Much is being written today regarding the practice of balance billing by out-of-network medical providers. To paint a clear picture of why a provider is “out-of-network” and why a provider might “balance bill” a patient, it is important to understand the following:
- The advantages/disadvantages of becoming an “in-network” provider.
- The application process for becoming an “in-network” provider.
- Insurance company reimbursement proposals to “in-network” providers.
- The difference between providers who offer routine care versus those providing emergency care.
What Does In-Network/Out-Of-Network Mean for Providers?
The advantage to joining an insurance company’s network is to be promoted by the insurance company to their enrollees, thereby increasing the provider’s exposure and/or reducing their advertising expense. This is particularly appealing to providers who enjoy recurring visits by their patients.
The disadvantage of joining an insurance network is that the provider typically accepts a significant reduction in their claims reimbursement. Effectively, the provider hopes to trade more patient volume for less income per patient visit.
How Do Providers Become In-Network?
Insurance companies do not accept every provider that applies for admission into their networks. Some rejections are for policy reasons, while some rejections appear to be without a legitimate basis. When a provider is not in a health plan’s network, it is typically because the provider applied for in-network status and was rejected, or the offer for reimbursement they received was so outrageously low that it would not make sense to accept.
How Do Insurance Companies Reimburse for In-Network Providers?
Emergency facilities, emergency doctors, many radiologist, emergency surgeons, and some other “on-call” specialties do not have patients who return to them on a regular basis. They are typically on-call 24/7 x 365 to respond to patient emergency medical needs, with major fluctuation on how many patients are seen each day.
Thus far, insurance companies have failed to recognize the costs of treating emergency patients on an emergency/on-call basis. They typically offer reimbursement for an emergency doctor at the same level as a physician who has office hours. The “office hour physicians” are available to patients 8 – 10 hours per day, while the ER physician is available 24 hours per day. Additionally, the “office hour physician” may see more than 100 patients per day, while the ER physician may not see any.
Insurance companies regularly offer substantially low reimbursement in order to participate in their network. A recent example is that of a major insurance company offering an FEC approximately $275.00 to treat a Level 5 (heart attack, stroke, etc.) patient, all inclusive including approximately five hours of doctor/nurse time, IV fluids, medications, etc. For obvious reasons, the FEC declined the offer.
How Are FECs Reimbursed?
Traditional hospitals are typically “in-network” because they depend upon “bedded” and Medicare/Medicaid patients. Thus, they earn revenue from both the ER visit and downstream care in the hospital. However, FECs are required to treat-and-release patients or treat-and-transfer patients requiring care beyond “emergency care” to hospitals. Therefore, FECs receive reimbursement only for the emergency portion of a patient’s care.
TAFEC would like to see insurance companies recognize the significant investments made by emergency care providers to deliver high-quality, around-the-clock care for patients, and to reimburse them at a level comparative to a hospital ER. By offering comparable rates for emergency care provided in a FEC setting, more FECs will become “in-network” providers and the out-of-pocket cost to patients would be significantly reduced.
John A. McGee
Chief Operating Officer