For years, insurance companies have operated networks of physicians and facilities which they pair with company benefit plans and their own insurance policies to facilitate “in-network” coverage for members. Physician networks are marketed by insurance companies to providers on the basis that joining a network will bring increased volume to the practice at a discount to the normal charges of the practice. Further, by joining a network, the physician will be paid directly, the member will not be balance billed and the physician can deal directly with the insurance company for any issues surrounding reimbursement. In theory, this sounds great, in practice, there are many shortcomings that call into question whether there truly is any benefit to being in-network. This is especially the case once the new federal surprise billing legislation, the No Surprises Act (NSA), becomes fully implemented.
How Does the No Surprises Act Affect Providers
Under the NSA, many out-of-network services currently performed by providers will now be reimbursed, at a minimum, at an amount equal to the median in-network contracted rate in the applicable (or same) geographic region. To the extent a provider’s in-network contract is below the median in-network rate, known under the No Surprises Act as the Qualifying Payment Amount (QPA), the in-network provider will be compensated less than out-of-network (OON) providers that perform the same service covered under the No Surprises Act or applicable State law. Further, an in-network provider will be stuck at their contracted rate while out-of-network providers will have the right to negotiate higher reimbursement amounts- and the ability to initiate the Independent Dispute Resolution (IDR) process. In effect, the No Surprises Act has converted the OON provider’s business model to align more closely with that of an in-network provider for certain services except OON providers do not have to sign an agreement with any payor that limits their rights to challenge payment.
Historically, in-network providers benefitted as a result of being “paid” directly by the plan. Often, plans purposely send payments due to out-of-network providers to patients requiring follow up by OON practices with patients to collect payment. This administrative burden can be demanding, and as such many states have implemented Surprise Bill and other laws that require fully insured plans to directly reimburse OON providers for certain types of services. Moreover, with the federal No Surprises Act to be implemented in 2022, self-funded plans will now also be required to directly pay OON providers for many types of services and/or types of providers. This would include all ER and most post stabilization services, OON services where no in-network provider is available at the in-network facility and other ancillary services, including assistant surgeons. The so-called benefit of direct payment will be less significant as a basis to go in-network.
Challenges in Reimbursement for Providers
While challenges exist in obtaining a fair reimbursement for OON providers, in-network providers will still face challenges being “paid” to their contracted rates. The same issues faced by OON providers are also faced by in-network providers including denial for lack of authorization of medical documentation, denial for improper coding or alleged “inclusive” codes, denial for medical necessity or experimental, denial for coordination of benefits or policy expiration. Agreeing to go in-network at Medicare based fee rates while still facing the administration costs and challenges imposed by payors from payment denials further reduces the actual “contracted reimbursement rate”. While, OON providers also incur these cost burdens, the mix of member plans that reimburse at UCR rates or meaningful multiples to the Medicare fee schedules, together with post-service reimbursement negotiations, can result in greater overall net revenue to OON providers. The No Surprises Act does not regulate these types of denials-or coverage issues and payors will continue to abuse this part of the claim reimbursement process whether in-network or out-of-network.
In-network providers purportedly benefit from challenging denials by having the right to appeal under the terms of the in-network contract. Often these contracts are boilerplate forms, and many practices focus on the fee schedules and little else. It is only after the contract is signed that in-network practices learn of the one-sided appeal process favoring the carrier. Tight claim and appeal deadlines, limited arbitration rights and the lack of judicial review, leaves the in-network provider as a hostage to the carrier. While the OON provider has no rights on its own under most circumstances, by working with their patients OON providers are able to assert rights available to members under ERISA and State laws through the use of the DAR/AOB forms. Plan documents and applicable laws play a role for the OON provider to effectively challenge payor actions while in-network providers are left to navigate the voluminous guidelines, policies and requirements imposed by payors leaving little leverage if any. Further these types of rights assigned to the OON provider remove the ability of payors to be the sole arbiters of all issues surrounding reimbursement which is often the case for an in-network provider.
The Prohibition of Balance Billing and Its Effects
Prohibition of Balance Billing is a big selling point to plan sponsors. Insurance companies promote their networks and the use of in-network providers as a method to manage plan costs and eliminate any balance bill to the member. Payors further the position that OON providers charge excessive amounts and therefore members can face enormous balance bills. While it is certainly true that OON providers charge a higher rate, many of these OON providers forego balance billing patients. Instead, most Board Certified OON providers first challenge payor denials and under-reimbursements, placing less emphasis in their practice on collecting balance bills from patients. The idea that balance billing is rampant in the industry by highly skilled surgical specialists is not as prevalent as carriers make it. Exorbitant billing practices by highly skilled surgical specialists is a fallacy and a widely misunderstood concept precipitated by the carriers. Most surgeons are committed to patient care and understand that balance billing can cause undue financial and emotional stress that can adversely affect a patient health.
Medical providers face enormous challenges in balancing delivery of patient care while navigating the onerous process to obtain a fair reimbursement from payors. While the healthcare industry and legislators agree patients need to be protected from balance billing, the impact of NSA regulations on the procedures between providers and payors will only be determined once the Act is fully implemented.