcomings in the design), and (2) what the insurer is willing to pay versus what the physician actually charges — thus holding both the insurer and the physician separately accountable to their customer, the patient.  

The threshold has to be a balance that would make one pause: And that amount is $1,000. More importantly, the $1,000 threshold preserves the intended purpose of the mediation — under the watchful eye of their customer, coupled with the shared cost of mediation between the insurer and the physician, both the insurer and the physician are incentivized to come to some agreement. The success of the informal teleconferences I mentioned earlier illustrates this likelihood.

Out-of-Network Payment Amounts/Coverage Design Determine Balances Owed — Not Charges
In testimony provided a couple of weeks ago on SB 481 (this bill’s companion), physicians heard some individuals imply that physicians are manipulating their charges to intentionally fall under the $1,000 threshold to ensure their claims cannot be taken to mediation.  

LET ME BE CLEAR: My charge alone in no way determines the final balance, which makes it impossible for me to “manipulate” whether a patient’s balance will fall above or below the current dollar threshold for mediation of a particular claim. This is true because the patient’s balance is influenced by many factors over which I have no control. These factors occur AFTER I submit my charge, regardless of whether the amount of my charge is greater or less than $1,000.  

My charge remains my charge, regardless of whether I am submitting the claim for an in-network service or an out-of-network service. The individual patient’s out-of-pocket responsibilities will vary depending upon many factors, including a particular patient’s health benefit plan coverage (or lack thereof) and where the patient is in his or her plan year for meeting deductibles and out-of-pocket maximums.

For emergency services, insurers must pay the greater of (1) the amount negotiated with in-network providers; (2) the amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable charges); or (3) the amount that would be paid under Medicare for the emergency service.

Since the contract payments and the methodology for settling claims is not public information, there is no way for the patient OR a physician to know how emergencies will be covered or even if the insurer complied with the law. For all other services, the carrier can set any amount for coverage — otherwise called the “allowed amount.”

When I submit my out-of-network claim to the insurer, I have no idea what the insurer’s final payment amount to me will be for several reasons, which prohibits me from manipulating the balance: 

  1. Since I have no contract, the insurer single-handedly determines what it will allow in payment to me for my out-of-network service, and that amount is not even based on my charge nor is it available to me before I submit my charge. 

  2. This “allowed payment” varies from insurer to insurer.  

  3. Then the insurer applies the out-of-network coinsurance amount specific to that patient’s coverage to the insurer-determined allowed amount, but the applicable coinsurance amount also varies from patient to patient. This coinsurance amount could be 70 percent, 60 percent, or 50 percent of the insurer’s allowed payment based on the patient’s coverage, and I do not know the amount applicable to a particular claim prior to my claim submission. 

  4. Then the insurer subtracts the coinsurance amount the patient is responsible for based on the patient’s coinsurance amount owed on the allowable. 

  5. Any deductible that may still be applicable in the plan year is then applied to reduce the insurer’s payment.  

  6. Finally, these amounts together are then subtracted from my charge, which ultimately determines the balance.   

As you can see, it is NOT my charge alone that determines the balance owed. Based on the number of insurers that my billing office submits claims to every day, it would be virtually impossible for me to even attempt the manipulations that are being alleged and implied. 

Payment Plans Must Be Offered to Patients for Balances Greater Than $200
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, the law already requires the facility-based physician to offer a payment plan. 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. This is another reason why bringing the balance threshold to $0 is not needed. 

Network Adequacy/TDI Enforcement Needs to Be Addressed Before Threshold Changes Occur
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 TDI 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 that a robust network provides. The front-end protection of a robust network 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 out-of-network physician’s explanation of payment, only after the fact.   

Conclusion
Chairman Frullo and committee members, we 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 Representative Smithee on committee substitute language to ensure that the successful mediation process implemented in 2009, and a process that TMA supported then, 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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April 26, 2018

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