Advisors work hard helping their business clients to deal with the complexity and expense of health care insurance benefits as well as with the needs and expectations of their employees. They recognize that their clients’ satisfaction with advisory services will be greatly influenced by employees’ experience with the plan chosen by their employer.
When a plan exposes employees to unexpected out-of-pocket health care costs, the surprise bills can color employees’ perception about their benefits and lead to complaints that may impact the brokers’ relationships with their clients. By keeping up with, and taking advantage of, developments in transparency in health care costs and insurance, advisors can better serve their clients, improve enrollee experience and promote greater member satisfaction.
This spring a new health care cost transparency law taking effect in New York State principally focused on greater consumer protections also will enable advisors to bring greater value to their clients. Enacted with broad support throughout the health care sector, the law requires clear, detailed disclosures about plan terms and operations and limits plan members’ liabilities for emergency and “surprise” out-of-network bills to the amount of their in-network responsibilities. It also creates a new independent dispute resolution process for disagreements between a payer and provider.
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The rules apply to both self-funded and insured plans. Other states are considering similar legislation and even more are watching how the law unfolds in New York. Some experts see the New York legislation as a model for future health care transparency mandates across the country.
New disclosures: apples-to-apples comparisons
The New York law requires health insurers to include in their offering materials and plan documents explanations of their terms and conditions for reimbursing out-of-network services. They also must present detailed examples that compare the reimbursement available for common procedures under their plans with the reimbursement under a plan with a standard, specified reference point for usual and customary costs.
Under the New York law, the standard reference point for apples-to-apples comparisons is the 80th percentile benchmark charge for a service as reported by FAIR Health, an independent nonprofit.
Although the examples mandated by the law are intended principally to support consumer decision-making, they offer advisors a clear and effective tool for helping their clients to evaluate different plan designs. Furthermore, once employers choose their plans, these new disclosures and examples can enhance plan educational materials and programs for employees.
Effective March 31, 2015, the law imposes additional rules:
In providing their required disclosures and examples related to their reimbursement terms, health plans must use the 80th percentile charge benchmark as reported by FAIR Health as a standard reference point;
Health plans must provide publicly available up-to-date lists of physicians, hospitals and other providers belonging to their networks;
Hospitals must list on their websites the standard prices they charge for items and services, as well as all the networks in which they participate;
Hospitals, medical practices, diagnostic and treatment centers must disclose which providers are out-of-network when they are making a referral;
Consumers who made reasonable inquiries to ensure that their care would be “in-network” but who receive a “surprise bill” from an out-of-network provider will be responsible for paying only the amount required by their plans’ in-network rules;
Patients’ out-of-pocket costs for emergency care will be limited to the amount required under their plans in-network rules; and
Payers and providers will have to negotiate their differences with respect to billed amounts exceeding plan members’ responsibility for emergency services and “surprise bills” under the law or seek an IDR (independent dispute resolution) ruling.
Advisors’ value-add: current information for clients
Studies abound about the low level of health care and insurance literacy among consumers. While education efforts usually focus on the enrollment process, plan members also need resources for decision-making at the time they access care.
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For example, a plan member’s cost-sharing responsibilities may influence his or her choice of an in-network or out-of-network provider. Important terms and conditions, such as how a plan determines reimbursement for out-of-network-care, for example, whether it uses a traditional “usual, customary and reasonable” (UCR) formula or a percentage of Medicare fees, are not always fully understood by members.
Insured patients may be willing to pay a little extra to go to an out-of-network doctor who is more convenient or who has been strongly recommended. They even may know that their plan reimburses at 150 percent of Medicare for out-of-network care while at the same time not understanding the level of reimbursement actually allowed by that formula.