We recently heard from one of our clients who is dealing with a balance billing issue resulting from a NICU stay. For her baby’s birth, she chose a large hospital in Denver that was on her Humana health insurance network. Her OB/GYN was also on the Humana plan, and she figured she had all of her ducks in a row. But complications necessitated an emergency transfer to the NICU, where her new baby was cared for by doctors who are contracted with the hospital, but are not part of the Humana network.
When patients are treated by out-of network providers, there’s no contractual obligation between the doctors and the health insurance carrier. The patient will usually be responsible for a higher deductible when using a non-network provider (although this is not typically enforced for 
emergency care), but even after the deductible is met, the provider is not obligated to accept the “reasonable and customary” payment from the health insurance carrier. The provider can choose to bill the patient the shortfall between what was originally billed and what was paid by insurance.
Our client has been balance billed over $5,000 by the NICU doctors. Humana paid the doctors their in-network amounts for the NICU stay and counted it as an in-network expense (ie, no additional out-of-network deductible was charged) because it was an emergency situation. But the doctors refused to accept the insurance reimbursement as payment in full, and billed the family for an additional $5,000+. I suppose it could be worse – this family ended up with a $50,000 balance bill from their baby’s NICU stay.
But it could also be better. People who are recovering from an illness or injury don’t need to also be finding out that an in-network facility where they were treated also has providers who are not in the network. Jay and I had some experience with this same type of issue when Jay had knee surgery at Vail Valley Medical Center several years ago. Although we asked lots of questions and made sure that everyone who would be treating Jay was on our health insurance network, we didn’t think to ask about the durable medical equipment supplier. We ended up on the hook for an extra four hundred dollars to pay for Jay’s crutches, knee brace, and rented ice machine, all of which were already in use or assigned to Jay by the time he woke up from anesthesia (ie, nobody asked him if he wanted them or let him know that they would be subject to our out-of-network deductible). There was no balance billing in this case – we paid the entire amount, because it was far less than our out-of-network deductible. But it was quite frustrating, given that we had also already paid our $3000 in-network deductible. But we got off easy compared with families that are being stuck with bills for several thousand dollars (or $50,000!).
I spent a lot of time this week reading about this subject, and everything I was finding indicated that this is a complicated issue that varies tremendously from one state to another. Some states have laws prohibiting balance billing in emergency situations, although even the definition of emergency has come under scrutiny. And some doctors have been less than pleased by laws that require them to accept “reasonable and customary” payments from insurance carriers with whom they are not contracted, even if the law is created in an effort to help people who are displaced following a hurricane.
Some states have chosen to not really get involved, leaving the issue up to the providers, while other states have tried to protect patients as much as possible, particularly in the event of emergency treatment. I came across this description from a couple years ago, of model legislation from the National Conference of Insurance Legislators on the subject of balance billing. The model legislation doesn’t call for banning balance billing, but instead focuses on transparency and communication with the patient. The idea is to make sure that patients are aware ahead of time if they might end up getting billed by an out-of-network provider – especially if that provider works at an in-network facility. I don’t know how much transparency and communication were involved in our client’s case, but if a hospital is going to let patients know that the NICU is not in-network, they definitely need to be doing so well before delivery (and be willing to accept the fact that some parents might choose instead to deliver at a hospital where the NICU is also on their network, since nobody can know for sure whether their baby will need NICU care ahead of time). New parents who have just had a baby that needs intensive care are not really in a position to be figuring out medical billing details, and most of them are also not in a position to request that the baby be transferred to a different (in-network) facility.
So was there any recourse for our client? We put this question on Google + and got a useful answer from Kevin Haney that indicated that our client might not be on the hook for the five grand. Kevin wrote:
“If [the NICU docs] accepted the in-network rate you may have an out. The in-network reimbursement is probably higher than the out-of-network amount. If paid out-of-network the insurer would have limited the payment by a separate deductible, and higher co-insurance amount.
By accepting the higher in-network reimbursement they by default agreed to accept ALL terms as an in-network provider – which means no client responsibility for amounts over the negotiated rate. They can’t be in-network and out-of-network at the same time.
Your client may still be responsible for any deductibles or coinsurance associated with the child’s care – per the in-network billing arrangement.”
This was heartening, but I continued searching for more information. That’s when I came across Colorado Revised Statute 10-16-704. Apparently, the Colorado Division of Insurance tried to directly address the issue of balance billing from non-participating providers working at in-network facilities back in 2006. On page 5 (3) (II), the statute reads:
The general assembly hereby finds, determines, and declares that there are situations in which insured consumers receive health care services, including procedures approved by their insurance carrier, in a network facility, with a primary provider that is a network provider, but in which other health care professionals assisting with such procedures may not be in-network providers. In such situations, the consumer is not aware that the assisting providers are out-of-network providers. Further, the consumer may have little or no direct contact with the assisting health care professionals. The division of insurance has interpreted the network
adequacy provisions in this section, along with the provisions related to relationships between an insurer and a health care provider in section 10-16-705, to hold the consumer harmless for additional charges from out-of network providers for care rendered in a network facility.
This seemed to explicitly state that if the facility was in-network, any out-of-network providers who worked at the facility were not allowed to balance bill patients whose health insurance paid reasonable and customary charges. Unfortunately, the paragraph ends with this:
The division of insurance’s interpretation of these statutes was challenged by an insurer and invalidated by a division of the Colorado court of appeals in Pacific Life & Annuity Co. v. Colorado Div. of Ins., no. 04CA2169 (slip op.) (Feb. 23, 2006)
And at the very end CRS 10-16-704, there’s an annotation that was presumably added after the lawsuit mentioned above:
When an insured receives care or treatment from a nonparticipating provider at an in-network facility, there is no negotiated rate, and the nonparticipating provider is under no contractual obligation to charge a rate other than his or her normal rate, and the insurer is mandated to pay to an insured only in-network benefits. The insurer is not required to pay the nonparticipating provider’s bill balance to shield the insured from making a payment above what it would make to a participating provider. Pac. Life & Annuity Co. v. Colo. Div. of Ins., 140 P.3d 181 (Colo. App. 2006).
This indicates to me that the method by which the DOI was trying to protect insureds from balance billing might have involved requiring health insurance carriers to pay more than reasonable and customary rates for non-network providers who were working at in-network facilities, using the “network adequacy” clause (basically, a requirement that health insurance carriers maintain adequately large networks so that insureds aren’t excessively burdened with seeking out in-network providers). And it looks like a health insurance carrier (Pacific Life & Annuity) balked – and won.
However, I did find a mention of this statute on Attorney Gregory Hall’s blog, in a post from March 2012. He notes that
“When a covered person receives services or treatment in accordance with plan provisions at a network facility, the benefit level for all covered services and treatment received through the facility shall be the in-network benefit. C.R.S. §10-16-704 (3)”
The statute that he’s referencing is the same one that I’ve detailed above though, so I assume that the annotation at the end is the most current interpretation.
This is unfortunate, because I still maintain that patients should not have to go through a line-by-line questionnaire at the admissions desk, asking about the network coverage for every provider they might see during the course of their treatment. Especially in the case of emergencies (which is usually the case with NICU stays), patients have little in the way of other options if some providers within the facility are not on the network.
My own opinion on this is that if a provider wants to work at a facility, one of the contractual requirements should be for the provider to maintain network agreements with whatever carriers with which the facility is contracted. There should be no surprises for the patient after doing due diligence to determine that the facility and primary providers are in-network. Balance billing should never be an issue in emergency cases, and it should never be an issue when the care is provided at a facility that is in-network. If an insured actively chooses to go out of network, then the out-of-network deductible and balance billing are to be expected. But for patients who believe they’re being cared for by in-network doctors, it’s an unconscionable burden to find out after the fact that some of the doctors at the facility have opted not to be in the network. It reeks of bait and switch: the doctors have privileges at the hospital and get patients (as a result of those privileges) who are often choosing the hospital based on the fact that it’s in-network with their health insurance carrier.
We’re looking into the details to see if the scenario Kevin Haney described might apply in this case. We’re waiting to hear back from the Colorado DOI, and we’ll update this post if and when we have more information.
Update: The client just emailed us: “I just wanted to share the great news I got this morning. [The NICU doctors group] has dropped the balance bill and we now don’t owe anything to them. It’s pretty appalling to me that if you put up a little bit of a stink they just drop your bill. I feel really badly for families that don’t have the time or resources to do this.”
