Surprise medical bills could get axed under proposed law

Aug. 08--After Alyson Kohn gave birth 21 months ago, her infant son had to undergo some unexpected tests and a short stay in the neonatal intensive care unit at Berkeley's Alta Bates Summit Medical Center.

Her baby received a clean bill of health. Kohn got hit with a different kind of bill: more than $2,000 in charges for various services provided by doctors and health professionals who were not in her health's insurance contracted network.

The new mom said she made sure her hospital and obstetrician were in her network, but had no way of knowing in advance that the doctor listed as being in charge of her son's care in the ICU wasn't.

"I never saw the man. I never heard of him. I never knew of him until he showed up on my bill, and he was out of network," she said. "I'm following the rules for the insurance, which I'm already paying through the nose for. And of course I'm a sleep-deprived brand-new mom worried about my son. So I'm not thinking, 'Can you make sure this is in-network?'"

The battle over so-called surprise medical bills is primarily between physicians and health insurers, but patients are getting caught in the middle. Californians blindsided with bills for out-of-network care often feel forced to pay them because they're too sick to fight back or afraid of seeing their credit ruined.

Just because "you shouldn't get a bill doesn't mean you won't get a bill," said Betsy Imholz, director of special projects for Consumers Union, which conducted a study last year that found that one-third of privately insured Americans have received a surprise medical bill.

The nation spent $3 trillion on health care in 2014, according to the Centers for Medicare & Medicaid Services. Out-of-pocket spending by consumers added up to $330 billion, or 11 percent of the total.

Most out-of-pocket expenses come as a set fee known as a co-payment or as coinsurance, a set percentage of the cost of treatment. But bills can be higher than expected for several reasons. One is that most insurance plans charge higher co-payments for out-of-network physicians. Another is the practice of balance billing, where noncontracted physicians charge patients the difference between their fees and what insurance carriers will pay.

California has barred balance billing in emergency settings, but the practice persists among physicians who do not have plan contracts, particularly in such specialties as pathology, anesthesiology and radiology. (Contracted physicians agree to get paid set rates.)

A state bill expected to be heard in Senate appropriations committee Monday is expected to resolve the problem by protecting consumers going to in-network facilities from out-of-network charges.

The bill, AB72, by Assemblyman Rob Bonta, D-Alameda, would keep patients out of the fray by requiring insurers to reimburse out-of-network providers at 125 percent the rate Medicare pays or the insurer's average contracted rate, whichever is greater.

"When a patient does everything right and schedules a surgical procedure in-network and, unbeknownst to them, one or two providers are not in the network, they shouldn't have to be burdened with thousands of dollars of out-of-network charges," Bonta said. The bill "says when you've done all those things right, all you have to pay is the in-network rate."

Bonta has been down this road before. A previous version of the bill failed by three votes on the last night of the legislative session last year. But he said some tweaks to this year's version make him feel confident that this year's bill, which has bipartisan support, will prevail.

Physician specialty groups remain opposed to the bill, unless certain amendments are added. Groups representing pathologists, radiologists and anesthesiologists want AB72 to include provisions that require insurers to contract with enough of these specialists to ensure an "adequate network" for their members.

"We're not happy with the situation. We believe patients should not be stuck in the middle of this," said Bob Achermann, executive director of both the California Radiological Society and the California Society of Pathologists.

Achermann said specialists are reluctant to contract with insurers because they're not reimbursed enough. The dispute extends to how those rates are set. "We're not arguing about reimbursement rates (per se). We're saying, can't we do more to incentivize plans to not have this happen?" he said.

Insurers, for their part, say they support protecting patients from surprise medical bills, but are concerned about some details in the legislation.

"We want to make sure any legislation doesn't provide a disincentive for contracting and make it harder for health plans to get fair prices for consumers in their contracted rates," said Nicole Kasabian Evans, spokeswoman for the California Association of Health Plans.

Evans said the dispute should remain between the plan and the physician. "Hopefully we can get to the place in California where we can make surprise bills a thing of the past," she said.

That can't come too soon for patients like Cassie Ray of Fairfield, who got hit with big bills after undergoing outpatient surgery at an Oakland surgery center as a follow-up to her breast cancer surgery last year.

Ray, the Northern California government relations director for the advocacy affiliate of the American Cancer Society, considers herself a savvy medical consumer and made sure her surgeon and the center were in her network. But she still got a $588 bill for an out-of-network anesthesiologist.

"There was really no incentive for the surgery center to make sure I had an in-network provider because they just passed along the bill and refused to discuss it," said Ray, 56. The anesthesiologist's billing service turned her bill over to collections. She eventually turned to an independent health advocacy service that her husband's company offered to help resolve the dispute, a process that took eight months.

"Most people don't understand what their insurance covers until they have a major medical crisis. During that time, they're so preoccupied and stressed and receive so many bills," she said. "Even if they do understand, they often just pay it because they need treatment."

Kim Rubin's surprise medical bill arrived almost 10 years ago, but it still could happen today.

Rubin, like other patients interviewed for this story, said he checked to make sure his doctor and hospital were in-network when the self-described serial entrepreneur from Menlo Park underwent rotator cuff surgery.

"But then I get this bill from this anesthesiologist and I thought, what is it? How can I have an in-network surgeon in an in-network hospital and get an out-of-network anesthesiologist?" he said.

Rubin, 63, eventually settled the dispute and is uncertain on some of the details, but is clear on the reaction he got when he tried to push back: "When I was talking to the billing person, she said 'Would you prefer the surgery be done without anesthesiology?'"

Victoria Colliver is a San Francisco Chronicle staff writer. Email: vcolliver@sfchronicle.com Twitter: @vcolliver

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