Surprise out-of-network bills are the fault of insurance regulators

A woman with cancer experiences complications related to her treatment and is hospitalized at a facility that accepts her insurance. During a four-day stay there, she is cared for by a team of physicians and nurses and undergoes a battery of tests and procedures. Once she is stable, she’s sent home. She continues seeing her oncologist for cancer treatments covered by her insurance, but a few weeks later, out-of-network bills from providers at the hospital begin to trickle in.

Those bills aren’t mistakes. They are actually an all-too-common occurrence, one that health plans often fail to mention — or do anything about. As a result, patients pay higher out-of-network costs that are partially covered, if at all, by their health insurance.

The problem arises when health plans marketed to consumers don’t have a sufficient number of hospital-based physicians (radiologists, pathologists, anesthesiologists, emergency physicians, and the like) under contract in the facility or on call, and care must be handled by out-of-network providers.

This isn’t patients’ faults, and they shouldn’t be charged for it.

It’s time for insurance regulators to do more to certify “network adequacy,” meaning that health insurers maintain sufficient numbers of in-network physicians and other providers in the plans they market to consumers. Requiring adequate networks of physicians in health plans will reduce patient costs by ensuring in-network services are reasonably available.

When regulators approve health insurance plans that don’t have sufficient numbers of hospital-based physicians under contract, patients treated in these facilities are likely to be assessed out-of-network charges, including the difference between what an out-of-network provider charges and the amount a health plan covers for physicians within their network.

To address this problem, nine national patient advocacy groups, many representing patients with cancer, and three national medical societies, representing many hospital-based physician specialties, issued a declaration calling upon states and the federal government to enact laws or regulations requiring that insurance plans be evaluated for contracting with physicians at in-network hospitals. In 2018, only one state has acted: New Hampshire. We hope other states will follow.

Why is this issue important? A Kaiser Family Foundation poll found that 56 percent of Americans are concerned about out-of-network billing, while almost the same number (55 percent) are concerned about “making sure health plans have sufficient provider networks.”

Yet a Robert Wood Johnson Foundation survey of state insurance departments showed that only 14 percent of regulators verified whether insurance plans had contracted with in-network facility-based providers. That percentage is not surprising: At the state level there are, for the most part, no laws or regulations to mandate this regulatory scrutiny of health plans.

Enforcement ensures compliance with the law. When insurance plans perceive lax enforcement of regulations, they may be induced to drive down physician payments, reduce the scope and size of their networks, and raise the specter of price gouging when insurers are insidiously shifting the cost of hospital-based physician services from health plans to patients.

Many news stories on “surprise” billing blame physicians, because the bill is sent from the doctor’s office or billing company. But the insurance industry is the real culprit, in concert with insurance regulators who have not acted to require network adequacy.

In 2015, the National Association of Insurance Commissioners unanimously rejected a physician-led initiative to require that insurance plans be reviewed for hospital-based physician network adequacy. The opposition of insurance regulators to that proposal was designed not to protect patients but the business interests of the industry they regulate. As a result, insurers increasingly capitalize on consumers’ desire for low-cost health insurance plans and fail to disclose potentially harmful flaws within their plans, including the impact of inadequate provider networks.

Patients should not be financially responsible when an insurance plan cannot provide in-network physician services at in-network hospitals or other facilities. Instead, the insurance plan should foot that bill. Policymakers must consider providing beneficiaries with an ample number of physicians who can span the continuum of care, including within the hospital setting. That should be a fundamental business responsibility for health insurers.

If they can’t meet that basic criteria, then the plans are really not in the business of health insurance, and everyone should know it.

R. Bruce Williams, M.D., is president of the College of American Pathologists. Geraldine B. McGinty, M.D., is chair of the American College of Radiology’s Board of Chancellors.