Both the House and Senate unanimously passed identical legislation this month to remove the risk of surprise hospital bills for some Virginians.
Surprise bills, or “balance billing,” often occur when patients seek emergency care at an out-of-network hospital, or receive treatment from out-of-network doctors at a facility that’s otherwise covered by their insurance.
Often patients don’t know they’re receiving treatment from an out-of-network provider. In one case, a Northern Virginia teenager was billed $34,000 after an out-of-network plastic surgeon treated his broken nose at a hospital included on his family’s insurance plan.
“When an individual needs medical care, that person needs to feel confident they can access that care without going bankrupt,” said Sen. Barbara Favola, D-Arlington, who carried the legislation in the Senate. “This has been a long time coming,” she said.
“I am constantly hearing from clients that they receive bills from hospitals… that have little to no correlation with what their expectations were, with what their understanding was with respect to what was or was not covered and what that cost would ultimately be,” said Arlington personal injury attorney Ryan Quinn.
Studies suggest that surprise billing occurs in 20% of emergency-room visits — though the rate could be as high as 42%.
“Overall it’s not a large number of people who are affected [by surprise billing.] But when it happens, it’s dramatic and those are the headlines you see about a patient who’s in terrible debt because of an ER visit to an out-of-network hospital,” said Clifford Deal, M.D., president of the Medical Society of Virginia.
The final version of the bill is modeled after a law adopted in Washington state which says patients who receive out-of-network emergency care can only be charged the in-network rate required by their plan, including their usual copay or deductible. Insurers are responsible for compensating an out-of-network provider at a “commercially reasonable” rate, based on payments for similar services in the same geographic area, according to the bill summary.
However, if the doctor or hospital doesn’t like that offer and can’t reach an agreement with the insurer within 30 days, both sides will make their cases to an arbitrator, who will decide the amount.
Lawmakers hope the 30-day process will discourage hospitals and insurers from seeking further action.
“Patients will never be a part of the arbitration process,” said Del. Mark Sickles, D-Alexandria. “The goal of arbitration is to serve as a powerful backstop and provide an incentive for the health plans and providers to be honest brokers from the start.”
The bill also mandates a “baseball-style” arbitration process, with both parties submitting their final offers without going through multiple series of offers and counter-offers, said Doug Gray, executive director of the Virginia Association of Health Plans, or VAPH. He noted that a key difference between the variation of this law in Washington is that the west coast version requires arbitrators to be attorneys.
The Virginia version does not.
“It looks like the Bureau of Insurance will be trusted in their ranks to write up what the qualifications of an arbitrator will be,” Gray said. “I think the concern was that if you included attorneys and required that training, then the cost would get out of control pretty quickly.”
Though Gray said neither side was eager to pass legislation that introduced a third-party mediator, when it comes to arbitration, the situation could be worse.
“What’s good about this process as compared to others is that it’s a much slower walk to arbitration,” he said. “The operating principle in this case is the best arbitration is the one that’s used the least.”
It’s important to note that the law only applies to patients with state-regulated health care plans. ERISA plans, or coverage provided and paid for by a single employer, have to opt into the law for it to apply.
This caveat potentially leaves up to 3 million Virginians still vulnerable to balance billing. While advocates for the bill have praised the potential thousands of dollars it will save Virginians, Gray said they can expect to pay the same amount for healthcare in different ways.
“A person might be protected if their employers opted in or if they’re fully insured. But all of the other people are now exposed to the provider going out of network and increasing their payments, which will just get hidden in their premium,” Gray said. “We didn’t protect anybody from higher health care costs. We just transferred it to a different place.”
Both Favola and Deal described the final bill as a “compromise” among doctors, hospitals and insurers on behalf of Virginia patients, while addressing insurers’ concerns that simply paying out-of-network providers’ charges would discourage them from joining insurance networks and ultimately push premiums higher.
“Virginians should be able to go to the emergency room or schedule a required surgery without worrying about a medical bill that is beyond their expected deductible or co-pay,” Favola told the Senate.
Virginia’s insurance companies have long preferred legislation that would set fixed rates for out-of-network providers, a price that is usually capped at the rate of Medicaid reimbursement or slightly higher, whereas doctors and hospitals have argued that the proposed rates are unfairly low.
Gray said that regardless of his stance on the final legislation, the bottom line is that patients will no longer be the middle-man between insurers and providers.
“When you back up to the global, this bill stops an egregious bill from being dropped on a consumer who’s fully insured. It absolutely does that,” Gray said.
The legislation will go into effect Jan. 1, 2021.