Major surgery or a hospital stay can be stressful enough, even when you have insurance. But insured Californians who seek treatment at a clinic or hospital that is in their insurance plan’s network must often also deal with the anguish caused by huge unexpected costs.
The culprits: physicians who are part of the treatment team, but not part of your health plan’s network. Because the insurance company won’t pay their full charges, these doctors bill directly for the difference, sometimes for hundreds or even thousands of dollars.
Consumer advocates, insurance companies, hospitals, labor unions and business groups are uniting behind legislation that would end this practice. Under fierce opposition from doctors, the proposal stalled just short of passage in the Legislature last year but faces another vote soon.
“We think it’s unfair,” says Anthony Wright, director of Health Access California, which sponsored the legislation. “It is really important that we resolve this issue and we resolve this issue this year.”
The experience of Sarah Ross of Humboldt County illustrates the problem. Before having a baby, Ross researched the potential costs and arranged to give birth in a hospital that was part of her plan’s network. But after she had a cesarean section, she received a rude surprise – a bill for more than $1,000 from the anesthesiologist.
“Since I had already paid down the deductible, I expected to pay only 20 percent,” she said. But Ross was billed far more because the anesthesiologist was not part of the network.
The proposal backed by Health Access and other groups, Assembly Bill 533, would ban doctors or insurance companies from billing patients like Ross extra as long as they get their care from a hospital in their network.
The new law would allow the health plan to pay these doctors based on rates approved for the federal Medicare program. An independent appeals board would settle any disputes. This seems like common sense, but it’s possible the change could cause unintended consequences, and that’s why doctors say they oppose it.
Currently there’s a delicate balance in negotiations between insurance companies and doctors. Insurers try to drive down costs so they can offer consumers cheaper premiums, but the plans have to offer doctors high enough fees to entice them to join their networks.
Most doctors, lacking much bargaining power, have to settle for whatever the insurance companies decide to offer. But doctors who do most of their work in hospitals – anesthesiologists, for example, or radiologists – have more leverage. In many cases they refuse to join an insurance plan’s network because they know the health plans have no alternative but to use their services, and then they can bill what they consider a fair price.
If their rates are reduced to what Medicare pays, it’s possible that fewer of these specialists will work in some hospitals. This could cause shortages, and delays in scheduling surgeries.
But Wright notes that the state already has something similar in place for emergency room services, and he says that process has not led to physician shortages. It’s simply not fair, he says, to penalize patients for the failure of insurance companies and doctors to reach an agreement on their fees.
“We just think it’s inappropriate to use the patient as the leverage point, as the hostage, to seek higher payments,” he says.
Daniel Weintraub is editor of the California Health Report. He can be contacted at firstname.lastname@example.org.