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January 17, 2019

Is this the simplest way to end 'surprise' medical bills?

Daily Briefing

    As a growing number of patients face out-of-network bills from doctors at in-network facilities, some hospitals are turning to a seemingly simple solution to protect patients (and their own reputations): requiring all doctors who practice at the hospital to participate in the hospital's insurance networks, Tara Bannow reports for Modern Healthcare.

    'Surprise' medical bills, explained in 5 charts

    More patients see out-of-network bills

    Up until about two decades ago, it was expected that doctors would participate in the same networks as the hospitals where they practiced. However, experts say these kinds of arrangements became less common around 2000, as major physician staffing firms started gaining market power.

    Raja Sékaran, a partner with the law firm Nossaman, said, "The medical groups in general have grown." He added, "With growth, they've added other professionals to support them in their business and have asserted themselves more than they have in the past."

    But as more out-of-network physicians practice at in-network hospitals, more patients are facing medical bills from doctors whom they thought were in-network. A 2018 survey from NORC at the University of Chicago found 54% of Americans have received a medical bill for physician services they thought insurance would cover. And 43% have received a bill for hospital or other health care facility care they thought would be covered. 

    How hospitals are responding

    In response to patient dissatisfaction with surprise bills from out-of-network doctors, California-based MemorialCare several years ago required all physicians practicing at its hospitals to be in-network with the same insurance carriers as the hospital.

    MemorialCare SVP John Cascell, said, "We can't have disruption, because ultimately it hurts the patients, and that's what we want to make sure doesn't occur."

    One "downside" to these arrangements for physician groups is that it can place them at a disadvantage in negotiations with insurers, Bannow writes. To help physician groups out, MemorialCare and other hospitals have adopted "reasonableness provisions" into their contracts. These provisions ensure physicians won't have to settle for below-market rates from insurers.

    MemorialCae CFO Karen Testman said the hospital also will help with contract negotiations, when necessary, "If a physician group is at an impasse with a payer, we would certainly do what we could to help move along the process."

    Florida-based Boca Raton Regional Hospital also requires physicians to be in-network and includes such contract language. Dan Sacco, SVP of strategic affairs and payer relations, said the provision might kick in if, for instance, a major insurer wanted the physicians to accept 10% of Medicare rates for radiology services. "We're not going to dislocate our entire radiology group because (an insurer) has been totally unreasonable," Sacco said.

    When this strategy doesn't work

    But in some cases, those clauses don't pan out, and hospitals can't require all physicians to take the same insurance they do, Bannow reports.

    Lee Hirsch, CEO of New Jersey-based St. Peter's Healthcare System, said it can be particularly hard to get large, national physician staffing firms to go in-network with all of the hospital's insurers. In cases where a deal cannot be reached, Hirsch said the health system keeps an active conversation so that patients do not receive surprise bills. He added that he doesn't get many complaints like that, since a new state law that requires providers to tell patients whether they're in-network and disclose costs.

    Rural areas present another obstacle as hospitals may be limited in their negotiations—though Bannow reports the same may be true on the physician side, when there's only one hospital in town.

    Michael Miller, policy director with consumer advocacy group Community Catalyst, said, "It's sort of like this market arms race between the plans, the hospitals and physicians for dominant position in the contract negotiations."

    Steven Shill, national leader and assurance partner in the BDO Center for Healthcare Excellence & Innovation, said that ideally, different parties could sit down and discuss to ensure that each provider in the supply chain is contracted with the correct payers. In the meantime, he said it makes sense for hospitals to take the "play ball or you're not in our networks" approach, since they'll likely face the patient complaints.

    "I think the hospital is ultimately going to become the quarterback in many of these situations, because they have the most to lose," Shill said (Bannow, Modern Healthcare, 1/12).

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