Health insurer reaches $3.5 million settlement over out-of-network disclosures

The attorney general’s investigation found that the disclosures regarding the out-of-network benefit were inadequate to apprise members and prospective members about low reimbursement rates and the potential of facing large balance bills from out-of-network providers. New York regulators said that, for example, the plan did not adequately describe that services at an in-network hospital might be performed by out-of-network providers and the likelihood that the member would incur substantial out-of-pocket expenses for that work.

In addition, according to state regulators, in many instances, GHI’s materials did not accurately set forth the potentially wide gap between the out-of-network reimbursement and out-of-network charges, and potentially substantial out-of-pocket amounts for which GHI Plan members will be responsible. Regulators noted that, for example, if a CBP member sought a hip replacement in Queens, New York, from an out-of-network provider, the estimated charge was $7,375. Under the plan benefit, the reimbursement rate was $2,732 and the member was responsible for the difference. If a member saw an out-of-network provider for a 25-minute outpatient office visit, the estimated charge in Manhattan for this service was $247. CBP’s hard-to-find reimbursement rate was $36, according to the attorney general’s office.

The government said that its investigation revealed four overall problematic areas for consumers in that GHI’s communications did not adequately explain:

• how members can access the reimbursement schedule;
• the financial consequences of using out-of-network providers;
• the circumstances by which members may unknowingly encounter out-of-network providers; and
• the frequency with which the out-of-network reimbursement schedule is updated.

The settlement requires GHI to modify its communications regarding the CBP so consumers are presented with clear information as to how to obtain out-of-network reimbursement rates from GHI in advance of receiving services; the likelihood plan members will incur substantial out-of-pocket expenses when out-of-network providers are used; that in the context of a hospital admission, services may be provided by out-of-network providers (even if the facility is in-network and some or many of the other providers are in-network) and the member would incur substantial out-of-pocket expenses; and that the out-of-network fee schedule was based on 1983 procedure rates that have not been increased since that time.

The settlement also provided that GHI will:

• Create a web portal that provides information on how much GHI will reimburse members for services provided by out-of-network providers;
• Assist members who contact GHI prior to receiving pre-scheduled medical procedures in finding participating providers so that the members can stay in-network;
• Assist members who seek help from GHI for balance bills from out-network providers, including collections and legal actions, so members are held harmless for those bills;
• Update its member complaint policies and practices so as to increase functionality that will permit GHI to better log, search, and prepare electronic reports regarding out-of-network services; and
• Train its staff and modify its out-of-network services practices, procedures, and policies in order to fully comply with the requirements of the settlement, and to prepare new training materials, together with a specific script for customer service, for approval by the attorney general’s office.