Over the last decade or two, the practice of balance billing for emergency care services (billing the patient for the portion of the claim that is not covered by the enrollee’s plan – less coinsurance payments), has been under a sustained attack by health plans, consumer advocates, insurance regulators, and legislators all across the nation. The usual argument for prohibiting emergency care providers from balance billing is that many ED patients, even if they go to an in-network hospital, may not be able to chose an in-network provider to treat them for their emergency. It is a pretty good argument. Of course, there is a counter-argument: physicians who treat patients in an emergency can not be expected to be participating in every health plan out there, and if they are prohibited from balance billing, they would be at the mercy of whatever the health plan chose to pay. In fact, this is a complicated issue, involving the rights of providers, the interests of consumers, the profits of health plans, the hospital’s rights and obligations, federal EMTALA mandates that require emergency care providers to treat everyone regardless of insurance status or ability to pay, and so on. It is so complicated that some legislators have spent months trying to craft solutions to the issue that satisfy all of the involved stakeholders, only to see these efforts succumb to the often shifting pressures of various coalitions formed to influence the legislative process, one way or another.
A good example of this free-for-all happened in California, where the Department of Managed Health Care decided to prohibit balance billing of emergency care claims for services rendered to HMO enrollees by out-of-network providers, first by emergency regulations (withdrawn), then by the normal regulatory process (successfully pushed off for three years), and finally the issue was decided in the courts. The Supreme Court of CA (Prospect vs. St. John’s) finally ended the battle by agreeing to a very twisted legal argument that said: since plans are required to pay emergency care providers directly (by CA law), and since emergency care providers are required to provide the service (federal EMTALA regulation); therefor the provider must be considered de-facto a contracted provider with the plan (even without a contract), and therefor can not balance bill the patient. They called this legal concept an ‘implied contract’. I suspect many legal scholars would consider this decision to condone legalized theft of services.
There was a possibility of a legislative solution to this issue in California, a bill called SB 981 Perata 2008, supported by California ACEP, that would have prohibited balance billing in exchange for a reasonable minimum payment standard for out-of-network emergency care services, and established an independent claims dispute resolution process to resolve disputes between plans and providers about the proper coding of the claim. Despite the complicated nature of the bill, and last minute inexplicable efforts by the California Medical Association to kill the legislation, the bill passed the legislature, only to be vetoed by the Governor at the request of the health plans. Elements of this bill live on in ACEP’s Fair Payment Model Legislation, but because of the CA Supreme Court decision, balance billing of HMO claims by emergency care providers is prohibited, with NO fair payment standard to ensure reasonable payment by the HMOs and their delegated payers. As you can imagine, emergency physicians in CA feel particularly screwed by this turn of events, especially as they see HMO payments plummet. This has likewise impacted contracted rates with HMOs for emergency care, and THIS is the real reason why health plans are so intent on prohibiting balance billing wherever they can. With this much pressure, balance billing of emergency care claims is likely unsustainable.
I have been involved with this issue for many years, and have been trying to follow every legislative and regulatory approach that has been put forward in states all around the country to address the balance billing/fair payment conundrum. Recently, the NY State Department of Financial Services produced a report entitled “An Unwelcome Surprise –How New Yorkers Are Getting Stuck with Involuntary Medical Bills from Out-of-Network Providers”. The report suggests prohibiting excessive fees for emergency care and a minimum benefit for OON services, but did not propose an outright prohibition against balance billing. In Louisiana, emergency physicians are pushing back against SB 578, another bill designed to prohibit balance billing with an uninforceable provision allowing plans to determine payment using a black-box process. Emergency care providers have a burden that comes with a disproportionate responsibility for the care of the under- and uninsured, and they cannot shoulder this burden if they are unable to receive sufficient and fair payment for the care of those who are insured. The emergency care safety net is already unraveling, and a prohibition against balance billing with no requirement that health plans pay fairly is a prescription for the failure of this safety net.
I have come to believe that, until every single person in this country is insured, and as long as health insurance is both government provided and commercially purchased; what constitutes fair payment for out-of-network emergency care services must be sufficient to ensure the availability of qualified emergency physicians to staff our EDs, and man our ED on-call specialty rosters. I am convinced that the best way to derive this fair-payment rate is to establish a market-driven reasonable value equivalent, which I believe is best approximated by usual and customary charges of physicians with comparable expertise and experience in a given community. Such a payment standard would need to limit emergency patient exposure to excessive fees, be pegged to a reliable database of usual and customary charges, be paid directly to the provider by the plan, and be sufficient to eliminate the need for balance billing. If I were making the choice, I would go for ‘the lesser of the provider’s charge or the 80th percentile of usual and customary charges based on the FAIR Health Medical/Surgical Benchmark’. If Goldielocks needed to go to the ER, this would be not too hot, not too cold; a reasonable value standard that could be considered ‘just right’.