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New Analysis Suggests Solutions For Ending Surprise Billing

As consumers continue to receive surprise bills, a new analysis from The USC – Brookings Schaeffer Initiative for Health Policy is examining how the current provider network adequacy standards fail to protect consumers from these surprise expenses and why legislation alone may not be enough to fix the problem.

First designed in the mid-1990’s, provider network adequacy standards aimed to ensure that consumers were able to receive adequate care from in-network providers. However, they purposefully did not require networks to contain specific physicians or groups. Doing so would have given the physicians too much bargaining power, possibly allowing them to make unreasonable demands of insurers and drive up prices.

Today, however, these adequacy standards do not help protect consumers from surprise bills.

From the patient’s perspective, it does not much matter whether the health plan has some anesthesiologists in the network, it only matters whether the anesthesiologist who happens to be on call the morning of your surgery is in-network.

This is especially true of specialists like emergency care physicians and anesthesiologists, which consumers can seldom select on their own.

For a policy to insulate consumers from receiving surprise out-of-network bills, it needs to guarantee that a specific provider is in the network, but that’s the very opposite of how network adequacy laws should operate.

Even making provider networks marginally larger influences the likelihood that consumers receive surprise bills, according to the analysis. Individuals with employer-based plans, which generally have larger networks, receive surprise bills slightly less often than those who have ACA marketplace plans. However, making changes to provider networks alone wouldn’t fully solve the issue of surprise billing.

Intensifying the pressure on insurers to contract with them would not change their ability to remain out-of-network; it would simply enable them to obtain even higher rates for going in-network – their current in-network rates in relation to Medicare are already extremely high – and would continue to leave consumers exposed.

The analysis suggests “billing regulation” or “contracting regulation” as solutions to the issue of surprise billing. A “billing regulation” solution would establish a minimum payment rate for out-of-network services, prohibit balance billing and require that insurers treat any cost-sharing as in-network.

“Contracting regulation” would prohibit hospitals’ emergency and ancillary providers from billing insurance companies or patients separately. Instead, these providers would negotiate bundled payment rates, which they charge with the facility.

This guarantees patients that their particular clinician’s services will be treated as in-network when they seek care at an in-network facility, since all the services will be billed by the facility.

While these changes would not address all instances of inadequate provider networks, the analysis says either would help protect consumers from receiving surprise bills after visiting in-network providers.


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