euclid managers legislative review


Surprise Billing Gaining Attention

Balance billing over the amount allowed for a medical service by the insurance company has long been a problem.  The advent of network-based plans such as Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs) seemed to be a solution to the balance billing problem since provider reimbursement is determined by contract.  But, the issue remains when a person receives services by a non-network provider.

This issue of Legislative Review will review the issue of non-network services and balance billing.

Air Ambulance Service – Special Case

Air ambulance services have been in the spotlight for surprise bill situations; largely because the bills can be so costly.  Consumers have reported balance bills for air ambulance services ranging from $15,000 to $100,000.

Complicating the situation is that insurers may not agree that air ambulance services were necessary.  Consumers are caught in the middle.  The services are often called by emergency responders such as EMTs or police. Also, in some parts of the country, the geographical challenges coupled with the need to get speedy care may mean that air ambulance is the best means to get care.

One case discussed in a September 2017 article in The Hill resulted in a $50,950 surprise bill for the patient’s family.  The full cost of the trip to the hospital was

Critics have noted that there has been explosive growth of private, for-profit air ambulance companies. The fleet of air ambulance services in the United States has doubled in size in the past 15 years.

Congressional action is needed to bring some order to how air ambulance services charge according to state and federal officials.  This is because air ambulance companies are regulated by the Federal Aviation Administration.  As such, the air companies maintain that state laws are preempted from applying state insurance laws and regulations to their services.

Congress is reviewing the laws and rules surrounding this issue. Stakeholders are expected to provide input with the hope of Congressional action in 2019.

Out-of-Network Claims

HMOs burst upon the health insurance scene in the 1970’s.  The network concept is a simple one: insurers contract with providers at pre-determined reimbursement levels; patients obtaining care from network providers are held harmless from any difference between the billed charges
and the negotiated rate.

Patients are incentivized to use in-network providers avoiding exposure to potentially high out-of-pocket costs.

Despite this strong incentive, the Kaiser Family Foundation study of large employer claims in 2016 found that:

• Nearly one in five inpatient admissions includes an out-of-network provider
• The share of inpatient admissions with a claim from an out-of-network providers is 15.4% even when patients use in-network facilities
• 9.2% of outpatient service days include a claim from a non-network provider
• Enrollees using outpatient mental health services are significantly more likely to have a claim from an out-of-network provider.

In the graph below, the Kaiser analysis found that a claim from an out-of-network provider varied by type of admission.

Their analysis suggests that the high incidence of out-of-network claims for psychological or substance abuse services may reflect access deficiencies for these types of professionals in the network.

Further analysis found that patients receiving outpatient mental health services were much more likely to have an out-of-network provider claim. Patients using facility based services were less likely to have an out-of-network claim.

As many brokers and consumers know, anesthesia and pathology claims have a high incidence of out-of-network claims.

The above graph illustrates the findings in the study.

The policy difficulty arises in the many instances where a patient could not anticipate or control their use of out-of-network providers. A patient may be at an in network hospital and still receive a claim from an out-of-network provider.  In fact, the study found this to be the case in more than 15% of admissions.

The Affordable Care Act attempted to constrain some of these surprise balance bill situations as it relates to emergency services. Health plans must apply in-network cost sharing when enrollees obtain emergency services from out-of-network providers in such instances.

Federal regulators are contemplating further action to address out-of-network balance billing. The challenge is to address situations where the patient is truly unable to elect in-network providers due to inadequate networks or refusal of providers to contract with providers.

Illinois Law

Public Act 100-0502, The Network Adequacy Transparency Act was signed by the Governor and effective September 15, 2017. This Act essentially codified Illinois Department of Insurance regulations that have been in effect since 2007 (Consumer Bulletin 2007-04).

The Act requires, among other things, that a health insurer submit a plan that includes:

• “A provision ensuring that whenever a beneficiary has made a good faith effort, as evidenced by accessing the provider directory, calling the network plan, and calling the provider, to utilize preferred providers for a covered service and it is determined the insurer does not have the appropriate preferred providers due to insufficient number, type, or unreasonable travel distance or delay, the insurer shall ensure, directly or indirectly, by terms contained in the payer contract, that the beneficiary will be provided the covered service at no greater cost to the beneficiary than if the service had been provided by a preferred provider.”

• A provision that the beneficiary shall receive emergency care coverage such that payment for this coverage is not dependent upon whether the emergency services are performed by a preferred or non-preferred provider and the coverage shall be at the same benefit level as if the service or treatment had been rendered by a preferred provider. For purposes of this paragraph (7), “the same benefit level” means that the beneficiary is provided the covered service at no greater cost to the beneficiary than if the service had been provided by a preferred provider.

The Act stipulates that a beneficiary who “willfully chooses” a non-preferred provider does not have the protection described in the first bullet above.   The term “the same benefit level” in the second bullet point above means that the “beneficiary is provided the covered service at no greater cost to the beneficiary than if the service had been provided by a preferred provider.”

The result of this law and the DOI regulation provides protection to patients with health insurance coverage issued in the state of Illinois. It’s important to remember that self-funded ERISA based plans are not governed by state law or insurance regulation.

Letter from Karen Knippen

Insurance laws, rules, and contracts are complicated and confusing. Even we insurance professionals have experienced frustration at times. This issue of Legislative Review addresses some of the history behind these confusing surprise bill situations and efforts occurring to remedy them.

To be sure, clients are not pleased when their health plan doesn’t pay a claim as they expected. In such situations, they often turn to you – their broker. By
knowing the rules and how to cut through the proverbial “red tape” you provide a service of great value.

Sincerely yours,
Karen Knippen Signature
Karen Knippen, RHU, REBC Senior Vice President

EUCLID MANAGERS has been serving the independent agent since 1976 with a portfolio of group health, life, disability, dental and individual health. We proudly represent UnitedHealthcare of Illinois, Delta Dental of Illinois, MetLife and UnitedHealthOne Individual. We encourage your feedback and suggestions. Please call your EUCLID MANAGERS Marketing Representative or Marcy Graefen at (630) 238-2915 for more information.

The information contained in this publication is intended for the general information of our clients. It should not be construed as legal advice or legal opinion regarding any specific or factual situation.