Health plans increasingly refuse to pay out-of-network providers who they claim often inflate their charges, leaving patients with unexpected medical bills
As health insurers narrow their provider networks in an effort to lower costs and hold down premiums, clinical laboratories and anatomic pathology groups may increasingly be designated as out-of-network providers and find themselves struggling to get paid.
This is particularly true in cases where a hospital is in-network and its hospital-based physicians—including its pathologists—are out-of-network for that same insurer. Following their discharge from the hospital and their insurer’s payment of the hospital bills, patients are surprised to get bills from the hospital-based physicians.
It is a problem that won’t go away soon. That’s because it is increasingly common for patients who are being treated in an in-network hospital to unknowingly receive care from out-of-network doctors, such as pathologists, anesthesiologists, emergency physicians, hospitalists and radiologists, who may not participate in the same plan networks as the hospital does.
In the past, laboratories or pathology groups would bill the health insurer as out-of-network providers and would be paid at an out-of-network rate. They then could turn to the patient to collect the balance for the service. Today, however, health plans increasingly refuse to pay the claims from out-of-network laboratories and pathology groups, thus leaving labs and pathologists with the option of writing off the service or pursuing the patient for what is owed.
Patients Often Not Aware They Are Being Treated by Out-of-Network Doctors
This so-called “balance billing” issue is making headlines in Texas, New York, Louisiana and other states where doctors, insurers, hospitals and patients are battling over out-of-network charges. The issue is particularly problematic in hospitals, where, as noted above, patients may have no idea they are using services provided by out-of-network physicians. A further aggravation to the patients is that, in addition, these unexpected bills may not count toward insurers’ annual limits on out-of-pocket costs.
According to a 2013 study published in Health Services Research, 40% of people who received healthcare outside of their network did so out of necessity. About half of those patients did not know how much they would have to pay for their out-of-network care.
“A lot of patients don’t understand that if the hospital takes insurance, [each] doctor that comes to their bedside might not,” stated Kelly A. Kyanko, MD, Assistant Professor of Population Health and Medicine at New York University School of Medicine, in a story published by Modern Healthcare. Kyanko also is co-author of the 2013 Health Services Research study “Patient Experiences with Involuntary Out-of-Network Charges.”
Pathologist William M. Hinchey, MD, Past President of the Texas Medical Association, says insurance companies deserve a large share of the blame for balanced billing issues because they tell pathologists, emergency doctors, radiologists, and other hospital-based physicians that “we want you some of the time but not all of the time.”
“In some instances, insurance companies can and will refuse to pay for services, such as certain professional laboratory services provided by pathologists, even when in-network,” Hinchey stated in the San Antonio Express. “This means the companies refuse to pay for such basic services as providing a safe and correct blood product for a transfusion. At the same time, they expect the pathologist to discount pathology services.
“To add to the confusion, insurers want your local pathologist in the network only for inpatient hospital services but not for your outpatient services—even when the pathologist wants to be in your network for both. The insurance company ultimately decides who will be in or out of your network,” he added.
“The rule crux of the problem is that health insurers are refusing to pay fair market rates for the care provided. Then they turn and say to the physician who is billing [for out-of-network services] ‘You’re the bad guy,’” Steven Stack, MD stated in the Houston Chronicle. Stack is a Lexington, Ky., emergency physician as well as President of the American Medical Association (AMA).
Payers Blaming Providers for Causing Balance-Billing Issues
In states such as Texas and Louisiana, where the fight between doctors, insurers, and patients has become public, insurance companies are deflecting blame and charging providers with being the source of the problem.
The Texas Association of Health Plans (TAHP), a trade association representing insurers in the state, suggested doctors were opting out of insurance networks so they could “inflate medical charges” to increase profits, the Houston Chronicle reported. The TAHP based their assertion on a study by America’s Health Insurance Plans that found Texas emergency-room doctors were charging out-of-network patients more than six times the rate Medicare pays.
In another twist, some Louisiana out-of-network providers have begun waiving the patient’s portion of the bill, essentially agreeing to accept “insurance only,” writes attorney Jacqueline G. Griffith of Chehardy Sherman in Metairie, La., in an article appearing on the firm’s website. “It is this action that has insurance companies, as well as in-network providers, in opposition for it is their belief this partial waiver results in billed charges that are now artificially inflated.”
Waiving the patient’s portion of their out-of-network bill at the outset of treatment could violate the Louisiana False Claims Act because the provider’s “initial bill was falsely overstated, given that the provider had no intention of ever recouping the patient’s portion,” Griffith explains.
“Surprise medical bills aren’t one party’s fault; there is plenty of blame to go around,” Pogue told the Houston Chronicle. “Doctors, hospitals, and insurers need to stop blaming each other and come to the table with real solutions.”
Dispute Resolution Process a Model for States
In response to the growing problem, several states are taking steps to resolve out-of-network bills. California, New York, and Texas have approved, or are considering, rules to reduce or resolve disputes. According to Modern Healthcare, New York is now requiring insurers and providers that disagree on out-of-network payments to participate in an independent dispute-resolution process, a system that could become a model for other states.
A few smaller insurers, such as Independent Health, a not-for-profit insurer in Buffalo, N.Y., have pledged not to saddle members with unexpected out-of-network charges.
“When a member has followed every rule, they should be held harmless from any consequences,” Jill Syracuse, Independent Health Chief Engagement Officer and Servicing Officer, told Modern Healthcare. “It’s the right thing to do.”
Sarah Davis, a Clinical Associate Professor of Law at the University of Wisconsin and Associate Director of the Center for Patient Partnerships, believes providers are unfairly being sandwiched between market forces. She blames insurers and employers for imposing larger deductibles and coinsurance on consumers at the same time providers are being pressured not to saddle patients with unexpected medical bills.
“I think that is unrealistic,” Davis told Modern Healthcare. “That’s setting providers up for failure.”
As noted above, the problem of out-of-network providers is becoming political, since several state legislatures are debating legislative fixes to this issue. For that reason, there will probably be no quick resolution to how insurers currently handle out-of-network providers, including pathologists and clinical laboratories.
—Andrea Downing Peck