A 'Clear' Win:

TMA-Backed Bill Makes Health Care More Transparent

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Medical Economics Feature - August 2007  

By Ken Ortolon
Senior Editor  

Two years ago, the Texas Medical Association fought off an attempt by health plans and their employer allies to ban out-of-network physicians from billing patients for charges their health plan wouldn't cover.

Lawmakers were hearing numerous complaints from constituents about getting unexpected bills for medical services they thought their health plan should cover. Physicians argued that the real problem was that the health plans were not contracting with enough physicians, particularly hospital-based specialists, to create adequate networks of physicians to provide needed care.

TMA sought legislation to force the plans to improve network adequacy, but could only fight the issue to a stalemate in the 2005 Texas Legislature. This year, thanks to groundwork TMA laid during the interim and a willingness among stakeholders to collaborate with the bill sponsors, lawmakers passed a bill hailed as a first step toward true transparency and accountability in health care.

And the author of the bill believes it will result in better-informed patients and health insurance consumers.

"It's an incremental approach to bringing some order into health care pricing and billing practices," Sen. Robert Duncan (R-Lubbock) said of Senate Bill 1731, which places new transparency requirements on physicians, hospitals, and health plans.

TMA and Texas Hospital Association (THA) officials say the bill is a balanced approach to ensuring that patients have information they need to make good decisions as health care consumers.

"It's generally a good first transparency bill," said TMA President William W. Hinchey, MD, of San Antonio. "Everybody - and that means the health plans, the hospitals, and the physicians - all are involved in the process. And health plans are going to have to make information available to patients that should always have been available but wasn't." 

Skin in the Game  

SB 1731 grew out of similar legislation Senator Duncan filed in 2005. That bill, SB 1738, originally banned balance billing by out-of-network physicians who provide services in a health care facility. The bill also placed disclosure requirements about physician network participation on facilities and physicians, with no similar requirements for the health plans.

The Texas Association of Business and the Texas Association of Health Plans supported that measure, but organized medicine was able to amend it to require health plans and facilities to notify patients that some facility-based physicians may be out of network. Facility-based physicians would have been required to furnish an itemized billing statement of the services provided when billing a patient for amounts not paid by the patient's health plan.

That bill ultimately failed to pass, which meant the issue was sure to resurface this year. Knowing that, TMA made true transparency a key issue on its legislative agenda for 2007 and began working with Senator Duncan and other key legislators to educate them on physician concerns.

THA President and Chief Executive Officer Dan Stultz, MD, says TMA and his association also worked closely throughout the session to convince bill sponsors that the two organizations were committed to improving transparency in the health care market.

By the start of the 2007 legislative session in January, Senator Duncan had decided not to seek a balance billing ban this year. Instead, he was committed to passing a bill that would not "punish" any one side of the health care industry but would leave all stakeholders "with some skin in the game," he said.

"What we said was, 'Let's do this in a collaborative way and let's do this incrementally so that everyone has a say, and nothing that has been done in any of these bills overtaxes one stakeholder more than another,'" Senator Duncan said. "'Let's raise all boats at the same level on this issue.'"

Stakeholders say SB 1731 achieves that objective by placing new disclosure requirements on physicians, hospitals, and health plans alike. TMA and THA officials say these new disclosure rules are critical for health care market transparency.

"There was no doubt patients were getting bills (whether they were balance bills or not) that were unexpected," said Dr. Hinchey, who testified in support of SB 1731 on behalf of TMA. "And so this word we use called 'transparency' will now allow the patient to know upfront that there is that possibility and will provide mechanisms for the patient to learn who is and who is not in network." 

Disclose, Disclose, Disclose  

Physicians will be required to implement billing policies and procedures to inform patients about possible patient discounts for medical services, whether late payment will incur interest, and how to file a complaint about charges for medical services.

A bill from a physician who is not in the patient's health plan must state that the physician is not in the plan, the patient's plan did not cover the physician's total charge, and the patient can call to discuss optional billing arrangements.

The bill also must include the physician's billing telephone number and information on how to file a complaint with the Texas Medical Board.

Hospitals will be required to implement similar billing policies and procedures and must give patients written notice that the hospital is in their plan, that the patient's health plan does not cover some physicians within the hospital, and that these physicians may bill the patient directly for services.

Physicians and hospitals also will be required to provide cost estimates in advance of care if requested by the patient.

Health plans will be required to provide patients with written notice that the health plan may not cover the physician providing care in a facility and that the physician may bill the patient directly. The health plan's physician directory or Web site must clearly identify hospital-based physicians covered and not covered by the plan.

Also, insurers must give the Texas Department of Insurance such information as patient satisfaction, quality of care, coverage areas, cost of premiums and increases, range of benefits, amount of patient copayments and deductibles, accuracy and speed of claims payment to patients, a list of hospitals in the plan, and more. This information will be maintained on the TDI Web site so that patients and employers can compare health plans to make informed health care decisions.

Senator Duncan says that data will give physicians, employers, and patients an idea of the "real world" market value of medical services.

"If this works the way we want it to - it's a novel approach and hasn't been done anywhere else that we know of - it will allow those who are negotiating contracts, those who are evaluating their own insurance company's rates, to shop around and understand what the true market value, at least in the commercial insurance world, is for health care," he said.

SB 1731 also creates a study group that will examine data submitted by the health plans and advise TDI on what an adequate physician network should be. 

Building a Better Consumer  

Senator Duncan believes the new transparency requirements will help patients be better health care consumers. "Hopefully as the system develops and consumers become more sophisticated because of the information they're getting, they can make better decisions in advance and know in advance that a doctor is going to balance bill them," he said.

He also thinks the bill will draw more physicians into networks; they will be better able to negotiate with plans because they will be armed with data on the actual market value of services and procedures.

Dr. Stultz says that, in the final analysis, whether this bill helps patients avoid getting balance billed unexpectedly will depend largely on the patients. "That depends on the aggressiveness of the patients, if they have access to the Internet and they really pay attention to it," he said. "They're going to have to take some responsibility for coming up to speed and understanding their health plan benefits."

Senator Duncan says he will watch closely how SB 1731 is implemented and how well various parts of the bill work. If necessary, he will attempt to bring stakeholders together again in 2009 to build even more transparency into the system, he says.

"By approaching this incrementally, the inadvertent, unintended consequences of legislation are not as severe, and you can make adjustments," he said. "The end goal is to have a very transparent, market-based medical economy. To get there, you have to have transparency; people have to know what their responsibility is."

Ken Ortoloncan be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at  Ken Ortolon.  


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