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Despite having insurance, one in six Americans received a surprise bill for medical services in 2017, according to Kaiser Health News. The study published on June 20th found that nationally millions of emergency visits and hospital stays put people with large employer coverage at risk of receiving a surprise bill.
What is Balance or Surprise Billing?
Balance billing, otherwise known as “surprise medical billing,” occurs when 1) medical care, usually during an emergency, happens with an out-of-network physician or at an out-of-network hospital, or 2) medical care happens at an in-network hospital that unwittingly or unknowingly involved an out-of-network physician. In both instances, the patient’s insurance does not cover the full cost of care, leaving a balance in the medical bill. Hospitals or physicians then charge that balance to the patients, holding patients, rather than the insurers, responsible for the remainder of the cost in a balance bill. Since consumers often don’t know that a provider working at their network hospital or an emergency response entity is out-of-network, these large bills are often a surprise out-of-pocket bill and can be tens of thousands of dollars.
What Does AB 1611 Do?
To strike the practice of balance billing in emergency care, California legislators have put forth AB 1611 to prohibit a hospital from pursuing an insured patient for a bill over and above his or her regular co-pay or deductible charges for emergency and post-stabilization care. Second, the bill would limit the amount that non-contracted hospitals could charge for their fees to 150 percent of Medicare rates or the “average contracted rate” in the geographic area, whichever is higher.
Though the federal Affordable Care Act (ACA) does require health plans to cover out-of-network hospital emergency care at usual and customary rates (UCR), there are no specific standards as to what usual and customary should be. Often plans set their UCR much lower than what a hospital charges leaving patients open to liability for the remainder of the charges. AB 1611 would tidy up the surprise billing for Californians covered by federally regulated health plans and those with coverage regulated by the California Department of Insurance.
Third Party Payor
AB 1611 defines “third party payor” as “any third party payor, including, but not limited to, a health maintenance organization, health care service plan, nonprofit hospital service plan, insurer, or preferred hospital organization, a county, or an employer that by statute or contract is required to cover emergency care.” However, AB 1611 would not apply to a Medi-Cal managed health care service plan or any other entity that enters into a contract with the State Department of Health Care Services. That said, DMHC does regulate Medi-Cal managed health care service plans and can prohibit balance billing for enrollees who are part of such a plan under 28 CCR §1300.71.39.
Other California Balance Billing Protections
California already has protections in place against surprise billing by individual doctors that are not chosen by members but out-of-network. However, the law does not currently apply to entire hospitals that are out-of-network.
Passed by the California Legislature in 2016, AB 72 focuses on the non-emergency scenarios that trigger balance billing. This enacted bill mandates that an insured patient shall “pay no more than the same cost sharing that the enrollee would pay for the same covered services received from a contracting individual health professional” if the patient is receiving nonemergency, covered services at an in-network hospital. In other words, an insured patient will not be billed out-of-network costs even if they are receiving nonemergency care from an out-of-network provider, as long as they are at an in-network hospital.
Resources: Kaiser Health News, AB 1611 legislative information, and Health Access Fact Sheet.
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