Legislative Affairs Feature - February 2008
By Ken Ortolon
Like cockroaches, you just can't seem to get rid of some issues in the Texas Legislature. Balance billing appears poised to become one of them.
Texas lawmakers hotly debated balance billing (or inadequate health plan networks, as the Texas Medical Association frames the issue) in the past two legislative sessions. In 2007, lawmakers passed Senate Bill 1731, which intends to alert patients ahead of time when they may get billed by out-of-network physicians for services not fully covered by their health plans.
But state Rep. John Smithee (R-Amarillo), chair of the House Insurance Committee, says he was not fully satisfied with that legislation and, at his request, House Speaker Tom Craddick directed the committee to study balance billing issues before the 2009 session. That almost guarantees the issue will be the subject of legislative debate again next year.
Representative Smithee says his goal is to find an equitable solution that works for both physicians and health plans and, more important, ensures that patients aren't stuck unexpectedly with huge out-of-pocket expenses.
"That's really not good for anybody," he said.
Allocating Fair Shares
The charge Speaker Craddick gave the Insurance Committee in November directs it to "study the practice of balance billing by medical providers and determine which portions of the cost out-of-network patients, insurers, and providers should ultimately be responsible for paying."
Representative Smithee says balance billing is part of a much larger problem revolving around how patients access out-of-network services and how out-of-network physicians and providers are fairly compensated.
"I think it's a problem that has several components to it," he said. "One is to try to ensure that patients are hooked up with in-network providers whenever possible, especially in hospital settings. Number two is this issue of how you compensate out-of-network providers and make sure they do get compensated at a fair rate. And number three is to try to make sure that the patient doesn't get hit with a large balance bill at the end of the process."
Physicians and health plans have argued for years over who's at fault when patients must go out of network for some health care services, thereby incurring out-of-pocket expenses for the portion of physician fees the health plans decline to pay.
The plans contend the problem is agreements between hospitals and hospital-based physician groups, such as anesthesiologists and pathologists, which result in one group being responsible for providing all services within a hospital. If an anesthesiology group, for example, is not in a particular health plan's network but has an exclusive contract with a hospital that is in the network, then all enrollees of that plan must use out-of-network anesthesiologists when they have surgeries at that hospital.
The health plans say those exclusivity agreements give the physician groups leverage against the plans when negotiating contracts.
But physicians argue that insurers have for years offered take-it-or-leave-it contracts at unrealistically low rates that force physicians to decline participation in the networks so they can bill patients the difference between what the plans are willing to pay and what physicians believe is a reasonable fee.
"Physicians feel like we have a right to charge a reasonable fee for our services, and these insurance companies are not negotiating in good faith with us," said Austin obstetrician-gynecologist Albert T. Gros, MD, chair of TMA's Council on Legislation.
Representative Smithee says he doesn't know who is at fault. He simply wants to make sure patients who go into the hospital for surgery or other care are not stuck in the middle if they can't find an in-network physician to provide care.
"It's not just a situation where the insured doesn't get the information when he buys the [insurance] product," he said. "He actually is in a position where he's lying on his back in the operating room where the decision's made. You can't make decisions of that nature in that environment. What I'd like to find is some way to avoid those situations the best we can avoid them."
Incentivizing Good Behavior
SB 1731, which took effect Sept. 1, requires health plans to notify enrollees that facility-based physicians may not be members of their health plan network and that they may be balance billed. The measure also requires physicians and hospitals to maintain consistent billing policies and tell patients they may be billed for services by out-of-network physicians, even if the hospital is in network.
Additionally, the measure requires the Texas Department of State Health Services to create and maintain a "Consumer Guide to Health Care" on its Web site to give patients information on facility pricing practices and links to quality-of-care data. The bill also directs the Texas Department of Insurance (TDI) to collect data on health plan reimbursement rates and create a task force to study network adequacy issues. Both of those efforts are now under way. (See " Task Force Launches Network Adequacy Study .")
Representative Smithee, however, says that his "impression of that bill is that it will do very little." He says lawmakers may need to do more than just provide warnings to patients that they may get balance billed. His approach is to give physicians incentives to participate in a network without being too heavy handed.
During the 2007 session, he proposed a "voluntary" system in which physicians would be encouraged to join the health plan networks in exchange for the promise of a fair and reasonable fee.
"The advantage [for the physician] is getting prompt payment at a reasonable rate," Representative Smithee said. "The disadvantage is foregoing balance billing and possibly accepting somewhat less than you would usually charge."
Jared Wolf, executive director of the Texas Association of Health Plans, says stakeholders rejected that proposal in 2007 because it was a "last day, last minute" offering that no one had time to analyze.
Still, Representative Smithee says it could be attractive to physicians if coupled with some added responsibility on the part of hospitals and health plans to ensure that they have at least some hospital-based physicians as part of every network.
"The hospital should have some obligation if it's going to participate in a plan to make sure that it has some hospital-based providers who are part of the same plan," Representative Smithee said, adding that plans must do a "better job of making sure they have hospital-based physicians in the plan as well."
Dr. Gros says TMA believes TDI also needs more authority to regulate network adequacy. TDI actually proposed standards for network adequacy before the 2005 legislative session, but they were never formally adopted and were dropped after lawmakers failed to act on the issue that year.
Dr. Gros says TMA may advocate added authority for TDI to regulate network adequacy when the agency goes through the sunset review process next year.
"They need to be empowered to make sure that the consumers are protected," he said. "Part of that empowerment needs to be that they can release information to educate the consumer about what an adequate network is and also educate the consumer about the various physician-profiling plans the insurance companies are putting out there under the guise of quality, when in reality all they are is economic credentialing."
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at Ken Ortolon .
Task Force Launches Network Adequacy Probe
A task force created by the Texas Department of Insurance (TDI) held its first meeting in December in an effort to bring stakeholders together to resolve issues of health plan network adequacy and physician balance billing.
The legislature ordered TDI to form the task force last year to give stakeholders a forum to discuss these issues in a "less volatile environment" than the heat of a legislative session, says Dianne Longley, director of special projects in the TDI Life, Health, and Licensing Division.
Ms. Longley says the task force's first job is examining "what data is missing to objectively look at the issue of network adequacy and, hopefully, use that data to come to some kind of agreement about what we could do to fix whatever the problem turns out to be."
TMA President William W. Hinchey, MD, represents TMA on the task force. He says the initial meeting involved a lot of "jostling for position" among the stakeholders.
"It was mainly everybody trying to stake out their position on how to get data, where data can come from to assess adequacy," Dr. Hinchey said.
Ms. Longley says TDI wants the task force to gather a variety of data, such as percentage of claims filed out of network and the actual number of patients getting balance billed by physicians.
"We're trying to understand exactly how big a problem it is. Is it more pervasive in some areas of the state or in some towns in particular, or is it truly a statewide problem?" Agency officials also want to know if the issue involves only certain specialists or all facility-based physicians, she adds.
While TDI has statutory authority to require plans to submit some of this data, Ms. Longley says the agency also wants to collect some data from physicians and hospitals.
"The task force expressed an interest in getting information from some of those providers," she said. "Any of the data we collect will require that we look at whether there's another agency that we might want to work through that has some authority, or whether it would be purely voluntary on the part of those providers working through TMA and THA [Texas Hospital Association] to get some cooperation."
Dr. Hinchey says part of the problem is there is no definition of an adequate network. And, he wants the task force to look at the reasons why health plans are failing to put together adequate networks.
"Breaking it down even further, why does one health plan have a more adequate network versus another health plan in the same geographic region that is contracting with basically the same population of doctors and hospitals?" Dr. Hinchey asked.
Jared Wolf, executive director of the Texas Association of Health Plans, says the atmosphere at the initial task force meeting was cordial. "Every single person in that meeting commented that the current situation is not something they desire or like," he said. "It gives everybody there a black eye."
Yet, neither the health plans nor physicians appear to have changed the positions they've held for at least two legislative sessions.
Physicians argue that health plans offer them low-ball fees in take-it-or-leave-it contracts that force them to stay out of network so they can charge patients the portion of their normal fees that the plans refuse to pay. Insurers argue that hospital-based physician groups frequently have exclusive contracts with hospitals to provide pathology, anesthesiology, or other in-hospital services, allowing them to hold the plans hostage for higher fees.
Mr. Wolf says the health plans "have been pretty confident from day one that our side of the story is going to bear out."
The task force and TDI must submit the data and any recommended solutions to the legislature in December.
Back to article
February 2008 Texas Medicine Contents
Texas Medicine Main Page