As healthcare spending in the United States continues to rise at a seemingly unstoppable pace, healthcare entities are making attempts to curb healthcare spending. This has led to changes in the healthcare marketplace and delivery of care to consumers. For example, health insurers are attempting to rein-in spending by decreasing the use of out-of-network providers. Recently, when asked what health insurers are doing to make it more difficult for out-of-network providers to secure patients and collect payment, I responded with “A variety of things depending on what the health plan is trying to prevent.”
While health plans are using a variety of measures to thwart out-of-network activity, this blog will focus on three prevention techniques that have perhaps become more prevalent recently:
- Educating members on the costs of using an out-of-network provider,
- Imposing penalties on in-network providers for use and/or referral to out-of-network providers.
- Making it difficult for out-of-network providers to collect payment.
Educating Members on the Costs of Using an Out-of-Network Provider
Health plans offering their members out-of-network benefits/coverage are going to greater lengths to steer their members away from out-of-network providers and to in-network providers through education.
As a first line of defense, health plans are taking steps to re-direct members to in-network providers via posts on their website and/or calls from pre-authorization staff, where the member is being educated on the increased cost associated with care rendered by the out-of-network provider. Some health plans provide an online hypothetical cost comparison tool. The tool helps members better understand the cost differences among doctors, facilities, and laboratories that do not participate in their networks.
Some health plans inform their members the out-of-network provider has no limit on what they can charge for their services, and those provider’s fees will not be discounted because they do not participate in the health plan’s provider network. Additionally, insurers may inform their members when an out-of-network provider is used, that they will likely end up paying a higher deductible and co-insurance.
Finally, health plans are alerting their members if they use an out-of-network provider, only a portion of the out-of-network charges will get paid by insurance and, absent a state-specific law or regulation, the member will be responsible for paying the remainder of the charges.
Penalizing In-Network Providers for Use of Out-of-Network Providers
When an in-network provider such as a surgical facility or surgeon uses the services of another provider who is not contracted with and participating in the plan’s network, the in-network provider may now be putting itself at risk for repercussions from the health plan.
Contracts between health plans and providers may require contracted providers to restrict their use of or referral to other contracted providers within the network. When these contracts are breached, consequences may arise including being served a contract termination notice or experiencing financial penalties. These types of restrictions have recently been extended to anesthesiologists, radiologists, pathologists, and surgical assistants.
These out-of-network referral situations have garnered significant attention because they can create unexpected “surprise bills” and substantial financial burdens for patients. As a result, health plans have started terminating contracts with in-network surgeons that use out-of-network surgical assistants and/or out-of-network facilities.
Some health plans are requiring new facilities seeking in-network status to accept contract provisions that allow the health plans to impose financial penalties on the facility for the use of out-of-network anesthesia, radiology, lab, and pathology providers. Penalties have ranged from a small amount to over half of the negotiated surgical fees. In addition, health plans have begun pressing providers to hold harmless provisions that protect both the payer and member from the added costs of out-of-network providers, including limits or prohibitions on balance billing.
Not Making It Easy to Collect Payment
Rather than reimbursing the out-of-network provider for services rendered, some health plans issue payment directly to the patient. This may occur even if the out-of-network provider has had the patient sign an assignment of benefits form, whereby the patient requests his or her health plan issue payment directly to the provider. And once the payment they’ve been waiting for has been sent directly to the patient, it may become more difficult for the out-of-network provider to collect payment. If patients have cashed and already spent the insurance reimbursement check, it may be difficult for the out-of-network provider to secure remuneration.
The practice of sending the payment to the patient will continue to be a deterrent to out-of-network providers. While a handful of states have enacted legislation which requires insurers to honor the assignment of benefits, chasing patients for payment will likely remain a labor-intensive administrative burden associated with managing out-of-network claims well into the future.
Making an Informed Decision on Going Out-of-Network
For some providers, the out-of-network strategy may appear to be the best fit for their business. But, facilities and physicians who either currently accept patients on an out-of-network basis or are contemplating doing so should also be aware of the potential obstacles and limitations of this strategy. Obstacles for out-of-network providers include persuasive education for plan members on the financial consequences of securing care from an out-of-network provider, the possibility of having penalties imposed on in-network providers, and the risk of chasing patient payments. If surgery centers do not understand the impact this will have on their business in the long-run, the vitality and long-term success of the center could suffer. It is in each practice’s best interest to understand the pros and cons of being an out-of-network provider prior to making an informed decision for the organization.
Dan Connolly, VP, Payer Relations & Contracting