Medical providers must plan now to comply with New York’s new “Surprise Medical Bill” law, which takes effect April 1, 2015. In short, for “surprise bills,” the law caps a patient’s financial responsibility for out-of-network medical services to an amount no greater than if the patient saw an in-network provider. Medical providers who do not comply with the mandatory disclosures under the law will find their bills classified as “surprise bills,” which means that they must pursue arbitration directly with the insurance carrier to obtain reimbursement. For surprise out-of-network medical bills, medical providers may not pursue reimbursement directly from the patients.
New York’s law, the toughest in the nation, was included as part of the Governor’s Executive Budget Bill in 2014 (S.6914, A.9205). The law is a response to endless horror stories from individuals who thought they received treatment from in-network providers, but who later received bills from out-of-network providers such as anesthesiologists, radiologists, pathologists, assisting surgeons, etc., who did not participate in a patient’s insurance plan. After receiving meager, if any, reimbursement from insurers, these out-of-network providers then send large bills to patients, who must pay out of pocket. Various consumer advocacy groups claim that surprise medical bills have been one of the largest causes of consumer bankruptcy.
The law places new requirements on insurers to ensure that they provide an adequate network of providers for members to receive medical care, as well as “fairer” out-of-network reimbursement methodologies. Insurers in many cases have moved away from reimbursing out-of-network services as a percentage of the “usual and customary rate” and have instead adopted a percentage over Medicare rate reimbursement, such as paying 140% of the Medicare rate for a particular service. Using the Medicare rate scale, out-of-network services now result in much lower reimbursements from insurers, leaving patients liable for much larger coinsurance or “balance billing” liabilities, since medical providers are required to bill patients for the balance of what insurance does not cover for out-of-network services.
In order to receive greater reimbursement for out-of-network services, medical providers must preserve their ability to seek full reimbursement from patients after insurance has paid its portion. To preserve this ability, providers must comply with the New York State Public Health Law, which added a new Section 24.
This section provides:
- Providers shall disclose to patients or prospective patients in writing or through an internet website the health care plans in which the provider participates and the hospitals with which the provider is affiliated. This disclosure must be done prior to providing non-emergency services, and the information must be conveyed verbally at the time an appointment is scheduled;
- Providers who do not participate in a patient’s insurance plan shall, prior to providing non-emergency services, inform a patient that the amount or estimated amount that the provider will bill the patient is available upon request; and upon such a request the provider shall provide such an estimate in writing to the patient. The provider must also identify insurance plans in which physicians at a hospital who are reasonably expected to provide services to a patient, such as anesthesiologists, radiologists, and pathologists.
While these disclosure requirements seem onerous, failure to comply will likely lead a provider’s out-of-network bill to be classified as a “surprise bill,” and thus require the provider to seek reimbursement from the insurer only.
A “surprise bill” is defined in the new Article 6 added to the New York State Finance Law. Section 603(H) provides:
“Surprise Bill” means a bill for health care services, other than emergency services, received by:
- An insured for services rendered by a non-participating physician at a participating hospital or ambulatory surgical center, where a participating physician is unavailable or a non-participating physician renders services without the insured’s knowledge, or unforeseen medical services arise at the time the health care services are rendered; provided, however, that a surprise bill shall not mean a bill received for health care services when a participating physician is available and the insured has elected to obtain services from a non-participating physician;
- An insured for services rendered by a non-participating provider, where the services were referred by a participating physician to a non-participating provider without explicit written consent of the insured acknowledging that the participating physician is referring the insured to a non-participating provider and that the referral may result in costs not covered by the health care plan; or
- A patient who is not an insured for services rendered by a physician at a hospital or ambulatory surgical center, where the patient has not timely received all of the disclosures required pursuant to Section 24 of the Public Health Law.
Providers should prepare prior to April 1, 2015 in order to avoid having their bills for out-of-network services falling under the “Surprise Bill” definition in the new law. Proactive steps include:
- Update your practice’s website and marketing materials to include all insurance plans in which a practice participates;
- Prepare office staff to make required disclosures when booking appointments;
- Get familiar with plan affiliations of physicians to whom you regularly refer patients;
- Prepare cost estimates for commonly-treated conditions to provide to out-of-network patients.