The Out of Network (OON) Conundrum for Emergency Medicine (EM) and Other Hospital-based Specialties
By Ed Gaines, CCO, EM Div. Zotec Partners and Chair of the ACEP/EDPMA Joint Task Force on Reimbursement Issues
Please note: the federal and state OON developments are changing rapidly, and the below information reflects the date of February 21, 2019.
Senator Bill Cassidy (R-LA) has been leading a bi-partisan “Transparency Work Group” (Work Group) in the US Senate with Senator’s M. Bennett (D-C0), T. Carper (D-DE), M. Hassan (D-NH), T. Young (R-IN) and L. Murkowski (R-AK) who are considering several federal legislative proposals on OON billing. Senator Cassidy is a physician and is looked to by many as a leader on these issues. ACEP, ACR, ASA, Physicians for Fair Coverage (PFC) and other stakeholders have had extensive discussions with the Work Group regarding possible legislative approaches. The Work Group is intending to address the OON issues for states which currently do not have an OON law and for ERISA self-insured plans—in certain large states, e.g. NJ and GA, it is estimated that ERISA plans make up over 60% of the commercial insurance market. (ERISA plans may be exempt to state laws and are generally governed by federal laws and regulations promulgated by the US Dept. of Labor).
Recently the Work Group requested OON revenue cycle management (RCM) data from hospital -based specialties including EM, anesthesia and radiology, and from the health plans—ACEP and EDPMA have been working with outside legal counsel and consultants to assemble that data in compliance with anti-trust laws. The data and narrative to answer the Work Group’s extensive questions are likely to be submitted for emergency medicine by the end of February 2019.
In addition, ACEP recently announced an “OON Framework” for legislation that includes among the following features:
- Health plans reimburse the patient’s co-insurance, co-pay and deductible (Cost Sharing) directly to the clinician;
- EM clinicians would be prohibited from making any demand for OON reimbursement from the patient—balance billing would be prohibited;
- For claims under $750, adjusted for inflation, health plans would be required to reimburse the charges in full; for claims over $750, the plans would be required to make an “interim reimbursement” directly to the clinician;
- For claims over $750, either the clinician or health plan could trigger an “alternative dispute resolution” (ADR) process, subject to strict time frames and factors that the adjudicator would have to consider in determining final reimbursement;
- The ADR would be “baseball styled” with the adjudicator selecting either the health plan’s initial offer of reimbursement or the clinician’s charges, one or the other, with costs and fees be awarded to the prevailing party.
February 2019 State of the States Update: OON/BB
Editor’s note: the following was provided by the ACEP Reimbursement Dept. professional staff, Adam Krushinskie: “As of mid-February 2019, more than 20 states have introduced legislation pertaining to out-of-network and balance billing issues, with at least 36 states expected to enter the fray before the end of 2019.” Adam characterized the threat to emergency medicine (EM) interests by listing those states that are “in the frying pan” fighting the good fight for EM to save reimbursement and create the best possible outcome, and those that are on the menu, aka have yet to be of concern now, but going forward are trending towards +/- action. Finally, Adam lists the states ACEP/EDPMA/PFC continues to monitor for developments.
Please note that the VA bills reference below were NOT enacted by the end of their legislative session but that VA-ACEP believes that significant progress was achieved in educating the legislature on the clinician’s issues and concerns.
“States currently “in the frying pan”:
1. Nevada: 3 bills and 4 months to go in session, the possibility of a major loss for EM is a real possibility in a new legislative environment in which both the governor and legislature branch is now run by Democrats that have promised to support legislation banning OON/BB
- Negotiations are unfolding behind the scenes, but ACEP is aware that at least 3 bills are to be introduced now that session is underway as of February 4th. The most likely bill to move is sponsored by Mike Sprinkle (D) who is Chair of the Health & Human services committee and an ally of the new Democratic governor. Although NV ACEP is still far apart on negotiations as this bill is still in draft form, it does use Fair Health (FH) allowable amounts as part of the MBS and has favorable provisions for prompt payment to providers.
- Ms. Maggie Carlton (D), the powerful Chair of Ways and Means, is offering up her own bill and is open to amendments from the EM community, however it appears to use Medicare or allowable rates as the “usual customary and reasonable” (UCR) in draft language previewed by the NV ACEP chapter.
- Sen. Joe Hardy (R), who assisted in detonating a 2018 bill that would have tied rates to Medicare, is now planning to introduce a version of the 2017 NCOIL model legislation, which ACEP could support, however since Sen. Hardy is in the minority party, little is expected to happen after his bill is introduced.
- Bottom Line: The conversation is centered on the FH allowable rate, which includes the OON rate paid by insurers to providers added to the average contracted or allowable rate paid by insurers. This blended rate will likely be in both the Carlton and Sprinkle bills. Finally, educating key senators and assembly members that counting a patient’s deductible as part of the OON payment is not permissible. Expect a long, drawn out process over the next 4 months.
2. Virginia: 9 bills and only a short, 45-day session, along with a crisis in the governor’s mansion has both helped and hurt physician coalition efforts.
- HB 1714 was introduced by Del. Lee Ware (R) at the start of the session and is the only bill so far to protect patients from OON/BB by prohibiting the practice and requiring insurers to pay providers directly for care, while also bolstering patient rights and the prudent layperson standard. However, the payment standard is tied to either the greater of the in-network amount or the “regional average” for commercial payments for emergency services that would be determined by either Medicare geographic price indices or a geographic zip code similar to FH. Unfortunately, Del. Ware’s bill was tabled for discussion on 1/17/19 and since then little has happened to move forward.
- SB 1763 Sen. Glen Sturtevant (R) has been working a bill through the legislature over the past 3 weeks that is similar to HB 1714, however its UCR considers the highest of 3 including average in-network rates, OON rates, and Medicare but also adds the same regional average for commercial payments as seen in HB 1714. VA ACEP has been supportive of the bill despite, despite its shortcomings, simply because this is the best option at this point in a time when the legislature says it will pass an OON/BB ban this session. On Feb. 5 this bill went up for debate, and successfully crossed over from the Senate to the House. In the House, a hearing on 2/11 was not held. The Appropriations Chair will not put the bill on the docket to be heard due to fiscal impacts to state employee health plans. In recent years the cap for OON was $30k for state employees, however this bill could exceed the max budgeted expenditure, requiring a fiscal impact review before it can move forward.
- Bottom Line: HB 1714 appears to be dead, as well as seven other bills that have sprung up since the start of session. The bill to watch is SB 1763. If the House can get it moving again, it has a real chance at passage. However, the fiscal impact on the 2019-20 Commonwealth Budget may encourage legislators to take a step back and consider other options, such as allocating money in the budget for state employees. This is a tall order for a Republican-led legislature.
3. Georgia: 1 bill has been introduced so far with 1.5 months remaining in session. PFC and the broad coalition of specialties are confident they can overcome challenges from 2018. PFC met with senators from both parties to find an opportunity for a way forward. This starts with compromise on the legislation introduced by Rep. Richard Smith, a Republican who chairs the Insurance Committee and plans to introduce legislation that ties rates paid to Medicare or another unfavorable solution. Rep. Darlene Taylor, a member of the committee is convinced that using FH allowed amounts as part of a blended rate solution will work. However, the committee has more than a dozen members, and so convincing them all to work with Medical Association of GA (MAG) and PFC on a solution will be a challenge. On the flip side, PFC and MAG have met with senators to ensure that any bill that survives the House can be given a fair chance in the Senate.
- SB 56 was introduced on 2/6 by Sen. Chuck Hufstetler and is awaiting a hearing in the Senate Insurance and Labor Committee. The bill creates mediation for EM bills over $1k for patients with a focus on consumer protections. It is expected that the senator will also re-introduce the PFC “skinny bill” from 2018 with an MBS tied to the 80th percentile of the FH charges database.
4. New Mexico: The Dept. of Insurance has filed two bills aiming to limit OON balance billing by setting reimbursement at the median amount of any commercial in-network rate paid, UCR at the 60th percentile of FH allowable, or 150% of Medicare, whichever is greater. Session ends in mid-March, so much can change in the interim.
- HB 207/SB337: sponsored by Democrats with a push from the Dept. of Insurance, these bills aim to do what was stated above, plus ban OON/BB. They await a hearing in the Judiciary Committee in the House and Corporations & Transportation Committee in the Senate.
States currently “on the menu”:
1. Texas: On 2/12 the Houston Chronicle and other outlets reported that Sen. Kelly Hancock (R) plans to introduce new legislation that will amend the mediation process to expand eligibility to include possibly the ERISA plans in the state. At least 3 other bills are expected to be introduced from a coalition of consumer groups and insurers that could include a ban on OON/BB.
2. Pennsylvania: UPMC and Highmark BCBS are having a messy divorce that now threatens to spill over into a high-profile lawsuit by PA’s AG which could eventually wrap in the OON/BB issue or force PA legislator’s hand on dealing with the issue. This could coincide with legislation to be introduced any time now by Sen. Judy Schwank (R), which could tie charges to Medicare rates as her last bill did. On February 19th the Insurance Committee in the Senate will hear arguments on the OON/BB issue with legislation expected soon thereafter.
3. Louisiana: Stakeholders, including EM, were asked to submit their best proposals for dealing with the OON issue by 2/1 to the legislature that established a task force on the issue in 2018. With the submission complete, expect legislation to be introduced this session.
4. Colorado: Two bills have been introduced in the last week, HB 1174 and SB 134 which tie reimbursement to 125% of Medicare or 100% of the allowable amount, however it appears the bill language is in flux and changes are expected soon to better clarify the MBS for providers.
States to Monitor:
1. Oklahoma: two bills have been introduced that deal with OON/BB, however they are unlikely to pass at this point.
2. Kentucky: reintroduced SB 24 and HB 138 from 2018 that is a modified version of the PFC “skinny bill”, however currently both have less than a 25% chance of passage
3. New Jersey: will legislation be introduced to set a minimum benefit standard (MBS)?
4. Oregon: expect negative legislation to be introduced
5. Washington: legislation has been filed that sets reimbursement at the in-network amount for OON, however we are at the start of a long legislative process
6. West Virginia: Expect negative legislation to be introduced?
7. Ohio: PFC is working with a coalition in the Senate to introduce legislation in 2019
8. Alaska: continuation of the fight to save the 80th percentile of FH charges as the standard will likely continue well into 2020
9. Connecticut: SB 329 will attempt to eliminate FH as the standard and require providers to accept an average of the in-network rate paid.