Medical Bills and Arbitration: Surprise Billing is Coming to an End, What is the Solution?

Individuals have the power to make contracts with people over almost anything, so long as all parties mutually agree and are aware of the stipulations within the agreement. The issue with medical billing in an emergency is that people are agreeing to receive care from professionals when they are not in an equal bargaining position, to refuse care could result in death in the moment for some. 

Individuals and providers attempt to avoid the complications of this dynamic by contracting with insurance companies to cover their cost of care and be the negotiating party between the insured and the professional. Not all providers have a contract worked out with all insurance companies. 

For providers to be within an insurance network they have to apply and meet specific requirements that can be different for each company. In an emergency, there will be doctors and other providers that will see a patient who may not be within the insured network at the time of service. When a provider is out-of-network, care from that provider is not covered by insurance companies. Even when a specific hospital is in-network, they may have professionals or contractors who work in the hospital that are out-of-network. 

In an emergency, this leaves the patient with “Surprise Bills” because they have no prior knowledge of the possible cost, most cannot refuse care in the moment, and they have no way to negotiate the costs prior to care. States have implemented regulations that do not allow these “Surprise Bills”. This stop-gap measure should encourage hospitals to ensure that all of the employees and contractors who work for them are within the insurance networks that they contract with to avoid these billing hiccups. 

Unfortunately, surprise bills still happen. To settle these surprise bills, insurance companies will typically negotiate with the provider to pay them their standard costs of coverage, which is lower than the charged amount. The provider accepts that payment and then tries to “balance bill” with the patient to get more for service. When surprise billing is against state regulation, providers are not authorized to balance bill in full. In response, some providers have taken to use arbitration and mediation, known as alternative dispute resolution in NY. This is when negotiations can get tricky. 

Alternative dispute resolution is a method that providers use in an effort to collect more from the bill. Under New York’s law, the patient is held harmless, and only has to pay as much of their deductible, copay or coinsurance as if they would when the doctor is in-network. If the insurance company and the physician can’t agree on how much of the rest of the bill to pay, they can take the issue to arbitration after mediation. One of the struggles with this is that the arbitrators usually have a limited background in medical insurance negotiations or billing and rely on the guidance from the law. In NY it suggests that patients pay the 80% percentile of the rates submitted by the medical providers. 

This is way above the standard costs of care that is averaged between insurance companies and providers, as well as, standard medicare rates. Thereby, it leaves the patient to cover costs that are higher than what a physician would normally receive from any other party until their standard deductible is maxed out for the year. In 2015, NY only had 115 cases that went to arbitration for balance billing, the practice is on the rise as 1,014 cases were held in 2018. More experts are coming to the forefront to advocate that the reasonable standard costs of care should be what arbitrators use as their guidance for settling these disputes, for now the dynamic remains the same. 

Negotiating medical bills during the mediation phase and before they even make it to an arbitrator is where the patient has the most negotiation power to  pay the standard cost of care rates. It helps to have it properly outlined for the biller and for the patient to know their rights against balance billing beyond their standard deductible when they receive care in an emergency at an in-network care facility from an out-of-network provider. This is where a medical billing advocate can step in and help patients understand the standard cost of care and how to connect with the right people to pay a bill before it is taken to arbitration.        

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