TMA research shows how narrow networks and other health plan practices — not physician billing — are bearing down on patients in the form of unexpected, out-of-network balance bills.
Cover Story — May 2016
Tex Med. 2016;112(5):26-36.
By Amy Lynn Sorrel
Physicians don't like surprises any more than patients do.
When Houston ophthalmologist Keith A. Bourgeois, MD, knows his patients need retinal surgery, he and his staff try to explain ahead of time what the procedure will entail, how much their insurance covers, and what their estimated costs will be. But sometimes he discovers the health plan directory his patients looked up was wrong: He is in their network in Columbus but not in Houston. And patients' insurance cards may look the same, but in fact their benefits and out-of-pocket costs have drastically changed.
It's one thing to find out during surgery that what looked like bacteria turned out to be cancer because of similar features. "That's the way medicine is, and you can't know that ahead of time. But patients have a right to know up front what their insurance product covers and what they are purchasing," Dr. Bourgeois said.
Given the growing complexity around health plans, he says so-called "surprise" balance bills for out-of-network services insurers don't fully cover should come as no surprise at all. He leads the Texas Medical Association's Task Force on Balance Billing, a group of hospital-based physicians and representatives of several other specialties charged with studying the issue as efforts to ban balance billing sweep state legislatures across the country.
TMA leaders say the restrictions on doctors do little to hold health plans accountable for a much larger problem revolving around how insurers design their networks and benefits and pay for care: TMA research shows that health plans' shrinking networks, caps on payments for medical care, inaccurate directories, and other tactics — not physicians' billing practices — are bearing down on patients in the form of unexpected out-of-pocket costs.
"Nobody wants surprise bills. But the real problem is not balance billing. The real problem is narrow networks," said Denton obstetrician-gynecologist Joseph Valenti, MD, task force member and chair of TMA's Council on Socioeconomics. "Patients are in the middle of this because it's not made clear to them what they are purchasing. It's like buying a warranty on a car and finding out there's only one shop in the entire metroplex you can take your car to. In that case, would you buy the car? Probably not. And physicians are caught in the middle because we are finding out we can't afford to participate in these plans and stay in business for what insurance companies want to pay. It's very confusing for patients, and it's very confusing for doctors."
Top Agenda Item
Health plans, on the other hand, say tailored networks keep costs down. They point the finger at physician groups they say are unwilling to contract and overcharge for out-of-network services.
TMA research shows otherwise.
Nevertheless, insurance companies, with strong support from consumer groups, are looking to take patients out of the tug-of-war and make balance billing a top agenda item at the state and federal levels. At least a dozen states are pursuing new or updated measures (see "States That Have or Are Pursuing Balance Billing Restrictions.")
TMA is monitoring potential bans in California and Florida, for instance, and a concerning Connecticut law that labels balance billing as a deceptive trade practice.
In Texas, renewed attention stems in part from interim charges state leaders issued to the House Insurance and Senate Business and Commerce committees to examine whether existing laws dating back to 2007 are working to encourage transparency and adequacy of health plan networks and "protect consumers from the negative impacts of disputes over out-of-network services." The issue is in the national spotlight with the proliferation of high-deductible and narrow-network plans sold in the Accountable Care Act insurance marketplace meant to keep premium costs down.
TMA is no longer optimistic, however, about 2017 federal rules that backpedal on more stringent requirements in earlier drafts to tackle ACA plan shortfalls. Similarly, TMA officials warn that new model network adequacy legislation adopted by the National Association of Insurance Commissioners (NAIC) — an organization of states' chief insurance regulators — does little in the realm of insurance regulation. The template, which garnered widespread support from the health insurance industry and could influence future Centers for Medicare & Medicaid Services (CMS) rules, largely leaves network standards up to individual states while restricting physicians' ability to balance bill.
"Make no mistake, balance billing will be one of the first things on the [Texas] legislative agenda when the gavel strikes in 2017," then-TMA President Tom Garcia, MD, told physicians at TMA's Winter Conference in January.
As this article went to press, TMA's Board of Trustees approved the Task Force on Balance Billing's recommendations for possible new TMA policy and advocacy solutions to be considered by the House of Delegates at TexMed 2016, April 29–30 in Dallas. At the top of the list: "Ardently pursue legislative goals [that] seek to hold insurers accountable for their actions."
"Lawmakers want physicians to be a part of the solution. And we want the same things our patients want, which is transparency, not just from physicians but from all health plans and all health care providers, because our patients don't deserve to get a surprise bill," said Beaumont anesthesiologist Ray Callas, MD, task force member and chair of TMA's Council on Legislation.
Until now, much of the debate focused largely on emergency care because patients don't always have a choice of where to turn for treatment and because emergency care can be more expensive than routine, nonurgent services. But Dr. Bourgeois cautions recent efforts more broadly target any out-of-network physician providing services at an in-network facility.
The End Surprise Billing Act of 2015, filed by Texas' own U.S. Rep. Lloyd Doggett, a Democrat, would prohibit balance billing by physicians of any specialty who have privileges at a network hospital but do not contract with the same insurer. Democratic presidential candidate Hillary Clinton's plan for lowering out-of-pocket costs would require that patients "pay no more than in-network cost-sharing for any care received in a hospital in their plan's networks and for any emergency services in a true emergency. Americans should never be surprised by an unexpected medical bill, especially in moments when health is their greatest concern," states a Sept. 9, 2015, factsheet from her campaign website.
Narrow Networks on the Rise
The mounting pressure on health plans to keep their premiums affordable has brought on a proliferation of narrow networks, Dr. Valenti says. But he cautions prohibiting balance billing or removing the patient from the process would only further encourage insurers to shirk their responsibility to ensure adequate access and contract in good faith. And much like the megamergers of some of the nation's largest health plans, he says any supposed promises of greater savings and better products come at physicians' and patients' expense in the form of take-it-or-leave-it payment contracts, high out-of-pocket costs, and less choice. (See "Bigger Isn't Always Better," December 2015 Texas Medicine, pages 22–31.)
"The narrower [insurers] make these networks, the more they shift costs onto patients and doctors, and if regulators don't look at this, we are all in big trouble," Dr. Valenti said.
According to TMA research, only two insurers offer broad preferred provider organization (PPO) networks in the 2016 Texas ACA marketplace, and both sell only regional coverage. That's compared with four health plans offering hundreds of PPO plans across the state in the 2015 exchange. Last summer, Blue Cross and Blue Shield of Texas (BCBSTX) dropped the only statewide PPO plan from both the ACA exchange and the private individual market due to high profit losses. Cigna also discontinued its PPO products on and off the exchange, while Humana dropped its PPO exchange plan. And UnitedHealth has indicated it is considering abandoning the ACA marketplace altogether in 2017 after losing an estimated $400 million. (See "2016 Texas ACA Marketplace Health Plans.")
Texas Department of Insurance (TDI) officials confirmed to Texas Medicine that over the past few years the agency has received an uptick in plan filings for narrow networks, particularly super-narrow exclusive provider organizations (EPOs) that have no out-of-network benefits, except for emergency services. Even if networks are smaller, however, TDI says they still have to meet the same requirements as any other plan type to show they have enough physicians.
It's not for lack of trying on physicians' part, TMA leaders say.
"We try hard to be in network. The big dilemma is that sometimes being out of network is not a choice of the practice. It's a choice of the insurance company gaming the system to their advantage," Dr. Bourgeois said. "Subspecialists like me are understandably worried because we have the potential to be kept away from some of our patients. With these narrower networks, insurance companies say they only need a few neurosurgeons or retinal surgeons on their panels. And the people who are making those decisions from a thousand miles away may look at a map of the greater Houston-Galveston area and think 50 miles looks close, but it can take patients two or three hours in traffic."
He's not alone. According to TMA's 2014 Texas Physician Survey, one-quarter of physicians approached a plan with which they were not contracted in an attempt to join its network. Of those, 29 percent received no response at all.
When it does come to negotiating contracts, a number of health plans barely cover the rent, Dr. Bourgeois adds, with some offers as low as two-thirds of Medicare rates.
"That's unsustainable. We have a business to run. But even if we negotiate in good faith, if insurance companies give you a low-ball, take-it-or-leave-it offer and you don't take it, you don't have much leverage as a two-person practice, and you never hear from them again," he said. "I just renegotiated my lease, and the building expects a 3-percent rise every year. What's frustrating is many of the contracts I hold are the same as they were 10 years ago."
Dr. Callas acknowledges there may be some entities with a policy to stay out of network. But having come to an agreement himself with all but one of Texas' major payers, he says that's the exception, not the rule. Most physicians negotiate in good faith and charge a reasonable fee for their services when those efforts fail, he says. "I know if I'm in network, it helps my patients, but not if I don't get paid appropriately and can't keep the lights on."
Early results from TMA's 2016 Physician Survey show physicians across various specialties rarely, if ever, balance bill more than $500, the threshold for initiating Texas' mediation model for patients in PPO plans to resolve out-of-network bills from certain facility-based physicians. On the other hand, health plan out-of-network payments are typically less than half of physicians' charge for the service, across specialties. (See "Uneven Playing Field.")
Many surprise bills, Dr. Callas adds, don't come from physicians at all and are out of their control. Often, hospitals use outside companies to hire surgical assistants, occupational therapists, imaging technicians, or other professionals who bill separately for their services.
Network Confusion for All
A TMA white paper further details how health plans determine not only what rates to pay physicians but also how much of patients' care they are willing to cover — referred to as maximum allowable amounts — versus paying the actual charge. In addition to confusing benefit structures, the paper also highlights how errors in various health plan directories mislead patients to believe they are visiting an in-network physician group. (See "TMA Resources.")
A majority of Texas physicians already discuss their charges with patients or help them estimate out-of-pocket costs, according to TMA's survey. With help from a consumer research firm, the task force interviewed insured patients across Texas and discovered that's exactly the kind of help they expect from their physicians because health plan products are so complex, and they find little to no help elsewhere.
"They don't blame you for the problem," researcher Robin Rather told physicians at TMA's 2016 Winter Conference, "but they want you to fix it."
Despite their best efforts, doctors are just as confused, says TMA Director of Payment Advocacy Genevieve Davis.
At the start of the ACA exchange in 2014, for instance, most health plans touted the networks they offered were the same inside and outside of the marketplace. That's no longer the case, and certain network designs are so labyrinthine or exclusive that "doctors and patients can't even tell the network game anymore" to avoid out-of-network scenarios, Ms. Davis said.
It got to be so confusing, Southwest Physician Associates (SPA) asked payers to supply a list of the Dallas-based independent practice association's members who are in network. "This year alone, 2016, networks have become so narrow and exclusive that it's so hard even for practicing physicians to know what plans they are a member of. It really becomes a big problem, especially when you are referring out," SPA President and pediatrician Christopher Abel, MD, said.
SPA thought the payer lists would help because patients often call ahead to find out if the practice takes their plan. But when they arrive and show their insurance card, "that's when the trouble starts," Dr. Abel said.
One SPA physician recently treated a new patient whose ID card listed on the front an EPO network the doctor knew he participated in, but the plan denied payment for the claim saying he was out of network. The practice and TMA Payment Advocacy staff researched the issue and found the doctor listed as in network in the plan's directories and online eligibility verification portal.
After much digging, TMA discovered the back of the card listed an acronym for a completely different network that restricted the patient to a specific accountable care organization (ACO) for care. None of that information came up in TMA's research, and the payer's own web-based guidelines to help physician practices interpret patient insurance cards say any ACO information should be listed on the front. The plan insists on denying payment because the physician is not in the ACO network, and TMA is still working to resolve the claim.
"You're not just getting the wrong information from the portal; you're getting wrong information from humans, from the card, everywhere," Dr. Abel said. "Doctors can't work for free. If I'm being told by the insurance company that I'm in network, and it turns out I'm not, why should I take the financial hit for that?"
TMA also received reports from unwitting out-of-network physicians to whom hospitals refer patients because they are the only specialists in the area. That leaves the physician and the patient with unpaid and unwanted bills.
TDI, too, is hearing from consumers seeking help in navigating networks, discerning costs, and finding doctors. The calls parallel a rise in formal complaints to TDI about balance bills. Officials stopped short of linking the two trends, but given the growing interest in network issues from consumers, as well as lawmakers, TDI told Texas Medicine it will more closely track such inquiries.
Health plans declined Texas Medicine interview requests, but through statements say their products meet state and federal access-to-care requirements and provide exactly what consumers want: a balance of affordability and choice.
"Creating focused or tailored networks forwards our commitment to provide the right care at the right time, in the right place … [and] we strive to educate and engage consumers and physicians on the value of coordinated care to reduce waste or redundancy, improve health care results, and lower out-of-[pocket] expenses for patients," reads a BCBSTX statement. On the other hand, officials say, "One of the biggest drivers of unplanned costs is out-of-network care. We negotiate rates with contracted providers so that we can predict and better manage what the costs of care will be."
BCBSTX points to a September 2015 report by America's Health Insurance Plans (AHIP) that blames some of those expenses on "exorbitant charges" for a range of out-of-network services provided by hospitals, physicians, and others, when compared with Medicare payments for the same treatments.
"These exorbitant charges underscore the value of health plans' provider networks. Health plans develop provider networks to improve quality and make health care more affordable for consumers," states an AHIP press release. "By selectively contracting with credentialed providers, health plans ensure consumers have access to a wide-range of providers and clinicians, and patients see measurable savings when they visit contracted providers. Yet when providers choose not to participate in a health plan's network or do not meet requirements for participation, consumers have little protection against physicians who 'balance bill' or charge the cost difference for a particular service."
TMA vigorously disputed that AHIP report. "This so-called report is nothing more than a desperate smoke screen to divert attention from the real problem," Dr. Garcia said. "The health insurance industry games the system to keep more of patients' premium dollars by forcing patients to seek care out of network. Then they have the gall to criticize what some doctors bill for that care."
Aetna officials also tell Texas Medicine balance billing "can happen for a variety of reasons. In some cases, physician groups want to have an exclusive contract with a hospital and remain out of network for plans. In others, an accountable care organization run by a health system is operating a narrow network for a specific employer. Regardless of the specific circumstances, balance billing can result in unforeseen medical bills."
Aetna and BCBSTX say they have taken steps to protect consumers from "unexpected and egregious medical bills" by educating members on their plans and cost differences between in- and out-of-network care; enhancing provider directories; and creating "cost transparency tools" that show doctor- and facility-specific information on health care costs and quality.
"We recognize that there can be confusion when networks change, and as a result we are working to simplify the process" and solicit ongoing input from TMA, Aetna representatives said.
In addition to insurers providing consumers with transparency tools, AHIP advocates "greater transparency from providers" and "strengthening financial protections for consumers by imposing limits on balance billing."
Texas Ahead of the Game
"There's a big difference between excessive billing and balance billing because doctors can't get into networks," Dr. Valenti emphasized.
Texas already has a long history of consumer protections, Dr. Callas adds, and if existing laws don't work, it's because they don't demand enough transparency and accountability from health plans, not doctors.
In 2015, TMA negotiated a compromise under Senate Bill 481 by Sen. Kelly Hancock (R-North Richland Hills). The bill lowers the threshold for patients to initiate mediation over balance bills from $1,000 to $500. TMA also strongly supported House Bill 1624 by Rep. John Smithee (R-Amarillo). The legislation strengthens requirements for health plans to publicly post accurate network directories on their websites, but officials say plans are slowly responding.
TMA's Task Force on Balance Billing and Council on Legislation also continue to analyze a host of legislative and regulatory proposals in Texas and beyond, with a careful eye on legislation aiming to restrict out-of-network physicians' ability to balance bill for services they legitimately provide. Other proposals around the country range from requiring certain price disclosures by physicians, hospitals, and others to tying out-of-network payment amounts to a state-certified database of geographic-specific charges, such as FAIRHealth.org.
At the federal level, however, CMS at the last minute reversed course on network adequacy standards for ACA plans that — much like Texas law — originally contained specific, minimum criteria. They also included cost-sharing provisions that allow patients to get credit for balance bills toward in-network deductibles if insurers don't notify them ahead of time of their out-of-pocket responsibility.
CMS suggested it was holding off "to provide states time to adopt the NAIC Network Adequacy Model Act," which suggests — but does not mandate — states incorporate quantitative time and distance criteria, for example. It also requires that any billing statement out-of-network professionals send to insured patients must inform them they are "responsible for paying their applicable in-network cost-sharing amount, but [have] no legal obligation to pay the remaining balance." Whether or how much insurers would pay is left up to state law.
CMS reiterates nothing in its regulations prohibits balance billing, as some stakeholders requested. Acknowledging the cost-sharing policy "will help provide transparency and … a measure of financial protection for consumers against surprise out-of-network cost sharing," the agency deferred it to 2018 "to permit us to monitor ongoing efforts by [plans] and providers to address the complex issue of surprise out-of-network cost sharing at in-network facilities … and amend our policy in the future to accommodate progress on this issue, if warranted."
NAIC calls the updates to its 1996 model network adequacy act "a major improvement" that reflects "a compromise among all of the participating stakeholders." A spokesperson tells Texas Medicine, "State insurance regulators must have the flexibility to regulate provider networks based on appropriate considerations such as geographic access and impact on premiums. They also need to make sure consumers can access clear information on which providers are in the network of each plan. The model does not regulate [physician] billing practices, but establishes protections for consumers in very specific situations where a person goes to an in-network facility and then finds out a provider in the facility is out-of-network."
AHIP, the Blue Cross Blue Shield Association, and Aetna all participated in and endorsed the final NAIC model bill.
TMA officials clarify the federal regulations do not supersede stronger state laws but say CMS' reversal represents a significant setback. Medicine strongly rejects the NAIC model act for "lack[ing] meaningful standards," TMA writes in an Oct. 31, 2015, letter to NAIC and CMS officials. Consumer groups like FamiliesUSA agree. Comments filed by TMA and the American Medical Association throughout the two-year development process continually urged regulators to focus on their charge of holding plans' feet to the fire for ensuring fair contracting and robust and transparent networks. Instead, the final model "serves to reward insurance companies for their poor marketplace conduct and signals to other insurers to reduce investment in network adequacy, especially in emergencies," TMA's letter states.
TMA and TDI officials say Texas' network adequacy standards already meet or exceed provisions in the NAIC model bill, for example, by imposing specific time and distance criteria, provider directory standards, regular reporting, and random sampling to verify insurers' panels. BCBSTX also told Texas Medicine the NAIC model contains provisions similar to existing Texas law, adding that it supported the recently expanded state mediation process.
TMA and TDI officials say Texas' mediation model, which NAIC rejected, is working: 94 percent of the roughly 1,000 requests TDI has received have been resolved in early conference calls without proceeding to formal mediation.
TMA's task force recommendations contemplate expanding availability of the mediation process for all out-of-network services and additional state oversight of health plans that repeatedly end up in mediation.
TMA adds Texas also could take stronger laws that already exist for HMOs and super-narrow EPOs and apply them across the board to PPOs. In emergency situations, HMOs and EPOs must find a way to hold patients harmless by paying non-network physicians adequate rates to prevent a balance bill. In nonemergency cases, HMOs and EPOs must fully pay the physicians needed to fill network gaps, either an agreed-upon rate or physicians' full billed charges.
"Creating adequate provider networks with payments that allow physicians to keep their doors open is the responsibility of insurance companies, not physicians or patients," Dr. Valenti said.
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.
2016 Texas ACA Marketplace Health Plans*
- Ambetter from Superior Health Plan (filed under Celtic Insurance Company)
- Allegian Insurance Company†
- Blue Cross and Blue Shield of Texas
- CHRISTUS Health Plan
- Cigna Health and Life Insurance Company
- Community First
- Community Health Choice
- FirstCare Health Plans
- Humana Insurance Company
- IdealCare (filed under Sendero Health Plans, Inc.)
- Molina Health Plan
- Oscar Insurance of Texas
- Prominence HealthFirst of Texas, Inc.
- Scott & White Health Plan†
- UnitedHealthcare (filed under All Savers Insurance Company)
*Not all plans and product types may be available in every Texas county. For more details, visit TMA's Affordable Care Act Resource Center.
†Offer preferred provider organization plans.
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TMA's white paper: "Network Adequacy and Unfair Discrimination in Insurance"
Health plan problems? Contact TMA's Payment Advocacy Department.
File a complaint with the Texas Department of Insurance.
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