When emergencies expose consumers to out-of-network providers, balance billing can bring a crushing burden. The recent devastation following multiple hurricanes serves as a sobering reminder that consumers are not always able to control where they go for urgent care. 

As the use of narrow provider networks has become increasingly common, the balance billing burden is growing. To mitigate the effect of situations where consumers have no control over which providers treat them, many states are working on policy solutions to protect consumers and limit financial risk. However, finding common ground between insurers and providers has been tough; they don’t agree on appropriate levels of payment for medical services. A federal solution may have the greatest potential for success. 

Whether they know it or not (and many don’t) most individuals with private insurance are participants in employer-sponsored self-insured plans. These are totally funded by the employers themselves, and regulated primarily under federal law. As Congress circles around the Affordable Care Act, and the provider community dreads the prospect of even more uninsured or under-insured consumers, now may be a good time for action on balance billing. The states, however, aren’t holding their breath. A handful of states are way ahead in developing solutions. Here’s a run-down of those that have taken this issue into their own hands… Or not, as the case may be.

30 States have no balance billing protections

In the District of Columbia and 29 states, there are no state laws or regulations that shield consumers from unexpected balance billing by out-of-network providers’ emergency departments, or even in-network hospitals. In some states, insurance regulators have stepped in to act as mediators between providers and insurers to work out acceptable payment levels, or else urge insurers to pay billed charges and help consumers avoid the burden of a massive balance bill. 

However, these approaches can’t really be relied on. Without direct authority over insurers and with almost no power over providers, informal approaches by state regulators may be inconsistently applied, and the most vulnerable patient populations (such as indigent consumers, those whose first language is not English, or those whose immigration status is an issue) may not know certain options - like arbitration - are even available. 

Even for those consumers able to advocate for themselves, there is no agency with the authority to force providers and insurers to resolve a dispute. When there’s no resolution, consumers and providers end up holding the bag. Consumers get stuck with a balance bill that can destroy their credit score and hurt their ability to get a job, obtain housing, or buy a car. Healthcare providers suffer from the growing weight of uncompensated care.

15 States have limited protections (CO, DE, IN, IA, MA, MS, NH, NJ, NM, NC, PA, RI, TX, VT, WV)

Fifteen states take a limited approach to protecting consumers who would otherwise face balance billing for care by out-of-network providers in emergency rooms, or in-network hospitals.  

What makes them limited? In some states (CO, IA, MA, NH, NJ, NM, NC, PA, RI, TX, VT, WV), the law doesn’t require consumers to pay balance bills, but doesn’t prohibit balance billing by providers. This means many consumers will pay bills they have no obligation to pay.

Some of these states limit protections to emergency department settings (CO, DE, IN, IA, MS, NH, NJ, NM, NC, PA, RI, RX, VT, WV), or only protect consumers enrolled in HMOs (IN, NH, RI, TX, WV). 

Most states with limited protections have no rules to define adequate payment to an out-of-network provider, nor a formal process to resolve payment disputes (with the exception of DE, which does have a dispute resolution process). The absence of a standard can incent providers to stay out-of-network and avoid agreeing to a contracted rate, then charging whatever they want via balance billing. This has the potential to drive up the overall cost of healthcare for everyone.  

6 States have comprehensive balance billing protections (NY, MD, IL, FL, CT, CA)

Six states have the most robust balance billing protection for consumers in that they: 

  • Protect consumers receiving care both in-network and in emergency hospital settings
  • Protect consumers with a wider range of health plan types (HMOs and PPOs)
  • Prevent the sending of a balance bill
  • Define adequate payment standards or dispute resolution processes to settle disagreements between insurers and providers---although the means of resolution varies widely from state to state 

iA Perspective

Insured consumers expect that if they pay their premiums and use in-network providers, their insurer will cover the cost of medically necessary care beyond their specified copayments, coinsurance, and deductibles. When consumers feel very ill or experience a medical emergency, they usually don’t have the time or presence of mind to determine whether a provider who treats them is out-of-network. Even if they know, they often have no opportunity to comparison shop. 

While insurers may elect to protect their enrollees from some instances of balance billing, there are no federal protections that explicitly ban the practice. To a certain extent, states can help protect enrollees from unexpected balance bills.  However, state protections are limited by federal law (ERISA), which exempts self-insured employer-sponsored plans---and these plans are prevalent, representing more than 60% of privately insured employees. 

Without a clear national standard for balance bills, consumers remain at risk and providers face significant administrative hassle. Those that offer outsourced business office or collection functions to healthcare providers should be fully educated on the laws related to balance billing, and a range of patient financing options.

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