Balance Billing: The Surprise Insurance Gap

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Ban could contribute to an unexpected emergency medical care discrepancy.

You’ve seen the headlines: Patient gets a $1,000 bill. Patient gets a $2,000 bill. Patient gets a $10,000 bill.


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There has been endless press lately regarding “balance billing,” with patients getting huge bills after seeking emergency medical care. So what is really going on here?

The Problem: “Balance billing” occurs when a patient receives medical care outside of their insurance network. The insurance company either does not cover the care or only covers a portion of the care, because the physician is out-of-network. The patient then receives a bill from the physician for the care that insurance did not cover. Often, the insurance company’s underpayment is lumped together with other “surprise medical bills,” which may include deductibles, copays or other expenses that patients thought would be paid by their health insurance.

Physicians may choose not to join an insurance company’s network for a variety of reasons, but often it is due to prohibitively low insurance reimbursement rates. For example, outpatient physicians offered extraordinarily low rates to care for an insurer’s patients will likely choose not to accept that insurance, and therefore will not provide care to patients with that insurance.


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Emergency physicians, however, provide care to all patients regardless of their insurance status. The goodwill of emergency physicians sets the stage for predatory reimbursement strategies by insurers that lowball reimbursement for emergency medical services. Emergency physicians are then forced to either accept reimbursement rates far below reasonable market value in order to stay in-network, or refuse to accept these low rates and provide care out-of-network.

There are three parties involved in the current payment structure for medical care: the patient, the healthcare team and insurance companies. Let’s look closer at each unique perspective:

The Patient:

  • From 1999-2017 inflation has been around 47% with the average workers’ earnings increasing 64%.[1,2]
  • In the same amount of time, employer health insurance premiums have increased 224% and workers health insurance premiums have increased 270%.[1,2]

What does that look like to the average American in real numbers?


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  • In 2015, the median household income was $56,516. The average annual healthcare premiums for a family were $17,545, making insurance unaffordable for many Americans.[1,2,3]

Insurance companies have added to these increasing healthcare costs by shifting expenses from insurer to patients in the form of increased deductibles and copays. Many insurance companies have also significantly narrowed their networks, often forcing patients to pay for more expensive (and often unreimbursed) out-of-network care.  The average deductible has increased from $533 for a single person in 2009 to $1,350 in 2018.  And the number of patients paying deductibles has increased from 59% to 85% over the same time period.[4]  The percentage of plans that offer out-of-network benefits has fallen significantly, particularly plans sold on the individual health insurance market, falling from 58% in 2015 to 29% in 2018.[5,6]

The Healthcare Team: There are many members of the healthcare team, but let’s focus just on Emergency Physicians. Where do we fit in this equation?

Emergency medicine has unique reimbursement challenges.  Emergency physicians don’t check to see whether a patient is insured or in-network and we will not delay providing care to a patient to verify insurance status. We provide the same exceptional emergency care to every patient, every time. By combining completely uncompensated care with undercompensated care (such as Medicaid and Medicare), estimates show that up to 55% of an emergency physician’s time is spent providing care that will not be reimbursed. [7]

Even the reimbursement that emergency physicians receive is lower than expected. According to the FAIR Health database (https://www.fairhealth.org/), the average emergency physician charge is $338 for a moderate-severity visit, and $565 for a high severity visit with immediate threat to life. However, the average in-network reimbursement for a high severity visit with immediate threat to life is $245.

The difference between the cost of providing emergency medical care and the insurance company’s paltry payments explain why emergency physicians may not be able to accept such low in-network reimbursement rates.[8,9]  This means that for life saving emergency care provided by a highly trained emergency physician, the cost is a fraction of the cost of annual emergency home repairs, which average $1,206.[10]

The Insurance companies: This shifting of costs onto patients has been a boon for the insurance industry, with net earnings in one year increasing 45% from $16.1 billion in 2017 to $23.4 billion in 2018.[11] This increase in earnings far outpaces increases in average income or in charges from the healthcare team. Instead of using these earnings to cover the costs of healthcare incurred by their insured customers, the insurance industry has waged a successful public relations and advocacy war on physicians, shifting the blame for “surprise bills” and increased healthcare costs from themselves on to “greedy” physicians.

This media blitz has spurred legislative action on both the state and federal levels with movements to ban balance billing to protect patients.

The Solution: Simply banning balance billing will not protect patients.  Emergency physicians won’t turn away patients due to their inability to pay. Insurance companies know this, and they use it to set reimbursement below the costs of providing care in order to protect the continued growth of their profit margins — at the expense of narrowing networks and quality medical care.

Without a fair reimbursement solution, a ban on balance billing may keep patients from receiving surprise bills, but it will leave a surprise insurance gap and could contribute to a surprise emergency medical care gap. Many emergency departments across the country are already struggling to staff their hospitals with qualified emergency physicians, let alone ensure robust on-call rosters for the specialists.  The downstream effects are larger holes in a healthcare safety net that is already bursting at its seams. In 2019, at least 30 hospitals nationally have entered bankruptcy, leaving large voids in critical access to healthcare.12 The solution, then, is both to protect patients from this surprise insurance gap and to create a fair reimbursement structure for the healthcare team. In the Commonwealth of Virginia, we have worked closely with all stakeholders to author legislation that not only protects patients, but also protects their access to emergency medical care.

Legislative solutions vary based on unique regional challenges, such as past legislation or other local regulatory standards, but key pillars of any proposed legislative solution must include:

  • Protect patients from surprise medical bills
  • Require health plans to pay physicians a fair and reasonable reimbursement
  • An independent dispute resolution (IDR) process for arbitration between physicians and insurers
  • Require health plans to pay physicians directly (enforce assignment of benefits)
  • Ensure care is covered regardless of the final diagnosis (enforce the prudent layperson standard)

In Virginia in 2019, we were able to successfully get legislation that meets these requirements through the Senate, but it died in the House in committee, never making it to the House floor for a vote. We are working again this year to ensure that our patients and the healthcare safety net are protected from surprise insurance gaps and predatory insurance reimbursement tactics. On the federal level there are similar efforts that include some, but not all the key pillars listed above. Most notably, the current IDR model proposed in the federal legislation applies only to bills greater than $750, which would leave almost all emergency physician charges with no arbitration options.

It is more critical than ever that emergency physicians join in state and national advocacy efforts to protect the communities we serve and the practice of emergency medicine that saves lives every day, ensuring excellent patient care for every patient, every time.

References:

  1. Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2017
  2. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2017
  3. Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2017 (April to April)
  4. Published: May 16, 2019. (2019, May 29). “Deductible Relief Day” is May 19. Retrieved from https://www.kff.org/health-costs/press-release/deductible-relief-day-is-may-19/
  5. Anderman, Tracy. “What to Know About Narrow Network Health Insurance Plans.” Consumer Reports, 23 Nov. 2018, consumerreports.org/health-insurance/what-to-know-about-narrow-network-health-insurance-plans/.]
  6. Hempstead, K. “Marketplace Pulse: Percent of Plans with Out of Network Benefits.” RWJF, 27 Dec. 2019, www.rwjf.org/en/library/research/2018/10/percent-of-plans-with-out-of-network-benefits.html.
  7. org. (2020). American College of Emergency Physicians;The Impact of Unreimbursed Care on the Emergency Physician. [online] Available at: https://www.acep.org/administration/reimbursement/the-impact-of-unreimbursed-care-on-the-emergency-physician/ [Accessed 22 Jan. 2020].
  8. org. (2020). Welcome to FAIR Health | FAIR Health. [online] Available at: https://www.fairhealthconsumer.org/medical/results [Accessed 22 Jan. 2020].
  9. Protect Emergency Care. (n.d.). Protect Patients from Surprise Medical Bills. Retrieved from https://protectemergencycare.org/cost-of-emergency-care
  10. Pant, P. (2020). Easy Ways to Budget for Home Maintenance and Repairs. [online] The Balance. Available at: https://www.thebalance.com/home-maintenance-budget-453820 [Accessed 22 Jan. 2020].
  11. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf [Accessed 22 Jan 2020].
  12. Coleman-Lochner, Lauren, and Jeremy Hill. “Hospital Bankruptcies Leave Sick and Injured Nowhere to Go.” com, Bloomberg, 9 Jan. 2020, www.bloomberg.com/news/articles/2020-01-09/hospital-bankruptcies-leave-sick-and-injured-nowhere-to-go?srnd=premium.

ABOUT THE AUTHOR

Dr. Anest is an emergency physician living and practicing in Hampton Roads, Virginia.  She is a councilor and board member with the Virginia chapter of ACEP and active in advocacy on behalf of emergency physicians and the communities we serve.  She can be reached at trishaanest@gmail.com.

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