America's Health Insurance Plans is supporting, for the federal level, California's plan to stop surprise medical bills.
Since the California law went into effect in 2017, the number of physicians in provider networks has increased by 16%, according to a study published in The American Journal of Managed Care and cited by AHIP.
Consumers may only be billed for their in-network cost-sharing for co-pays, coinsurance or deductibles when they use an in-network facility for non-emergency care, the law states. They are protected from surprise medical bills when they get non-emergency services, go to an in-network health facility and receive care from an out-of-network provider without their consent.
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Facilities include hospitals, ambulatory surgery centers or other outpatient settings, laboratories, and radiology and imaging centers.
Consumers following their health insurer's requirements are protected from having their credit hurt, wages garnished or liens placed on their primary residence, AHIP said.
The law sets a benchmark for a locally negotiated market reimbursement rate for out-of-network care. Physicians in California are paid either the physician's average contracted rate or 125% of the Medicare reimbursement rate, and patients do not receive an additional bill above that amount, AHIP said.
The study is based on new research examining 11 health plans, representing 96% of covered lives in the fully insured commercial market in California. The survey excluded health plans that had fewer than 10,000 enrollees, as well as Kaiser Permanente, because the health system has an integrated health plan with exclusive contracts with the two Permanente Medical Groups, which provide most care through their own physicians.
WHY THIS MATTERS
Payers and providers have been at odds over how to end surprise medical bills as federal and state lawmakers tackle the problem.
Earlier this year, AHIP and 16 other organizations asked House and Senate leaders to pass legislation setting reimbursement based on market rates determined by "reasonable, contracted amounts" paid by health insurers in a geographic area, or a percentage of Medicare.
The American Hospital Association and the Federation of American Hospitals pushed back, saying the plan would set a dangerous precedent for the government to start setting rates in the private sector.
Surprise bills not only hurt consumers who are left having to pay for out-of-network care, but also undermine competition between health insurance plans, especially those trying to limit costs by offering narrower networks.
However, California's plan does not address emergency room care, where much of the bulk of surprise bills originate. And the number and cost of these bills, as well as that from out-of-network inpatient care, are increasing.
Between 2010 and 2016, the incidence of out-of-network billing for emergency room visits increased from 32.3% to 42.8%, and the liability to patients increased from $220 to $628, according to a JAMA study done earlier this month.
For inpatient admissions, the incidence of out-of-network billing increased from 26.3% to 42%, and the liability to patients increased from $804 to $2,040.
ON THE RECORD
"Too many hardworking families are hit with a surprise medical bill after they get the care they need," said Jeanette Thornton, senior vice president for Product, Employer and Commercial Policy for AHIP. "This study shows that we can protect patients, improve affordability, and ensure strong provider networks with the right legislation to stop surprise medical bills."
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