Florida Consumer Advocate Urges Governor to Veto Managed Care
Legislation
FOR IMMEDIATE RELEASE: May 13, 2009 CONTACT: Sean Shaw 850-413-5923
FLORIDA CONSUMER ADVOCATE URGES GOVERNOR TO VETO MANAGED CARE LEGISLATION
TALLAHASSEE-Florida’s Insurance Consumer Advocate, Sean Shaw,
sent a letter to Governor Charlie Crist today urging him to veto
SB 1122, managed care legislation.
“Allowing SB 1122 to become law would be a backward step from
attempts to corral the spiraling cost of health care and more specifically,
the direct cost to consumers,” Shaw said. “Florida would be heading
in the wrong direction and at the wrong time.”
A copy of ICA Shaw’s letter is attached below:
Dear Governor Crist,
I am writing to urge you to veto SB 1122. Supporters of SB 1122
claim that all the bill does is change who the insurance company
sends the check to for payment of covered medical services rendered
by an out-of-network medical provider. Instead of sending a check
to the insured patient, the check will be sent directly to the provider
of services.
If it were this simple, no one would be opposed. Yet insurers
and employers who provide group health insurance to their employees
believe this bill will increase health care costs and health insurance
premiums. I will leave it to insurers to explain why they think
it will increase their costs and therefore premiums for employers
and employees. The issue that concerns me the most is “balance billing.”
First of all though, it needs to be pointed out that the alleged
justification for this bill is that many consumers do not pay their
medical bills even when they have insurance. In other words, the
insurance company pays money to the policyholder in order for the
policyholder to pay a medical bill and the policyholder just keeps
the money. Except for a single provider of drug and alcohol rehabilitation
services, there was no evidence or testimony that this is in fact
true. Supporters of the bill failed to show that it is justified.
This bill applies to health insurance plans that utilize a "preferred
provider organization" (PPO) to provide medical benefits to their
policyholders. A PPO consists of physicians, hospitals and other
health care providers that are under contract with an insurer. Under
the terms of the contract, the providers agree to accept reduced
rates of payment from the insurer. The providers also agree that
they cannot bill patients in the plan for any additional amount
above what they are paid by the insurer.
The question of balance billing arises when patients receive
treatment from providers who under contract with their PPO, usually
through no fault of their own such as in emergency situations. Under
current law and under this bill, a health care provider who is not
in the insurer’s PPO can receive payment directly or indirectly
from the insurer and then bill the patient more on top of that payment.
This is the practice referred to as “balance billing.”
Instead of encouraging this practice, which this bill does, the
Legislature should prohibit this practice altogether. This is not a
new concept. Under Florida law, if a health maintenance organization
is liable for services rendered to a subscriber by a provider, regardless
of whether a contract exists between the organization and the provider,
the subscriber is not liable for the payment of any fees to the
provider (Section 641.3154, Florida Statutes.) Providers are prohibited
from collecting or attempting to collect any fees from the subscriber.
In other words, whether under contract or not, a provider who provides
services that are covered by an HMO may not balance bill the patient.
Federal law prohibits balance billing by providers of services
covered by Medicare and Medicaid.
As an example of the unfairness of balance billing, a business
owner, who purchased a health care plan for his 250 employees, contacted
the Office of the Insurance Consumer Advocate for assistance on
a claim. The man’s son had a medical emergency. The child was air
lifted by air ambulance to the PPO's contract facility where emergency
surgery was performed.
The PPO did not have a contract provider for land or air ambulance
services although such services were covered by the policy. The
ambulance service submitted a bill for $12,000 to the insurer. The
insurer determined that $4000 was the usual and customary fee and
paid this amount. The ambulance service billed the balance of their
fee, $ 8,000, directly to the policyholder.
The PPO did not have contract for anesthesia services needed
for the surgery, even though the services were delivered in a PPO
facility. The insurer paid $13,387.32 for anesthesia performed by
a non-contract anesthesiologist. The physician billed an additional
$5,170 in charges to the policyholder.
There was nothing that we could do for this consumer. The consumer
was on the hook for over $13,000.
The scope of the network of preferred providers in a PPO is not
subject to review or regulation – i.e., there is no requirement
of law or regulation that a PPO network must include every provider
specialty or contract service that could reasonably be expected
to be required in order to deliver the benefits of a "major medical"
health insurance contract. As a result, consumers who receive services
from out of network providers usually haven’t done so by choice,
contrary to statements by supporters of the bill.
A common problem for PPO’s across the country is the refusal
of radiologists, anesthesiologists, pathologists and emergency service
providers to participate in a PPO even when working within a participating
hospital. Radiologists, anesthesiologists and pathologists are hospital
based physicians but they are almost never hospital employees. Therefore,
they are not subject to the hospital’s contact with the PPO. Some
commentators refer to this situation by the acronym “RAPE.” In instances
of emergency care, patients can not reasonably be expected to exercise
"choice" of provider services or treatment. They are shocked when
they receive bills from providers who they thought were covered
by their insurance plan.
Supporters of the bill claim that the bill doesn’t impact these
problems. They are certainly correct that the bill does not fix
the problem with balance billing. In fact, the supporters successfully
fought off repeated attempts to amend a balance billing prohibition
onto the bill. They wrongly claim that the problem will not be exacerbated
by the bill. The problem is that by allowing policyholders to assign
their benefits to non-contract providers, it will encourage non-contract
providers to provide services to policyholders because it will assure
them of at least some payment for their services. If a person believes
the argument that consumers don’t pay their medical bills, it appears
that providers are willing to be paid at the same rate as contracted
providers and therefore should have been willing to accept a prohibition
against balanced billing. I doubt this is the case.
Balance billing is a nationwide problem. In a Wall Street Journal
article from December 8, 2008, it was reported that “A growing number
of state regulators are moving to crack down on balance billing.”
The “New York State Insurance Department …is drafting proposed regulations
that could force more disclosure by medical providers and insurers
and shield consumers from unexpected charges. California regulators
recently made it illegal for people covered by health-maintenance
organizations to be balance-billed for out-of-network emergency
services. And late last year Illinois put out a bulletin that protects
many consumers from balance bills in certain situations if they
make a "good faith" effort to use in-network doctors.”
Allowing SB 1122 to become law would be a backward step from
attempts to corral the spiraling cost of health care and more specifically,
the direct cost to consumers. Florida would be heading in the wrong
direction and at the wrong time.
The Insurance Consumer Advocate is appointed by Florida Chief
Financial Officer Alex Sink and is committed to finding solutions
to insurance issues facing Floridians, calling attention to questionable
insurance practices, promoting a viable insurance market responsive
to the needs of Florida’s diverse population and assuring that rates
are fair and justified.
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