Private insurers and fairness of balance billing
Surprise Health Bills Make People See Red
By Anna Wilde Mathews
The Wall Street Journal
December 4, 2008
Insured patients are sometimes hit with unforeseen charges after emergencies, when they are taken to the closest hospital regardless of whether the facility accepts their insurance. Consumers also may be billed after visiting in-network hospitals if they received treatment from medical providers who work there but don’t participate in the same health plans. When that happens, insurers often pay part of the doctors’ fees, and the physicians bill patients for the difference. This is the practice known as balance billing, and it can leave consumers battling both the insurer and the medical provider to get the charge reduced.
California regulators recently made it illegal for people covered by health-maintenance organizations to be balance-billed for out-of-network emergency services.
Physician groups say doctors have the right to refuse to sign up with insurers’ networks, and regulators shouldn’t bar doctors who don’t participate in health plans from billing insured patients. They say that insurers’ payments to out-of-network health providers are often unfairly small. “You can’t turn it around and say it’s the doctor’s fault,” says Nancy Nielsen, president of the American Medical Association.
Insurers counter that they shouldn’t be forced to pay whatever fee out-of-network health-care providers demand. “You have a set of specialists who won’t contract with health plans, and they want to bill whatever they choose,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.
http://online.wsj.com/article/SB122834911902477643.html
Comment:
By Don McCanne, MD
Balance billing is a payment required by physicians that is in excess of the benefits covered by the patient’s insurer. It is a prime example of the unfairness that permeates our system of health care financing. It can be unfair for all parties.
Balance billing is certainly unfair for patients who purchased insurance in good faith only to find that they receive large bills for services that their insurance should have covered. Denying physicians the right to bill full fees for services that the patient’s insurer should have covered, but didn’t, is unfair to the physicians who have no contract with the insurer. Physicians who hold out for exorbitant fee schedules are unfair to the insurers who are trying to put together a reasonable list of in-network physicians to serve their beneficiaries.
Let’s step back and see if we can make some sense out of this.
Let’s agree that the goal of our health care financing system should be to be sure that everyone can receive the health care that they need without exposure to financial hardship. Not only are financial barriers removed for the patient, but also enough funds are allocated for the delivery system to be sure that it will be there when needed. Obviously that means that physicians should be adequately compensated.
Should physicians have the right to unilaterally dictate the fees that the third party payer must pay? When Medicare was introduced, we saw what happened. Fees skyrocketed. Medicare had to adopt payment policies that would ensure that compensation was reasonable. That has been and always will be a work in progress, but an effort continues to be made to provide a reasonable balance that would advance the public good: fair fees for physicians without an excess burden on taxpayers.
It is very rare to see balance billing for a patient enrolled in the traditional Medicare program (except maybe by error) since very few physicians totally opt out of the Medicare program. Those physicians who do not sign Medicare contracts are still required to adhere to a payment schedule unless they establish what amounts to a private contract with every Medicare patient they see.
What is the role of private insurers in setting fees? They establish a contract with patients to pay for services, but only under the terms of the contract. The only reason that private insurers still exist is that they also establish contracts with selected physicians and other providers who agree to the discounted reimbursement rates dictated by the insurer. Physicians who decline to sign contracts to become providers under these plans are free to charge any patient, whether or not covered by these plans, their usual fees. That is, until now.
California has made it illegal, in emergency situations, for physicians to bill the patient for balances not covered by the patient’s own insurance plan, even though the insurer has no contract with the physician. Think about that. The only contract is between the patient and the insurer, yet the state has given the insurer the authority to enforce upon physicians the terms of a contract that doesn’t even exist!
We’ve seen what’s unfair about balance billing, so how could we introduce fairness? If we had an improved Medicare program that covered everyone, the patient would never have to worry about being billed for balances that are not defined by the program. That’s fair. Under a universal Medicare program, reimbursement would be negotiated with physicians to be sure that rates were adequate to cover legitimate expenses and still provide reasonable profits. That’s fair.
And the private insurers who are extorting physicians with whom they have no contractual relationship, while they burn up resources on egregiously wasteful administrative excesses? With our own improved Medicare system we wouldn’t even need them, and we would show them the door. Now that’s really fair!