Government Criticizes Healthcare Providers and Insurers for Out-of-Network Payment

The New York State Department of Financial Services (“Department”) recently issued a highly critical report about out-of-network billing practices in New York State. The report stems from the Department’s receipt of frequent complaints from patients who unexpectedly receive bills from specialists or other providers who they did not know were out-of-network. The Department indicated that unexpected, and often times, excessive medical bills from out-of-network providers are contributing to the growing problem of consumer medical debt, which continues to be a primary cause of personal bankruptcy.

The Department launched an investigation looking into more than 2,000 complaints it received in 2011 involving payment issues in order to better understand all aspects of the medical bills. A large number of complaints submitted to the Department involved patients who received scheduled, non-emergency medical services for which pre-approval had been obtained from the patient’s insurer. In many of these cases, neither the insurer, the doctor, nor the hospital disclosed to the patient that other specialists – some of whom were out-of-network – would also be providing professional services. (Currently, providers are not required to disclose whether they are in-network or out-of-network prior to performing services.)

The Department’s investigation of unexpected bills sent to patients by out-of-network providers revealed some large flaws in the way the health insurance market operates, such as:

• Lack of Disclosure for Non-Emergency Care. For scheduled, non-emergency medical services, patients typically do not know many of the specialists who are anticipated to provide treatment, and whether those specialists are
out-of-network, how much those out-of-network specialists reasonably expect to charge, and how much the insurer reasonably expects to cover. This lack of disclosure is a frequent cause of patient complaints.
• Excessive Bills for Emergency Care. In emergency situations, patients do not have the luxury of advance disclosure by out-of-network providers. Additionally, some out-of-network specialists appear to take advantage of the patients at this vulnerable point by charging excessive fees.
• Reduced Insurance Coverage. Some insurers have significantly reduced the level of out-of-network coverage. Employers, unable to keep up with increasing premiums, have chosen to reduce benefits. Patients are often unaware that their policies offer less generous out-of-network coverage.
• Difficulty in Submitting Claims. Submitting out-of-network claims is often confusing and time consuming. Not all insurers allow patients to submit claims electronically and not all out-of-network providers include a claim form with their bill to the patient.

The Department recognized in its report that health plans and healthcare providers will need to reform their current policies and practices. Some of these improvements may include enhanced disclosure, limitations on excessive charges for emergency health care services, and a simplified claim submission process.

The Department concluded its report by noting that even though a patient may have health insurance; this does not necessarily mean that he or she will leave the hospital without a bill. As such, prior to receiving medical treatment, patients should inquire which doctors will be providing professional services on their behalf and whether they are in or out-of-network.