All of these patients had medical insurance. It’s not a question of uninsured patients, misuse of emergency room services or widespread institutional avarice. The problem in each situation is a practice known as “balance billing,” and it has been the subject of a growing number of lawsuits, alternative dispute resolution efforts and legislative advocacy throughout the country.
What is balance billing?
Balance billing refers to a physician's ability to charge the patient any outstanding balance after an insurance company submits its portion of the bill. Out-of-network physicians, not bound by contractual, in-network rate agreements, may bill patients for the entire remaining balance.
The practice has become startlingly more frequent. In 2018, according to a University of Chicago survey, 57 percent of American adults were affected by a surprise bill for care that they thought was covered by insurance. In 2015, a similar study put the figure at one third of privately-insured Americans. In 2011, it was roughly 3 percent.
Why the increase?
It can happen when a young and relatively healthy patient, like the bicycling dentist above, opts for a high-deductible plan. These plans, often coupled with health savings accounts, have become popular in the last decade. They can work well until financial disaster strikes.
Insurers have narrowed their networks in an effort to keep premiums down. As a consequence, the number of patients who were forced out-of-network for specialty care at institutions such as children’s hospitals or cancer centers, for example, has jumped.
Balance billing is also far more likely to occur in connection with emergency room care. Patients in immediate distress are more likely to go to the nearest facility regardless of network affiliation, and less likely to negotiate over price. These are circumstances where the usual legal niceties about a mutually understood agreement and informed financial consent really do not work.
Furthermore, many hospitals contract out for emergency room services. Two thirds of emergency rooms now hire contract doctors. Envision Healthcare Corporation, a wholly-owned subsidiary of global investment firm KKR, is the single largest player in this space, with 6 percent of the $41 billion emergency department and hospital-based physician market. “Doctor outsourcing” is now a big and very profitable business – for investors.
If the contract doctor is actually employed by an out-of-network entity, a bill for the unpaid balance will follow, regardless of the hospital’s network affiliation. This information is also not generally disclosed to a patient.
What can emergency room patients do?
Part of the remedy may ultimately be legislative or regulatory. Advocates have recommended amendments to the regulations surrounding the Affordable Care Act that would limit balance billing practices. Senators Maggie Hassan (D-NH) and Bill Cassidy (R-LA) have introduced bills that would address the issue by requiring more disclosure by medical management companies like Envision. The American College of Emergency Physicians has come up with its own proposal for Congress. In various ways, the legislative solutions try to tackle both the problem of exorbitant charges and the issue of transparency in billing.
Part of the remedy may involve changes to state laws that provide additional alternate dispute resolution mechanisms for medical bill conflicts. Texas patients, for example, may request mediation from the Texas Department of Insurance, although a massive backlog of cases is a new source of frustration.
Part of the remedy may involve class action lawsuits, like the lawsuit brought a year ago against Envision. The Florida law in question prohibited balance billing emergency room patients, whose circumstances limited their ability to choose in-network treatment.
READ MORE EMERGENCY ROOM CHARGES LEGAL NEWS
In the meantime, however, patients may still be subject to “billing shock” on top of injury, especially for emergency room care. There seems to be a growing consensus that the problem is ripe for a solution.