Out of Control Out of Network Charges

Out of Control Out of Network Charges


Out of Control Out of Network Charges

Few healthcare changes have been more impacted than the out of  control out of network charges billed to patients.  The health care reform  bill known as PPACA has for the most part been insignificant in the Northeast, in particular, as many  state laws  have already addressed issues such as pre-existing conditions, contraception, coverage rescissions and maximum loss ratios (MLR).

Instead, the market forces are reshaping the medical field  into significant insurance & provider consolidation, larger hospital groups and flattening provider reimbursements.  The  problem is pointed out in  Out of Network Medical Costs Affecting NY State Across  investigation report commissioned by Governor Cuomo recognizing the unexpected out-of-network claim problem.  Officials say that this is now  “an overwhelming amount of consumer complaints.”   Some examples cited in the report An Unwelcome Surprise – “a neurosurgeon charged $159,000 for an emergency procedure for which Medicare would have paid only $8,493.”  Another example: ” a consumer went to an in-network hospital for gallbladder surgery with a participating surgeon. The consumer was not informed that a non-participating anesthesiologist would be used, and was stuck with a $1,800 bill. Providers are not currently required to disclose before they provide services whether they are in-network.” The average out-of-network radiology bill was 33 times what Medicare pays, officials say.

To make matters worse, Health Insurers have reduced their out of network recognized charges from private industry index UCR (usual customary and reasonable) to the Medicare Index known as RBRVS Resource Based Relative Value Scale ).  Insurers moved away from UCR after then-NYS D.A. Mario Cuomo in 2009 forced Unitedhelatcare Group (owners of Inginex) to settle $50 Million in a conflict of interest allegation.  D.A. Cuomo future hopes for UCR were to that it be overseen by a non-profit entity.  So much for best laid plans.

Today, 90% of SMB members have in network only benefits but the few remaining consumers are paying for eroding out of network benefits with little transparencies and necessary protection from new out of network billing practices.  The NY Dept of Financial services  is calling for providers in non-emergency situations to disclose whether or not all services are in-network, what out-of-network charges will be and how much insurers will cover.

Insurers such as Aetna are taking action – with lawsuits throughout the country such as Aetna sues 9 N.J. doctors for “unconscionable” fees.  Another Aetna lawsuit is discussed extensively in a law blog: In New Lawsuit, Health Insurers Allege Fraud and Kickbacks Against Out-of-Network Providers Who Forgive Patients’ Financial Responsibility.

In an ominous statement” “Failure to recognize this historical out-of-network avalanche will result in shocking financial disasters, as experienced by so many hospitals in 2003″

Empire Leaving Small Group – delayed 1 year

Empire Leaving Small Group – delayed 1 year

In a pleasant surprise, Empire will delay their April 2012 decision to “simplify” small group plans 1 more year from April 2012 to April 2013 instead.  The Nov 4th Empire announcement to leave  the NY Small Group Business was truly shocking after being in business for 75 years and insuring 35% of the  market.

What this means for consumers is that insured members will now breath a sigh of relief and keep their contracted plan at least until their renewal. Evidentially, Empire was allowed to abruptly  do a “hard shut down of  their plans”  for April and not allow a group to complete their 12 month contract.  The negative  consequence would have affected many unfairly as most members today have some kind of annual deductible and/or coinsurance on Rx plans, hospitalizations and surgeries.  Example: a member signs up for a plan Oct 1 and has already met their deductible responsibilities would suddenly  have to now change plans on April 2012. and start all over again.

A point needing further explanation is are they or they not exiting?  Empire is stating that they are not in fact leaving but merely simplifying their offering to 6 plans but this is actually a red herring as the plans offered are not market friendly and allows Empire to stay within the market without having to really exit. Example:  Their HMO monthly rate is $675/single when you can get the same plan from a leading competitor for $465/single.

So why be in the market without actually being in the market?  The state’s regulation would not permit an insurer to re-enter for 3 years.  With Health Care Reform changes in the subsequent years there are variables that may help NYS  such as add’l federal funding.  Additionally, it is an election year and with many unknown Health Care Reform variables still evolving such as Supreme Court hearing on individual mandate by June 2012 –  WSJ Supreme Test for Health Law.

Either way this is welcome news to our existing clients and for the marketplace at large however short term it is.

Happy Holidays!!

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