State lawmakers passed a host of new rules that experts are calling the most comprehensive in the country when it comes to guarding patients against a practice called “balance billing” and allowing them to seek care outside of their insurer’s network of doctors.
“Balance billing” occurs when a doctor charges more than an insurer is willing to pay, and the insurer passes on the rest of the bill to a patient. This typically occurs when patients see doctors out of their insurer’s established network, which costs more money because the insurer hasn’t negotiated special rates with that provider. When patients see providers out of their network, it's usually because it's an emergency situation with little time to ensure a doctor is in their network or because out-of-network specialists frequently perform part of procedures and patients mistakenly assume that all doctors in a particular hospital are within their network.
National data on the issue is scarce, but a 2007 California Association of Health Plans survey found that of 1.76 million people who visited an emergency room over a two-year period in the state had to pay an average additional balance of $300. New York’s Department of Financial Services has amassed more than 8,000 reimbursement complaints since 2008, along with individual stories of balance bills that totaled tens of thousands of dollars.
Thirteen states -- including New York -- already offer at least some out-of-network protections, but the combination of new transparency rules and network adequacy provisions might place New York at the top of the pack for patient protections, said Jack Hoadley, a health policy analyst at Georgetown University.
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"New York seems to be trying to go down both the protection and the transparency path, and maybe it's fair to say they’ve been the most aggressive overall," he said.
The New York law bans balance bills for out-of-network emergency care, requires insurers to let patients see out-of-network doctors at regular costs when the network can’t meet a patient’s needs and sets new rules for insurers, doctors and hospitals to disclose network status online or before a procedure.
Among the 13 states offering protections, most ban balance billing for out-of-network doctors in cases of ambulatory care or other emergency services but lack further protections as comprehensive as New York's. Maryland, for example, extends those protections to emergency and urgent care but doesn’t have New York’s disclosure requirements, so patients might still receive a balance bill for those services and not realize they don’t have to pay. Neither Colorado nor Texas bans balance billing, but Colorado allows patients to see out-of-network providers like in New York and Texas has transparency laws like New York's.
New York's transparency provisions force insurers to make network status clear online, keep provider directories up to date, provide comparison rates and tell patients which doctors involved with an upcoming procedure are in-network. Doctors will have to disclose their status upon request and let patients know in advance about anticipated charges. And hospitals will have to disclose price information on their website and whether a doctor is a hospital employee or operating independently. The bill also allows for independent arbitration on payment disputes and requests to see an out-of-network provider, which some states have done, but only for certain types of care, according to Chuck Bell, programs director for the advocacy group Consumers Union, which produces the publication Consumer Reports. Disputes will be forwarded to New York's Department of Financial Services, which would certify that there's grounds for an appeal before sending it to an independent, third-party contractor.
As the Affordable Care Act increases the number of people who have insurance, he said more states will look to act on the issue.
“We’re looking forward to implementation in New York, and we think other states may look to it as a model for strengthening and improving their laws,” Bell said.
