by Marilyn M. Singleton, M.D., J.D.
These days, in order to keep costs down the vast majority of insurance plans use the model that limits the hospitals or physicians from whom patients can get medical services. The “covered services” are determined by the insurer. The plans involve contracts between the insurer and the patient, and the insurer and the “health care providers.” The parties agree upon and know in advance who must pay for medical care—with the amount to be determined by the insurer.
The insurer develops its “provider network” by negotiating discounted prices with hospitals, laboratories, radiology facilities, and physicians. The value to the service providers and physicians is that in exchange for reduced fees, they might have an increased volume of patients.
On the patient’s end, the incentive for using the network personnel is the “discounted” price. After receiving in-network medical treatment, the patient expects to pay out of pocket any co-payment or co-insurance fee, and any deductible that the plan requires. If the patient uses out-of-network services, the insurer generally imposes higher cost sharing. Also, the out-of-network provider can bill the patient the difference between the customary or “market” rate and the in-network contracted rate for the same service or procedure (“balance billing”).
One downside to the networks is that patients may not have access to the care they need because some hospitals lack sufficient in-network hospital-based specialists. Because hospitals fill the gaps with out-of-network physicians, a patient could unknowingly receive care from an out-of-network physician or service at an in-network facility.
No one—particularly your physician—wants to see patients suffer financially. California’s newly-minted solution to “surprise medical bills” is Assembly Bill 72. Under this law, if a plan’s patient obtains medical care at an in-network facility but receives treatment or services from a non-contracted out-of-network provider, the patient would only pay for such services as if they were in-network. (This is already the case for some emergency services.)
Problem solved—no surprise bill.
It’s also no surprise that yet again insurers get the brass ring. Insurers can pay the non-contracted out-of-network physician the same amount they pay the physician on contract with the insurer. And if the doctors don’t like the payment, they can go to arbitration at their expense to seek their usual fee. It is a remedy in name only as the legal costs would outweigh any benefit.
Note: AAPS has filed suit to stop AB 72. Details at http://StopAB72.com
Dr. Singleton is a board-certified anesthesiologist and Association of American Physicians and Surgeons (AAPS) Board member. She graduated from Stanford and earned her MD at UCSF Medical School. Dr. Singleton completed 2 years of Surgery residency at UCSF, then her Anesthesia residency at Harvard’s Beth Israel Hospital. While still working in the operating room, she attended UC Berkeley Law School, focusing on constitutional law and administrative law. She interned at the National Health Law Project and practiced insurance and health law. She teaches classes in the recognition of elder abuse and constitutional law for non-lawyers.