Big insurers faulted for 'surprise' out-of-network medical bills

Major insurance companies in New York are to blame for so-called "surprise" out-of-network bills that often result after scheduled, non-emergency and insurer-approved medical services, according to a state investigative report.

After reviewing 2,000 complaints it received last year and questioning the 11 big companies that provide health plans in the state, the Department of Financial Services (DFS) found that many patients were hit with out-of-network bills from specialists because insurers didn't clarify which doctors would be involved in their care or how much that care would cost, reported the New York Daily News.

The problem is that many doctors--orthopedic surgeons, plastic surgeons, neurosurgeons, anesthesiologists and radiologists, in particular--don't participate in some health plans and, therefore, set their own rates. Although insurers still pay these non-participating doctors, it's usually much less than in-network doctors. The remaining cost is billed to patients, who often are unaware of the additional charge, according to the Albany Times Union.

In some cases, patients were charged $233,188 for orthopedic surgery, $282,500 for neurosurgery and $200,000 for plastic surgery. These three specialties accounted for 50 percent of the surprise bills that patients complained about to DFS.

DFS Superintendent Benjamin Lawsky specifically called out health insurers in the New York Daily News article, quoting one company's complicated explanation of how it met state disclosure requirements. "'Reimbursement is based on a percentile of national prevailing charge data compiled for a specific procedure and adjusted for geographic differences,'" the report stated. "Unfortunately, language such as this does not provide consumers with meaningful information," DFS wrote in response.

As a result of his investigation, Lawsky now is calling for legislation that would require insurers to provide more notification about out-of-network doctors, establish network adequacy requirements and implement a simplified claim submission process, according to Crain's New York Business.

Insurers responded favorably to the report. "These egregious practices contribute to the rising cost of health insurance for New Yorkers," New York Health Plan Association President Paul Macielak said, adding that the group will work with Lawsky to enact policies to protect against excessive out-of-network billing without triggering premium increases, reported Crain's.

Aetna, which is involved in two separate lawsuits against New Jersey doctors and California surgery centers, responded to the DFS report, according to Crain's. "We applaud the governor and the DFS for their focus on this very serious issue, and we look forward to working with others toward a viable solution for New York's health care consumers," Steve Logan, Aetna's president of the New York market, said.

To learn more:
- see the DFS out-of-network report (.pdf)
- read the Albany Times Union article
- check out the New York Daily News article
- see the Crain's New York Business article

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