Rules may cut down on surprise medical bills
New rules address insurance networks
Surprise medical bills are really frustrating. This is especially true when they stem from seeing an “out-of-network” provider, which causes them to be even higher than they would be otherwise. This month, The Centers for Medicare & Medicaid Services (CMS) finalized new insurance rules to address this problem.
To understand the new rules, it helps to start with a working understanding of how networks work.Understanding networks
It’s easier to explain networks with a story, so let’s take that approach. In our story, Mary is an elementary school teacher who needs hospital treatment. She goes to ACME Hospital and gets a bill for $20,000. Mary calls ACME and speaks to John in billing. “John, did ACME submit this bill to my insurance company?” John looks up Mary’s record and finds ACME did not. ACME submits the bill to Mary’s insurance company. Mary’s insurance company pays the bill in full, but only has to pay $4,300 to do that instead of the $20,000 that ACME was expecting from Mary.
Why was Mary going to have to pay $20,000, but the insurance company only had to pay $4,300 when paying on her behalf?
Two words: bargaining power. Mary is just one person. The insurance company has thousands of members. The insurance company uses its thousands of members to negotiate lower prices with ACME Hospital. “Hey, I’ll encourage my members to come see you if they get sick, but only if you give me lower prices than what you normally charge,” says the insurance company.
But then how does the insurance company encourage its customers to go to ACME Hospital? By subjecting its members to lower deductibles and out-of-pocket limits with ACME Hospital than it does with other hospitals. ACME Hospital is then referred to as “in-network” while the other hospitals are referred to as “out-of-network.”
While this example is pretty straightforward, in real life it can get complicated. Partly as a result, surprise medical bills have become all too common. Following are three of CMS’s new rules designed to help consumers.
1. Network coverage ratings
Many healthcare consumers understand the importance of comparing the deductible of one health plan versus another. Fewer understand the importance of comparing the networks offered by various plans. In many cases, no tools exist to help them. The result? The Center for U.S. Health Reform found 44 percent people who bought a marketplace plan for the first time did not even understand the network of the plan they chose.
CMS is responding to this problem by requiring plans on healthcare.gov to have “network coverage” ratings. The idea is that these ratings should call attention to the importance of taking a plan’s network into account when choosing what to buy, in addition to making it incrementally easier to compare the networks.
2. Better transitions
Sometimes insurance companies and medical providers decide not to renew their contracts. When this happens, the provider goes from being “in-network” to being “out-of-network.” This can be a real problem if you’re in the middle of treatment when it happens.
CMS is addressing this problem by formally requiring insurance companies to provide notice to patients of medical providers who become “out-of-network.” Furthermore, if a patient is in active treatment with a provider who becomes “out-of-network”, he or she will be able to continue treatment for a period of time under “in-network” terms.
3. Out-of-network providers at in-network facilities
One of the most common drivers of surprise medical bills are treatments at “in-network” facilities by “out-of-network” doctors. Going back to our story: Mary was careful to check that ACME Hospital was “in-network.” But it turned out that Anesthesiologist Donna, who put Mary to sleep before Mary’s surgery and who Mary had never met before, was “out-of-network.” It doesn’t seem fair, but Mary would have had to pay Anesthesiologist Donna under the “out-of-network” terms of her plan.
A new CMS rule beginning in 2018 will require insurers to count “out-of-network” charges incurred at “in-network” facilities toward “in-network” out-of-pocket limits. This is designed to reduce the possibility that consumers are surprised by “out-of-network” exposure with doctors who practice at facilities that are “in-network.”
While these new rules give consumers more protection, they are not fully comprehensive. There will still be unpleasant surprises. As a healthcare consumer, it continues to be important to take time to understand your coverage.
This column originally appeared in the March 22th edition of The Tennessean.
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