Imagine you need to have a surgery performed to remove your gallbladder. Carefully, you consult with your health insurance plan to choose both a hospital and surgeon that participate in your plan’s network to ensure that you only pay the minimum amount necessary. After the surgery, you are surprised to receive an $1,800 bill for services rendered by an, unknown to you, out-of-network anesthesiologist, despite your prudent planning. This precise scenario happened to one New York patient, and similar situations have plagued a large number of the state’s residents.
“Surprise billing” is currently being investigated by New York’s Department of Financial Services (DFS) after the agency received thousands of complaints in 2011 from patients who received large bills from providers that the patients did not realize were out-of-network prior to receiving scheduled medical procedures. These providers are most often made up of specialists including plastic surgeons, neurosurgeons, and orthopedic surgeons.
If these specialists elect not to participate in a health plan, they are entitled to charge what they like, which is often much higher than the prices negotiated by health plans and participating physicians. For example, the DFS report revealed that the typical out-of-network emergency bill is 14 times the amount that Medicare would pay for the same services. Paul Larrabee, spokesman for the New York State Conference of Blue Cross and Blue Shield Plans, pointed out that New York neurosurgery bills alone increased by as much as 49 percent in the last year.
While insurance plans usually pay for out-of-network providers, they are paid much less than providers who participate in the plan. Neurosurgery bills in the state average $22,159; however, health plans only pay an average of $8,276, leaving insured persons with a $13,883 bill for the unpaid balance and burdensome medical debt. These balances can range from hundreds of dollars to tens of thousands of dollars for a surgeon, and often, patients do not even realize they must pay this balance.
At this time, there is no requirement that providers disclose whether they are covered by a plan’s network before providing services to a patient. DFS is seeking legislation that would require advance notification to the patient of out-of-network providers that may be assisting in their procedure. At that time, patients would have the opportunity to comparatively shop around for less expensive providers. Some believe such legislation would effectively rein in the charges of out-of-network providers by encouraging consumer choice and more competitiveness.
DFS is recommending the following measures to protect consumers: “enhanced disclosure, network adequacy requirements, standards for coverage of out-of-network health care services, prohibitions on excessive charges for emergency health care services, and a simplified claim submission process.” However, the agency emphasizes that cooperation among doctors, hospitals and insurers is imperative to working out solutions.