Last month, a woman sued a health plan, claiming that she was intentionally misled about which physicians were participating providers in the company’s online health insurance exchange established under the Affordable Care Act.  The petitioner alleged that the plan displayed the names of the physicians on its website, and that she even checked with the plan to ensure that those physicians were in the network.  Unfortunately, after she and her family were treated by those providers, she received an out-of-network bill.

Starting in 2015, New York consumers will have an added layer of protection against out-of-network billing when healthcare providers will be obligated to provide patients with their plan affiliations prior to the provision of non-emergency services, and verbally at the time of the appointment. 

Known as the “Emergency Medical Services and Surprise Bills” law, new legislation passed in the 2014-15 New York State budget includes greater transparency of out-of-network (OON) charges and network participation, as well as broader availability of a patient’s right to go OON if the insurance plan’s existing network is insufficient and, most heralded, safeguards against “surprise bills” from OON physicians. Below are some of the key provisions in the new law.

Out of Network and Surprise Bills

Consumers who receive OON emergency services will not have to pay more than their usual in-network cost sharing and/or copayment amounts, regardless of the network status of the physician. Similarly, consumers who receive OON non-emergency services because there were no adequate in-network physicians available, or because they received a referral to an OON provider without the proper disclosures, will not have to pay more than their usual in-network co-pay/cost-sharing.  The disputed bill must be negotiated directly between the physician and the health plan.

The law also makes bills for emergency services from OON physicians and “surprise bills” subject to an independent dispute resolution (IDR) process after an insurer has made an initial “reasonable payment” for such care.  A surprise bill is a bill received by (i) an insured for services rendered by an OON physician where a network physician is unavailable or the patient had no knowledge that the physician was out of network, or did not consent to the referral of the OON physician; or (ii) an uninsured patient who did not receive the required disclosures (discussed below).

As part of the IDR entity’s review, the IDR will consider, among other things, whether there is a “gross disparity” between the fee charged by the physician as compared to other fees paid to similarly qualified non-par physicians in the same region, the level of training, education and experience of the physician, and the circumstances and complexity of the case, including the time and place of the services.  Decisions by the IDR entity must be made within 30 days of the dispute’s submission.

Provider Disclosures

Healthcare providers, including group practices and diagnostic and treatment centers on their behalf, must provide patients with their plan and hospital affiliations prior to the provision of non-emergency services and verbally at the time of the appointment.  If a provider is not in the patient’s network, the provider must inform the patient prior to providing non-emergency services that the amount or estimated amount for the service is available upon request and if requested, must be disclosed with a warning that costs could go up if unanticipated complications occur.

Physicians must provide patients with the name and other information of any other provider scheduled to treat the patient in the hospital and the plans in which the provider(s) participate.

Finally, hospitals must provide on their websites the health plans in which they participate, a warning that (i) charges for physicians who provide services in the hospital are not part of the hospital’s charges, and (ii) physicians who provide services in the hospital may not be in the same networks as the hospital, and the names of contracted specialty practice group providers and how they can be contacted to determine their plan affiliations.

Plan Disclosures

Insurers are currently obligated to give consumers a provider directory that is updated annually and that includes the name, address, telephone number and specialty of all participating providers, facilities, and, in the case of physicians, board certification.  Under the new law, insurers also will be obligated to have information in writing and on the internet that allows consumers to estimate anticipated out of pocket costs for OON services in a particular geographic area based on the difference between what the insurer will be reimbursed for the OON services and the usual and customary costs for the OON services.

Insurers must also disclose whether a provider scheduled to provide services is in-network and, with respect to OON coverage, disclose the approximate dollar amount that the insurer will pay for the particular OON service (but the approximation will not be binding on the insurer).

Network Adequacy and OON Coverage

The new law requires all health insurers, not just HMOs, to have adequate networks to ensure greater choice and access to care.  If a plan’s network does not have a geographically accessible provider with appropriate training and expertise to treat a patient’s condition, the patient can seek services from an OON provider without incurring additional out-of-pocket expenses.

If the plan covers OON care, it must make available one option for coverage at 80% of “usual and customary costs” (and if the plan doesn’t offer any OON coverage the Superintendent may require such coverage at 80% of U&C costs unless it will cause undue hardship on the insurer).  “Usual and customary cost” is defined as the 80th percentile “of all charges for the particular health care service performed by a provider in the same or similar specialty and provided in the same geographical area as reported in a benchmarking database maintained by a nonprofit organization specified by the superintendent.”

Denials based on OON coverage – where the plan disagrees that there is no in-network provider that can meet the insured’s medical needs – can go through the state’s external review process.

The law, which will take effect on April 1, 2015, will require plans and providers to make adjustments to their policies and practices.  While the law is aimed at addressing the inequities that come with receiving surprise medical bills from OON providers, it will be interesting to see how the law plays out on the provider side, particularly with regard to providers’ choice to remain out-of-network, whether the law acts as a deterrent to their provision of emergency care, and their ability to amicably negotiate disputes with the health plans.