Protect yourself from surprise out-of-network bills

Out-of-network providers can work at in-network facilities.

What consumers and lawmakers need to know about surprise out-of-network charges
You can still get a bill from an out-of-network provider even when you use an in-network facility. Jose Luis Palaez, Inc./Blend Images/Getty Images

You're scheduled for surgery at a local hospital, and you're sure you've got all your ducks in a row. The hospital is in your health insurance network, and so is the surgeon. You've even talked with the billing office to make sure that the anesthesiologist is in-network. You know that you'll be responsible for paying your deductible and then the coinsurance on your plan, but you've got a plan with a maximum out-of-pocket of just $3,000 - chosen specifically because you knew you'd probably need surgery.

But then along with the explanations of benefits and expected bills that arrive after the surgery, you also get - surprise! - a bill from an assistant surgeon who helped with your procedure, and isn't contracted with your health insurance carrier. Scenarios like this are far more common than they should be.

There are several factors at play here. First, there's no federal regulation banning out-of-network charges for procedures obtained at in-network facilities. Second, networks are significantly more likely to be narrower now than they were prior to 2014, and third, it's becoming increasingly common for PPO plans to have out-of-network benefits that don't include any cap on out-of-pocket charges.

Narrower networks are increasingly common

The ACA has restricted the ways that health insurance carriers can remain profitable and competitive. Carriers must use at least 80% (85% for large group carriers) of the premium dollars they collect for medical claims - otherwise, they have to refund a portion of their members' premiums.

They also have to accept all applications that come in during open enrollment (or during a special enrollment period triggered by a qualifying event), and cover pre-existing conditions.

Under the new regulations, restricting network size allows carriers to have more bargaining power when setting payment rates with doctors and hospitals, and the carriers can pass those savings on to insureds in the form of lower premiums.

Narrow networks are more common in most areas than they used to be, but their prevalence varies from state to state.

ACA caps out-of-pocket costs - but only in-network

Before 2014,there were no federal regulations in terms of how much a health plan's out-of-pocket costs could be. For the first time, the Affordable Care Act applies limits to maximum out-of-pocket charges (for 2016, the limit is $6,850 for a single individual, and family plans must have embedded individual out-of-pocket maximums). But those limits only apply to in-network charges. There's no regulation under the ACA that requires carriers to limit out-of-pocket costs when people use healthcare providers who aren't in the plan's network. 

It used to be common for PPO plans to cover out-of-network charges with the consumer paying roughly twice as much in out-of-pocket as they would have paid if they saw an in-network provider. But that's becoming increasingly rare. In 2016, 45 percent of newly-available PPO plans have no cap on how much members will owe in out-of-pocket charges if they get healthcare outside the plan's network.


A perfect storm

Those two factors - narrower networks and a trend towards unlimited out-of-pocket spending if you go outside the network - can result in people receiving eye-popping bills for out-of-network charges, even when they thought they were using in-network providers.

Efforts to protect consumers

Although the ACA doesn't help prevent surprise out-of-network charges, some states have taken it upon themselves to address the problem. Nine states have implemented regulations that prevent out-of-network providers from balance billing PPO members in certain circumstances - but the circumstances tend to be relatively limited. 

New York has a particularly robust consumer protection law that went into effect in April 2015 in order to prevent surprise balance billing. And on the federal level level, legislation was introduced (H.R.3770) in October 2015 that would provide similar protections nationwide.

H.R.3770 would eliminate out-of-network balance billing in emergency situations, and would restrict out-of-network providers' ability to balance bill patients who receive non-emergency care at an in-network facility unless the patient receives notice of the situation at least 24 hours in advance of the procedure, and consents to the charges. 

When a patient knowingly seeks care from an out-of-network provider, it's understood that the patient will pay more than he would have at an in-network provider. But a problem arises when patients believe they're incurring in-network charges and then are surprised by out-of-network charges from a provider by whom they may not have even known they were being treated (eg, an assistant surgeon, or a durable medical equipment provider).

If you're scheduling a medical procedure, it's worth having an in-depth discussion with the billing office in advance. If possible, ask them to give you information in writing, including details about any providers who might assist with your procedure and whether or not they're in your health plan's network. 

And if you're concerned about this issue, contact your Senators and Representatives and ask them to support H.R.3770

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