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The Golden State Joins Five Others in Comprehensively Protecting Healthcare Consumers from Certain Balance Billing Practices

In our era of managed healthcare plans, insurers and employer sponsors of group health plans go to great lengths to encourage their enrollees to use in-network hospitals and doctors. In-network healthcare providers have contractually agreed to accept smaller payments in exchange for their services, and to not bill the patient for amounts not paid by the insurer or healthcare plan, except to account for the patient’s deductible or other cost-sharing obligations like copayments and coinsurance.

But patients who arrive at an in-network hospital expecting to be treated by an in-network doctor sometimes find that they were treated – without their knowledge – by an out-of-network doctor. That doctor is not bound by a network contract. Except where the care was emergency care, the doctor is free to bill the patient whatever the provider wants to bill and to “balance bill” the patient for whatever portion of the bill the insurer or health plan doesn’t pay.

California recently joined five other states in implementing comprehensive protections for health consumers from certain balance billing practices.

Lockton comment: Other states with comprehensive protections are Connecticut, Florida, Illinois, Maryland and New York.

The California Law

The new law, Assembly Bill 72 (AB 72), applies to services rendered on or after July 1, 2017. It’s designed to protect patients who, while receiving medical care at an in-network healthcare facility (hospital, clinic, outpatient surgical center, etc.), are treated by an out-of-network doctor. We refer to “doctor” in this blog, but we mean any individual healthcare professional.

Lockton comment: Under the Affordable Care Act, insurers and healthcare plans are required to treat emergency care as in-network care, even if provided at an out-of-network facility. That rule protects the patient from having the plan decline to cover the emergency treatment if it would otherwise be covered in an in-network facility.

But the rule doesn’t protect the patient from being balance billed by the out-of-network facility or emergency room doctor. Many states, including California, already have laws protecting patients from balance billing by an out-of-network emergency care facility or provider. So AB 72 is most relevant with respect to non-emergency care provided by an out-of-network doctor at an in-network healthcare facility.

AB 72 says that, unless the patient agrees otherwise in writing, the out-of-network doctor is required to accept, as payment in full, what he or she would have received had he or she been an in-network doctor. So while the patient might still owe his or her deductible and standard copayment or coinsurance amount, the doctor can’t bill the patient more than that.

There’s always a Catch (or Two)

The new law allows an out-of-network doctor to ask the patient for his or her agreement to pay the doctor a larger amount. But the doctor must ask for this consent in writing, at least 24 hours before providing treatment, and can’t do it when the patient is being admitted to the facility or just before undergoing a procedure. The doctor must provide an estimate of what he or she expects the patient may have to pay. The patient is not required to agree.

Lockton comment: What if the patient says “no”? The doctor could, we presume, provide the care in exchange for in-network payment rates, or decline to provide the treatment and the patient could ask the facility to provide treatment only by in-network doctors.

In addition, the law does not apply to self-insured employer plans, or to insured plans not subject to California law.

What if the Doctor Bills the Patient Anyway?

Unless the patient agrees to pay the doctor more, the doctor can’t bill the patient an amount that exceeds what the patient would owe if the doctor had been an in-network doctor. And if the doctor does so, and the patient pays the doctor, the doctor must refund the overpayment, with interest.

Voluntary Receipt of Out-of-Network Care

AB 72’s protections don’t apply where the patient voluntarily seeks non-emergency treatment at an out-of-network facility.

Other States…and a Federal Rule?

Almost 30 states have considered balance billing legislation in the last several years, and seven states have recently imposed rules relating to balance billing. Some of the new laws simply encourage greater transparency, while others prohibit balance billing altogether.

Federal legislators have considered similar legislation, but to date there has been no federal solution.