“It’s tim fr halth insuran mpanis t stp this businss prati that shks urpatints with unxptdly high bills fr halth ar thy thught thy’d alrady paid fr.”

— TMA President Josie R. Williams, MD

Over the past ew months, the Texas Association o Health Plans (TAHP) has distributed yers and helda tutorial or legislative sta on balance billing. TheTexas Medical Association (TMA) reviewed TAHP’smaterials and ound its assertions neither accurate noraddressing the real reasons patients like you and yourconstituents incur additional costs or out-o-networkmedical services. TMA believes it is time to set therecord straight. Here are the acts.

Just Lik “Truth in Lnding”—W Nd “Truth in Spnding”

First, there are several reasons a physician may billa patient like you or an out-o-network medicalservice:

•

Your health plan benefts do not cover the medicalcare,

•

A physician who did not have a contract with thehealth plan provided your medical care,

•

You have not met your annual deductible amountor paid your coinsurance portion, or

•

Most importantly, your health plan single-handedly determines what it is willing to pay or your out-o-network care. In many cases, health plansarbitrarily use inaccurate data to establish theirpayment.

“When health plansdon’t bother to puttogether a comprehensivenetwork o physicians,they orce patients to goout-o-network or thecare they need. And whenthe insurance companiesuse their own secretormulas, they dumphigher costs onto patientswho thought they wereexercising their optionsunder their insurancepolicy to see the doctoro their choice.”

—

TMA PresidentJosie R. Williams, MD

Fig. 1

TAHP RHeToRIc No. 1:

When you receive a bill or an out-o-network service,it is solely the physician’s ault.

TMA Rspns:NoT TRUe.

It is the result o your health plan’s benet design or out-o-network services and what your health plan decides to pay or “allow” or your medical service. A physician who is not contracted with the health plan is allowed to bill you or the dierence between the amount o the charge led on theclaim and what the health plan decided to pay, less the patient’s copay or deductible.

Why TAHP Is Wrng

Patients are shortchanged when health plans lowball their payments or out-o-network services. They do this by using their “usual and customary” determinationor payment, and/or manipulating the patients’ “maximum allowable.”Patients choose to pay higher health insurance premiums or two reasons: (1)or the reedom and ability to choose a doctor not in their health plan’s network,and (2) so their out-o-network care is covered when they don’t have access to anin-network physician. Patients are penalized with higher and unexpected out-o-pocket costs when health plans ail to have contracted network physicians avail-able to provide the most basic health care services, such as an elective surgery, orunexpected emergency or hospital care.

Here’s how patients end up pay-ing greater out-o-pocket costs:

Usually a patient’s health insurancecoverage or out-o-network servicesis based on a 70/30 coinsurancebeneft design. The patient assumeshe or she will pay 30 percent o the amount billed or the medicalservice. For example, when a physi-cian fles a $1,000 claim to the healthplan or an out-o-network service,the patient assumes the health plan will pay $700 and the patient $300(Fig. 1). However, this is not the case.

Health plans pay their percent-age o the patient’s claim based on what they determine is the

“maximum allowable amount”

or that medical service.

One major Texas health plan de-fnes the “allowable amount” in thepatient’s beneft handbook as

“the “maximum amount determined by [PLAN] to be eligible for consideration of payment for a particular service, supply or procedure.”

As a patient, does this denition help you understand how the plan deter-mines what it will pay or your out-o-network service? Does it help youknow what your out-o-pocket cost would be? Hardly.

Because the insurer determines thedollar amount or value it will use tomultiply the 70 percent, the insurerdetermines how much it will pay and pushes the remaining expensedown to the patient.I we look at the many and variedmaximum allowable amounts orout-o-network services reported by the fve health plans to the SenateBill 1731 workgroup, we can seehow the plan’s maximum allowabledeterminations aect patients.For example, i we assume all fvehealth plans cover 70 percent o theout-o-network allowable amount, you can see clearly why some pa-tients are balance billed more thanothers. The patient covered underPlan E expects to pay 30 percent o

Fig. 2

the charge, or $300. Instead, the patient will pay 63 percent o the charge, or $626,or an out-o-network charge o $1,000. This is because Plan E pays only $374 o the patient’s claim — that is, the health plan based its 70 percent on its sel-deter-mined allowable amount. Plan E reported that its maximum allowable amount orout-o-network services, on average, is 53 percent o actual billed charges. No otherhealth plan reported limiting its out-o-network maximum allowable to that degree(Fig. 2). At the same time, i you are lucky and happen to be a patient covered under PlanB, you will pay only $343 or the same service because Plan B pays $657, based onits maximum allowable amount o 94 percent.