(Bloomberg) – New York state has a new law that is supposed to sharply limit “balance billing.”
“Balance billing” occurs when a physician, hospital or other care provider sends a patient a bill for the difference between the amount the patient’s health insurer has agreed to pay and the full amount the provider has charged.
Because health plan provider networks prohibit most balance billing, the practice usually affects enrollees who are seeing out-of-network providers.
An older New York state balance-billing law protects individuals against high out-of-network ambulance bills. The law also protects health maintenance organization enrollees against balance-billing for emergency room visits.
The new law, which takes effect next year, will require medical providers to warn patients before non-emergency treatment starts if the providers don’t take the patients’ insurance.
If a provider fails to deliver the warning, the patient will have to pay only a regular, in-network co-payment amount.
The law also is supposed to create an independent arbitration process to resolve disputes between insurers and out-of-network providers and insurers.
Insurers will have to update online provider directories within 15 days of receiving information about a change.
New York is one of 13 states that have restrictions on out- of-network balance-billing, according to the Kaiser Family Foundation.
Some states, including Maryland, prohibit out-of-network balance-billing for select services. While Colorado doesn’t explicitly ban the practice, the state instructs insurers to “hold harmless” the patient and take responsibility for surprise bills. In Texas, providers must disclose their network status.
In California, organizers of a 2007 survey found that 1.8 million insured residents who had visited emergency rooms in the previous two years had received extra charges, according to the California Health Plan Association.
“It’s a pretty good bet that, if you’re hospitalized or having any kind of surgery, somebody along the way who touches you or your slides or films will not be in network,” said Karen Pollitz, a senior fellow at the Menlo Park, California-based Kaiser foundation.
Balance-billing happened to Abby Ives, a therapist and clinical social worker from Ossining, N.Y., when she fell in her front yard on June 24, 2012, and shattered a bone in her right leg.
As a health-care provider, 61-year-old Ives knew the importance of insurance.
“As I was laying in the front yard, I told my husband, ‘Honey, get the insurance card, we’re going to need it,’” she recounted in a telephone interview.
The ambulance took her to Phelps Memorial Hospital Center in Sleepy Hollow, N.Y., which was covered by her insurance through Empire Blue Cross Blue Shield. Ives underwent surgery, then X-rays revealed her left leg was also broken, so she had a second surgery. During her month-long stay in the hospital, she said she wasn’t told that many of the providers treating her weren’t included in her insurance plan.
Ives was shocked when, after she was discharged, Empire notified her that both surgeons, the hospitalists who coordinated her care within the hospital and the cardiologists who read her electrocardiograms weren’t part of her coverage plan. One surgeon sent her a bill for $13,000, the hospitalists charged $1,500, and two electrocardiograms were an additional $100 each.
“My reaction is not printable,” she said. “I’m a provider, I see patients and bill insurance companies, I’m supposed to know how this works, but how did they do that to me?”
To pay the bills, Ives said she would have to reach into her and her husband’s retirement funds. She appealed to the surgeon’s billing staff repeatedly, she said, before the surgeon agreed to accept the insurance company’s out-of-network reimbursement of $20,000 and stop pursuing Ives for the balance of $13,000.
As for the hospitalists and cardiologists, “I just paid them,” Ives said. “I wanted to be done, for them to go away.”
A common problem
Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York, said balance-billing is the most-common payment problem seen at her nonprofit advocacy organization, which handled 65,000 health-care cases last year.