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Industry Insights

The 101 on surprise medical bills

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You may have heard that a small percentage of New Jersey physicians do not participate in some insurance networks. You may have even been billed by one. I hope to clarify why you get billed.

If physicians are in network, they face onerous contract terms, low payments and constant second-guessing of treatment plans, including denials of coverage for medicine and procedures. If they are out-of-network, they risk even lower payments.

Underpayments by insurers are systematic in New Jersey and nationally. Insurance companies shirk payment responsibilities until they are caught. For example, in 2007, Aetna was assessed almost $10 million for underpaying physicians; $530,000 for "failure to limit a covered person's liability for services rendered by non-participating providers;" another $530,000 for failing to keep members free from balance bills, $650,000 for misrepresenting their obligation to pay out-of-network claims; and almost $8 million for failing to pay claims fairly, promptly and in good faith. Though the final settlement amount was less, these multi-million dollar settlement costs are much higher than sporadic payments that must be made for complicated out-of-network surgeries. Along with high administrative costs (the U.S. is highest in the world) and bloated executive salaries, these health insurance industry practices are what truly cost consumers.

In 2015, Oxford Health Insurance Inc., Oxford Health Plans (NJ) Inc. and UnitedHealthcare Insurance Co. used the same pattern of underpayments, failing to provide coverage for their members. They deliberately misrepresented patient cost sharing and underpaid doctors, forcing patients to pay the bills instead. Again, it took action from DOBI to stop the behavior, with a $300,000 fine.

The most insidious underpayment scheme involved Ingenix. Ingenix was the database used to determine physician payments by several insurance companies. The database was rigged to underpay providers, again leaving patients to pay the bills. UnitedHealthcare, which owned and operated Ingenix, paid $350 million in a settlement when the scheme was exposed in 2009. The case made national headlines. This makes the 2015 scheme by UnitedHealthcare that much more brazen.Aetna and Horizon Blue Cross and Blue Shield of New Jersey were also punished for using the database.

A more recent example is the new policies of small employer and individual plans in New Jersey. They recently slashed out-of-network provider payments, knowing patients will have to pay more, even after choosing expensive plans to cover this care. This is also being litigated.

The latest example shows that insurance companies are still deliberately underpaying emergency room physicians under a federal law. Like New Jersey laws, this federal law aims to protect patients from physician bills. But, insurers need to be reminded to use premium revenue to pay for care. They are again violating law, letting patients pay the bills. Physicians filed suit this year to protect their patients.

As if underpayments were not enough, Horizon Healthcare of New Jersey Inc. was fined $150,000 in March for attempting to take back physician payments without providing statutorily required notice and appeal rights. Physicians constantly face payment insecurity.

These examples involve multibillion-dollar insurance companies that push costs on providers and patients. It is no surprise physician morale is dangerously low, with suicide rates going up, and patients are delaying care.  We all pay for health insurance to cover our care. Are you getting what you pay for?

Larry Downs is CEO of the Medical Society of New Jersey.

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