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Legislation Plans to End Loopholes to Balance Billing
The Savvy Consumer

By Teresa McUsic,
THE SAVVY CONSUMER

A state mediation process for Texans to fight back against unexpected out-of-network charges on their emergency room bill is getting little use, but state Senator Kelly Hancock (R-North Richland Hills) is working to change that.

Last month, Hancock introduced Senate bill 507, which looks to expand the “balance billing” mediation program he set up through legislation in 2009.

"No Texan looks forward to visiting a surgical center or emergency room," said Hancock, in a statement. "But when that happens, hidden charges and surprise bills should be the last thing on their mind."

Balance billing occurs primarily in healthcare plans that are Preferred Provider Organizations (PPOs) and when patients are directly billed by an out-of-network provider for the remainder or balance of the bill not covered by their insurance.

This practice occurs mostly when PPO patients go to an in-network ER, but later learn that not all of the doctors and services like pathology or anesthesiology are in-network, causing extra out-of-network charges to be filed.

The practice occurs much less frequently if at all with patients covered by HMOs, Medicare and Medicaid because of state and federal laws already in place to stop the practice, said Stacey Pogue, senior policy analyst with the Center for Public Policy Priority in Austin.

The exposure to those with PPO insurance is large, though. More than 3.6 million Texans carry either a PPO or the state employee retirement system plan, which is also susceptible to balance billing problems, Pogue said.

Based on Pogue’s analysis, around 250,000 Texans in these plans will get a surprise, out-of-network medical bill in a given two-year period.

At the same time, fewer than 4,000 Texans have used the mediation system available since the program began seven years ago, according to records from the Texas Department of Insurance, which runs the program.

When the mediation program is used, it is effective, however. To date, 92 percent of all mediation cases were settled before the formal mediation process begins with a simple phone call between the insurer and doctor, Pogue said. Only eight percent of requests went onto the State Office of Administrative Hearings for mediation.

According to TDI data, in 2015 alone mediation saved Texas patients more than $1 million, Hancock’s office said, despite the programs low usage rate.

There are many loopholes in the program, however, some of which Hancock is out to close.

Among them, SB 507 calls to:

  • Expand the TDI mediation system to include all types of out-of-network providers treating patients at in-network hospitals and other facilities. Current law applies only to six types of physicians, including ER physicians, radiologists, anesthesiologists, neonatologists, pathologists and assistant surgeons.
  • Allow mediation for emergency care balance bills at any healthcare facility, whether in or out of network, including free-standing ERs. Currently, the law only covers in-network or preferred facilities. Many of the 300 free-standing ERs in Texas, which have been popping up around the Metroplex, claim to accept “all insurance,” but do not always carry in-network contracts with the insurer, making them ripe for balance billing, Pogue warned.
  • Require more disclosure by healthcare providers and other facilities by requiring the language “This is a balance bill that may be eligible for mediation” on each balance bill.
  • Expand mediation protections to more than 250,000 Texans enrolled in the Teacher Retirement System (TRS-Care) and 430,000 enrolled in the self-funded TRS-ActiveCare program.

Both AARP and the Texas Association of Hospital Plans support the legislation.

An aide in Hancock’s office said the bill is in the Business & Commerce Committee, which Hancock chairs. Similar legislation is being put forth in the House.

Two previous bills, the one that began the mediation process and expanded it in 2011, were both passed with little opposition.

While Texas was the first to address this problem in the nation, it also is among the largest states to continue the problem, Pogue said.

In her study, she found there are more than 300 hospitals in Texas where the hospital itself was in-network, but there was not a single in-network ER doctor available with at least one of the three major insurers studied (Blue Cross Blue Shield of Texas, Humana and United Healthcare.)

Further, Pogue calculated the average percentage of dollars for emergency room physician services billed out-of-network at in-network hospitals per insurer, based on information posted by the insurer (a requirement of Hancock’s previous legislation).

Blue Cross showed the lowest with 42 percent of dollars for ER physician services billed as out-of-network at in-network facilities. Humana was higher at 51 percent and United Healthcare higher still at 70 percent.

While the Hancock legislation is an improvement, some states have virtually eliminated the ability to balance bill, Pogue said.

In Florida, California, New York and Illinois patients are responsible only for their deductible and copayments whether the provider was in or out-of-network. Also, if there is a fight between provider and insurer in those states, the patient doesn’t have to get in the middle. The two parties can ask for dispute resolution, without the patient having to begin the process, Pogue said.

For more on how to use the current state mediation balance billing process go to tdi.texas.gov.

Teresa McUsic’s column appears Saturdays. TMcUsic@SavvyConsumer.net