While the price transparency law is helping patients better anticipate and manage healthcare costs, there are still situations where they can receive unexpected bills – especially when making a trip to the emergency department (ED). Surprise billing often occurs when a patient is brought to an in-network hospital but is treated by an out-of-network provider in the ED (for example, the physician or anesthesiologist). Many payers will not cover the full charges billed for that “out-of-network visit,” resulting in the patient receiving a bill for the unpaid balance for the amount the payer did not cover – which is often much more than they would expect to pay out of pocket.
Generally speaking, patients don’t have much of a say in which facility they are taken to in an emergency situation, and many have no idea they are even receiving out-of-network care. With privately insured patients, an estimated 1 in 5 emergency claims and 1 and 6 in-network hospitalizations include at least one out-of-network bill, and, on average, 18% of emergency visits result in at least one out-of-network charge. To combat this, many states enforce balance billing restriction laws that require emergency providers to accept what the insurance company has paid, usually with a dispute resolution process, and prohibits them from billing patients for more than their typical, in-network cost-share. In addition, a federal No Surprises Act will go into effect on January 1, 2022, which will apply to most commercially insured patients and to almost all out-of-network services where surprise bills are a common occurrence. This bill will expand balance billing restrictions significantly and has the potential to impact a number of emergency physician groups across the country.
One thing is for certain – these laws are forcing payers and providers to identify new ways to settle their shared financial disagreements, whether it be through informal negotiations or an arbitration process that results in officially binding legal decisions on the dispute. If an emergency provider is interested in obtaining additional reimbursement, they must be well-versed in the current state legislation and know what specific tactics can be utilized to make a compelling case and attain a successful verdict. This blog will examine the financial impact certain state legislation has on emergency physician groups and break down the process for working through balance billing claims.
Emergency physician groups must now balance several competing priorities such as being compliant with state laws, meeting overall financial goals and delivering fair billing processes all while providing excellent care to patients. Given the fact that providers in some states can no longer bill remaining balances to patients, many are facing reduced patient collections, which has the potential to lead to cost and staff reductions. Additionally, these providers are receiving lower overall reimbursement rates from payers for out-of-network visits, causing them to incur serious financial hits.
There are also several operational challenges providers must now face to determine who is ultimately responsible for paying certain balances. Many state laws only enact balance billing restrictions and protect patients with certain types of insurance plans. For example, some states will safeguard patients with HMO plans, but will not protect those with a PPO or federal healthcare plan. There are also discrepancies associated with whose responsibility it is to ensure the patient is not balance billed – sometimes it falls to the provider, sometimes it falls to the insurer or, in some instances, it falls to both. On final explanation of benefits (EOB) forms, insurers do not always indicate whether a provider can bill a remaining balance to the patient, making it difficult for the provider to know how to proceed with billing claims.
While emergency physician groups may feel like they are in a no-win situation between payer constraints, increased legislation and frustrated patients, this does not have to be the case. By deploying the right strategy, providers can ensure they comply with various laws, set up appropriate negotiations and reach a satisfactory resolution.
1. Start by reviewing claims data.
To determine if payer follow up is necessary, emergency providers need to be continually reviewing their claims data and flagging instances where they are receiving payments that are significantly lower than expected. Providers, with the help of their billing team or revenue cycle partner, should establish payment thresholds in their billing systems that define the amount the provider expects to receive for an out-of-network visit. When a payment falls below that threshold amount, the system should flag the claim. Although claim appeals are often denied, this is a good first step to indicate to the payer that the reimbursement received is not adequate and your organization is interested in starting negotiations.
2. Analyze regulatory requirements and assess risk.
Before deciding to move forward with a negotiation or more extensive formal dispute resolution, providers need to thoroughly understand the regulatory requirements associated with their specific state’s balance billing legislation. As previously mentioned, each state has different rules surrounding which health insurance plans are protected (meaning balance billing is forbidden), which claims are eligible, when arbitration or mediation can be filed, timelines that must be followed, and associated fees. Understanding the potential cost of dispute resolution is critical. For example, Texas arbitration fees range from $300-$6,000 per case, which can have a big impact on the earnings even if the case is won. Providers should work with their billing departments or revenue cycle partner to review all the necessary details and decide whether (1) the balance for the specific claim can be pursued and (2) it is worth initiating the full dispute resolution process.
3. Initiate appropriate negotiations or file for dispute resolution.
If an appeal has been denied and the provider decides that they are willing to pursue further action, they can first try to organize a negotiation with the payer before moving to arbitration or mediation. Payers tend to be more willing to negotiate if an informal meeting takes place since they typically want to avoid the high fees associated with dispute resolution. Regardless of the setting, emergency providers need to be well-prepared to make a case for why additional payment is warranted. This includes providing appropriate timelines, claim information, a detailed summary of the visit and benchmark data for reference. An organization needs to determine what monetary amount is reasonable to request from the payer and what they are willing to accept based on their current payment structures.
While it’s encouraging to know there are options for negotiating reimbursement in balance billing situations, it’s important to note that this is a complex, time-consuming process. Pursuing a negotiation, arbitration or mediation requires a significant amount of paperwork within tight timeframes, as well as substantial compliance/legal knowledge to decipher the many laws by which providers must abide. A skilled revenue cycle partner can reduce this workload by providing comprehensive technology resources and expertise, such as a billing system with workflows that can review/flag claims, ensure compliance with individual state laws and escalate appropriate cases to experienced claims appeals and negotiation teams who know how to assemble a winning case. With the federal No Surprises Act around the corner, emergency physician groups should equip themselves with the right tools now to be prepared for what is ahead and ensure they are no longer covering balances that are well below their financial limits.
Kathryn Beard is a Manager of Regulatory Compliance focusing on the physician business for R1 RCM.