Surprise Medical Bills
Download our Surprise Billing Policy Brief here.
Surprise bills have become a hot topic within the healthcare industry recently. A surprise bill can be defined as passing along the difference between the total cost of care and what is covered by insurance to patients. This often leaves patients with a large out-of-pocket expense for emergency care.
To better understand surprise billing and why it exists, TAFEC has identified two primary causes for surprise billing.
No Definition for “Usual and Customary”
Currently, the Texas statue reads that insurance providers are required to reimburse emergency health care providers at the “usual and customary rate” for emergency care. However, there is no definition or uniform guidelines for insurance companies to follow, which has allowed insurers to determine their own arbitrary rates. While some insurers provide adequate reimbursement for services, others are reimbursing at a much lower percentage, leaving patients to foot the remainder of the bill. Defining a “usual and customary rate” is necessary to hold health plans accountable, ensure healthcare providers are paid sufficiently for their services, and most importantly, reduce out-of-pocket costs for consumers.
Disregard for Existing Emergency Care Statutes
The Affordable Care Act defined emergency care as an essential healthcare benefit. A person cannot be penalized for receiving emergency care at a freestanding emergency center. This statute is also a component of the prudent layperson laws, which requires insurance providers to pay at the in-network benefit level for emergency care when a person believes his or her life is in danger. However, many health plans are not following these regulations and pay at the out-of-network rate.
Because there is no established industry standard for reimbursing healthcare providers, health plans are lowering freestanding emergency center reimbursement rates to unacceptable levels. As a result of the insurance provider’s predatory underpayment, a freestanding emergency center’s only option may be to seek reimbursement for their services from the patient.
Solving Balance Billing
TAFEC would like to present a potential solution that would eliminate the need to balance bill patients altogether. The solution involves defining a “usual and customary” reimbursement rate that takes into consideration the average charges for specified procedures by FEC providers, and then assigns a uniform reimbursement percentage by insurers to those providers.
Once all stakeholders agree upon reimbursement rates, these newly defined rates would then be enforced for both insurers and healthcare providers. As long as the established reimbursement rates are met, FEC facilities that accept the rate would legally forfeit the right to balance bill a patient.
Additionally, TAFEC would like to see the Texas statute updated to reference these newly defined “usual and customary” reimbursement rates.
This proposed solution will reduce the time and resources associated with mediation and remove patients from the process altogether. By taking this initiative to start a dialogue, we hope that insurance providers and legislators will come to the table in good faith to eliminate this grey area and make meaningful changes that protect Texas consumers.