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Bankruptcy-Inducing Bills From Out-of-Network Providers Plague Patients, Should Be Curbed, Public Citizen Report Shows

April 16, 2014

Bankruptcy-Inducing Bills From Out-of-Network Providers Plague Patients, Should Be Curbed, Public Citizen Report Shows

Congress, States Must Act to Protect Patients

WASHINGTON, D.C. – Congress and the states should take steps to protect patients from large, unexpected medical bills from out-of-network providers, Public Citizen said today.

In its report, “Out of Control,” Public Citizen describes the problem of “balance billing” and outlines several solutions.

Balance billing refers to bills for the difference between the amount that an insurance company is willing to pay for treatment and a provider’s total charges. Providers that are not members of patients’ insurance networks have charged patients as much as 9,000 percent of what Medicare would have paid for the same procedure.

Medical bills are the leading cause of individual and family bankruptcy in the United States. According to one study (PDF), more than 62 percent of all bankruptcies were linked to a medical event; of these, more than 75 percent of the filers had health insurance.

“Merely possessing insurance coverage does not necessarily protect a patient from excessive and potentially financially crippling bills,” said Adam Crowther, researcher for Public Citizen’s Congress Watch division and author of the report. “Instead, patients should be protected from being unfairly billed for medical care they unwittingly or unavoidably received from out-of-network providers.”

The report describes three scenarios through which patients might receive a balance bill: 1) a patient knowingly selects a provider that is outside his/her network; 2) a patient selects an in-network facility (such as a hospital), but in the course of the treatment, an out-of-network provider gives some service to the patient (often without the patient being aware); and 3) a patient requiring emergency treatment is unable to choose an in-network facility or provider.

Patients deserve protections for the latter two scenarios, Public Citizen says in the report.

Medicare and Medicaid have both essentially banned balance billing for their beneficiaries. But for the tens of millions of Americans who receive private insurance coverage, protections against balance bills are almost nonexistent.

The Patient Protection and Affordable Care Act (“ACA”) did little to change this. The ACA requires most plans to pay out-of-network providers at least their in-network rate. But this protection applies only to emergency services and does nothing to protect patients from thousands of dollars in balance bills that emergency and non-emergency providers may send above their in-network rate.

Public Citizen suggests these reforms:

Transparency and disclosure: Insurance companies should be compelled to maintain up-to-date and accurate lists of the providers in their networks; the facility should be responsible when patients arrive to inform them that they might receive medical services from both in-network and out-of-network providers at that facility; and facilities should develop the capability for patients to search for in-network providers once at the hospital.

Patient billing protections: Balance billing protections should include a “hold harmless” provision – guaranteeing that the patient will incur no out-of-pocket costs that exceed what he or she would have paid using an in-network provider for covered services – as long as the medical services were provided either in an emergency situation or at an in-network medical facility. And providers should be required to send bills directly to the insurer, not to the patient.

A payment standard for out-of-network claims: For cases in which a patient receives care at an in-network facility or receives emergency care, an out-of-network provider should be limited to billing the patient’s insurance company either 200 percent of the Medicare fee schedule for the services rendered or the provider’s charge, whichever is less.

“These solutions would protect consumers from balance bills without unduly burdening providers and insurers or upsetting the existing system of insurance networks,” said Crowther. “They need to be examined at both the federal and state levels.”

Read the report.