How to Avoid the Out-Of-Network (Balance Billing) Hospital Trap

Balance billing….it’s a nasty word in the healthcare world.  As of July 2017, it’s more than nasty.  It’s illegal in the state of California.  Sometimes referred to as “out of network”,  balance billing involves medical providers who are pursuing the “balance” of what wasn’t covered by the insurers directly from patients.

Throughout the U.S., patients have complained that after they undergo treatment and/or surgery, especially in emergencies, they are hit with costs they’d never imagined or expected. What is happening is that doctors and hospitals belonging to an insurer’s network use out-of-network specialists, consultants, assistants and other hospital employees without your permission. The insurer then covers only a small portion—or none—of the out-of-network provider’s fee, and you are billed for the rest. Unlike in-network providers who agree to discounted rates negotiated with the insurer, out-of-­network providers charge their full fees, which may be 20 to 40 times higher.

If you are a Medicare customer, you need not worry.  You are protected, because Medicare doesn’t allow providers who accept Medicare payments to bill patients beyond what Medicare covers.   However, if you have an HMO or PPO plan, you could be the unwitting victim of this insidious billing scheme.

California’s New Balance Billing Law

As of July 2017, California’s new law (AB72) makes balance billing for non-emergency services illegal.   (Balance billing for emergency services were found to be illegal by the California Supreme Court in 2009 in a famous case:  Prospect Medical Group, Inc. v. Northridge Emergency Medical Group.)

Under the Act, insured individuals are only responsible for costs equal to what they would pay if they received the service from an in-network provider. Cal. Health & Safety Code § 1371.9(a)(1). Further, out-of-network providers are prohibited from billing or collecting any amount from the enrollee for their services except for the in-network cost-sharing amount. Cal. Health & Safety Code § 1371.9(a)(3).  If you visit an in-network facility — such as a hospital, lab or imaging center — you will be responsible only for your in-network share of the cost, even if you’re seen by an out-of-network provider. Should you inadvertently pay an out-of-network provider more than he or she is owed, the doctor must refund the overpayment within 30 days or pay you interest.

The law allows out-of-network providers to bill you at out-of-network rates, but only if you voluntarily sign a form at least 24 hours before you receive care. The form must include an estimate of your cost and inform you that can receive care from an in-network provider instead.

If you believe you are being charged for out-of-network services, you need to contact your insurer and challenge the bill.   Just ask why Cal. Health & Safety Code §§ 1371.30 does not apply to the bill.   The insurer is likely to back down quickly and not bother you again.  However, if they continue to insist that you pay, your next step is to contact either the state Department of Managed Health Care if an HMO plan is involved or the California Department of Insurance, if it is a PPO.

Department of Managed Health Care department’s help center can be reached at (888) 466-2219 or by visiting healthhelp.ca.gov.

The California Department of Insurance  help line can be reached  www.insurance.ca.gov . The phone number is (800) 927-4357.

Note: the new law does not cover some 5.7 million people whose employer-sponsored insurance plans are regulated by the U.S. Department of Labor.   But it does cover Californians with private health insurance plans that are regulated by the state Department of Managed Health Care (DMHC) and the state Department of Insurance, which includes roughly 70 percent of the state’s private insurance market

 

Other State Laws

Colorado and Maryland have passed more serious protections, which force at least some insurers to pay surprise out-of-network charges; in these cases, patients are simply billed as if they were in-network. New York has passed similar legislation, but the arbitration process is screwy. Other states have similar balance billing prohibitions.  It is worth your time to  check out your state laws.

But if you have a private health insurer, here’s how to protect yourself against out-of-network hospital or doctor bills:

First, when you sign hospital consent forms, make sure there’s no language that allows a doctor to do this without your express permission.

Second, take some time to scope out what hospitals are in your network in case of an emergency. Then ask what percentage of ER doctors and other personnel there are out of network.

Third, if you are having a planned procedure, be sure to ask your doctor well in advance who else might be involved in your case, and insist that everyone be in-network unless there is an overriding need for someone out of network to take part. Seek to work out terms in advance with out-of-network providers.

As more and more insurers are reducing the size of their networks as a way to reduce costs, we can expect to see increasing numbers of out-of-network balance billing incidents. Being proactive on this may save you thousands of dollars.

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