Medical Billing Practices facing legislative scrutiny

by Shellie Pruden Director of Medical Practice Relations

There are two kinds of balance billing. Both are legal and acceptable, confusing to patients, and causing enough stir that the Legislature likely will attempt to govern a physician practice’s ability to do it.

In-network balance billing is a bill sent to a patient after the practice receives payment from the insurer. It includes any copay, deductible, or coinsurance that is the patient’s responsibility. Billing for this portion of a patient’s services is not only expected, it’s required by the contract between the physician and the health plan. Although patients sometimes are confused when they receive this bill, it’s fairly easy for the insurance company or physician’s office staff to explain. Organized medicine has fought for years to increase a physician’s ability to access deductible and coinsurance information at the time of service, but antiquated computer systems and complicated claims-paying processes often prevent a plan from providing accurate information at that time.

Out-of-network balance billing is the other billing practice the Legislature is contemplating. This practice of billing the patient the difference between the amount the health plan pays for a service and a physician’s billed charges generates a much more emotional response from the patient. This billing practice occurs because the health plan was unable to come to a contractual agreement with the physician delivering the service. These negotiations fall apart for various reasons, including years of ongoing negotiations that never come to an agreement, lack of contract compliance, and refusal to negotiate terms or price. The majority of practices make good-faith efforts to negotiate because of the complexities of being out-of-network. It’s more difficult to get information and authorizations from the health plan to provide needed services, it compromises referral networks, and it’s far more difficult to collect from patients. A physician’s desire to eliminate these hassles makes him continue to attempt to contract. Patient dissatisfaction and financial exposure is the only incentive to keep a health plan at the negotiating table.

The Legislature’s concern is with the bills received by patients who had no opportunity to choose an in-network physician. Radiologists, anesthesiologists, pathologists, and emergency room physicians are taking a tremendous amount of heat for not contracting with the same health plans as the hospitals in which they provide services. But the issue has far greater reach than these specialties; it extends to specialties that do consultations in the hospital and to many subspecialists. Protecting a physician’s ability to collect full-billed charges when seeing patients out-of-network could be a significant challenge this session.

Insurance companies want to cap their financial exposure for patients seen in areas with incomplete networks. They’ve called on their professional associations to share horror stories in order to prove their point. One example recently circulated is of in-network physicians billing patients the difference between the contracted rate and billed charges. That discount was agreed upon by both parties, and to bill the patient the difference is a breach of contract and is unethical.

Another unethical billing practice that health plans cite is where physicians bill for services they have not delivered or where they misrepresent the services they did provide. A broadly applied example is intentional upcoding. (It is an excellent business practice to audit coding annually to ensure correct coding practices. Update your coding manuals annually and consider having a certified coder on staff, whether it’s hiring someone already certified or having one of your staff members become certified.) Although some practices intentionally upcode to maximize reimbursement, more often, practices undercode and walk away from legitimately earned revenue. The Legislature doesn’t hear about the latter cases.

In addition, TDI receives a number of complaints each year regarding the return of overpayments to payors or patients. It’s unethical to keep these overpayments; the net effect of keeping this money is charging more than the contracted rate for the service delivered.

Although the above examples seem clear cut, the danger of illicit billing practices lies in more gray areas. This includes direction of patients to out-of-network facilities when in-network facilities are available. Legislators are hearing about physician-owned facilities that are in-network, yet the physicians remain out-of-network in order to capture higher reimbursement.

In a unique turn of events, health plans are providing examples to their professional organizations and legislators of physicians who refuse to negotiate in good faith. This refusal to negotiate forces the plan to sell an insurance product with an inadequate network and forces patients to pay more out of pocket for their healthcare services. The Texas Department of Insurance recently published proposed rules that require health plans to hold harmless HMO patients who were forced to go out-of-network for services. These rules do not cover PPOs or any other type of insurance coverage.

Health care is a complicated business. Legislators will be calling on physicians and their business managers to help them understand the nuances of network adequacy and the resulting out-of-network balance billing before passing any bill. Dallas County Medical Society and Texas Medical Association will keep you informed as the issues progress. If you’d like to be added to an email alert system, contact Shellie Pruden, DCMS director of medical practice relations, at shellie@dallas-cms.org.