Patients confused by 'balanced billing' tactic

Health care assistance

Southern Nevadans with health care insurance questions can contact Consumer Health Assistance in the governor's office at (702) 486-3587 or through the website: www.state.nv.us/cha/. Consumers also may contact the State Insurance Division at (702) 486-4009 or toll free at 1-888-872-3234.

A Las Vegas consumer was enraged when he got a $90 bill from a medical lab for a tissue examination that he thought had been covered by his health insurance plan.

His insurer, in fact, had already paid $271 to satisfy its contract with the lab. The extra money billed to the patient was the amount the lab would have charged a consumer who was not a member of a managed health care plan.

The patient had to take the issue up with the human resources director where he worked to get the issue resolved.

The incident involving the lab is part of a controversial and increasingly used tactic known as "balanced billing."

Under the practice, the managed care patient typically receives a bill from the medical provider that shows the amount the service normally costs, the discount charged to the insurer, and the amount the provider believes the patient owes, minus adjustments such as for co-payments.

Health care experts advise that a consumer in a managed care plan should never pay a physician or other medical provider if he already made a co-payment and believes his insurer covered the service. The consumer who believes he has been wrongfully billed or isn't sure should contact his insurer, medical provider or personnel director at work before paying the bill. Chances are the patient doesn't owe a dime.

Todd Meek, chief operating officer of Nevada Care, one of the state's largest health maintenance organizations, said balanced billing is a concern to his industry. That's because it makes it possible for patients in managed care plans such as HMOs to unwittingly pay physicians for services already covered by the insurer.

"I know we have had several physicians no longer in our plan in part because of this," Meek said. "It's a violation of our contract. If a provider continues with that practice, it leaves us with little choice but to end our relationship with that provider."

If the HMO reimburses the physician, that medical provider is obligated under law to refund any money paid to him by the patient for that service. If the HMO doesn't reimburse, the doctor simply could pocket the patient's check.

Reimbursement is not always timely, however. One Las Vegas resident received a $368 bill last August for an outpatient hospital visit. She paid the bill but got to thinking that it should have been covered by her managed care insurer. She was right. The problem was that the insurer somehow screwed up the paperwork and had to reprocess her claim. The insurer eventually paid the bill, but the patient didn't receive her refund from the hospital until January.

Liz Smith, president of the 450-member Medical Association of Billers in Las Vegas, said there have been a few physicians in town who have used balanced billing unscrupulously.

"I know a couple of doctors who got upset when the patient asked for a reimbursement," Smith said. "But that's a very rare instance. Most doctors are not doing it to hurt their patients."

Joe Kaufman, president of the Nevada chapter of the Medical Group Management Association, whose 141 members include outpatient clinics and hospitals, defended balanced billing and said it is not abused. Because many physicians argue that HMOs have not been making their reimbursements in a timely manner, they believe they must resort to this tactic to generate the cash flow they need to stay in business.

"Balanced billing is a scare tactic to get the patient to call the insurer," Kaufman said. "As a provider, I wouldn't balance bill a patient that I didn't have a problem with. But if I had a problem with an insurer who had 100 patients, I would balance bill all of them to bring the insurer to the table."

HMOs have become so powerful that they do not feel obligated to make timely reimbursements, said Larry Matheis, executive director of the Nevada State Medical Association.

His organization, which represents more than 1,400 physicians, is now surveying its members to determine whether HMOs are complying with a new state law requiring them to make prompt reimbursements. As part of the survey, Matheis said he hopes to determine the extent to which doctors are resorting to balanced billing.

"This is a growing problem," Matheis said. "It's a terrible practice, but it's one in which physicians have no choice. I hate to hear that physicians are forced to go to the patient and say that the insurers haven't paid them. It should make the consumer angry because they have paid for that insurance.

"Consumers are increasingly receiving these bills because the physicians and hospitals aren't being paid."

One of the biggest examples of doctors not being reimbursed by a managed care plan was resolved last year through the State Insurance Division when PacifiCare of Nevada agreed to pay $1.6 million to about 40 physicians to settle outstanding claims. PacifiCare blamed its billing organization, FPA Medical Management Inc., which had filed for bankruptcy.

Ruth Mills, president of the Nevada Health Care Reform Project, a coalition of 53 organizations that advocate increased patient benefits, said she has not heard any patients complain that physicians are trying to bilk them out of money in addition to what their insurers should cover. But she said she knows of many doctors who complain about late reimbursement from insurers.

"If I got a bill because of this, I would blame the HMO," Mills said. "I would say, 'My doctor is a good doctor, why aren't you paying him?' If the doctor is not adequately compensated by the HMO, what can they do?"

One alternative

One alternative could be for the doctor to sue the HMO rather than bill the patient. But Mills said it wouldn't be worth it for a physician to incur high litigation costs just to try to collect reimbursements on a few patients.

"I suppose they do everything they can to try to get the money from the HMO," Mills said of physicians.

HMOs have long been suspected of delaying reimbursement in part so that they can continue to collect interest on insurance premiums that they have invested. The perception is that prompt payment forces HMOs to dip into those investments, giving them less return on their dollar.

But Meek said it is a disadvantage for HMOs to delay payment because that could result in billing disputes that will drive up the insurer's administrative costs.

"We pay out about $100 million annually in claims reimbursements," he said. "When you have that rate of reimbursement there will be clerical issues such as bills that were not submitted correctly.

"It's an educational issue with the providers more than anything else. There are a number of different billing systems that physicians use. Their billing systems are not as standardized as we would like."

Matheis said that in 1998 and early 1999 HMOs on average were taking four to six months to reimburse Nevada physicians. That led to a new state law, effective last Oct. 1, that gives managed care plans only 30 days to approve or deny an insurance claim and up to 30 additional days to reimburse the medical provider if the claim is approved.

The new law also gives doctors the right to sue HMOs in state court to collect late payments, though no physicians have exercised that right so far, Matheis said.

"There's a reluctance to be the first one to test the law," he said. "But if physicians continue to have problems, it's an additional option that I think will be used."

But Dr. Jeffrey Cichon, past president of the Clark County Medical Society, said physicians are reluctant to sue HMOs not just because of litigation costs but also out of fear of repercussion. Cichon said doctors who sue HMOs risk getting kicked off that plan and then would have difficulty getting patients from other HMOs.

"They want someone who will roll over and who will not sue them," he said.

Congress also is considering a prompt pay requirement as part of proposed federal patients' bill of rights legislation.

In a letter earlier this month to Assistant Senate Majority Leader Don Nickles, R-Okla., Rep. Shelley Berkley, D-Nev., urged him to help a joint House-Senate conference committee pass patients' legislation that includes prompt pay.

"Across the country, complaints of arbitrary denials, payment lags and short-changing by HMOs and insurance companies are becoming shrill and pervasive," Berkley wrote.

"Experience has shown us that patients and health care providers need to be protected from unfair and unnecessary delays in claims payments."

Kaufman said the state's prompt pay law is well-meaning but lacks teeth. He and Matheis said some HMOs in Nevada have attempted to circumvent that law by sending new contracts to physicians and clinics in which the medical provider agrees not to hold the insurer responsible for late reimbursements.

"If you make a stink about a patient, you could be dropped from the (managed care) plan," Kaufman said. "It's the insurance company that controls us."

Matheis said his organization has filed a complaint to the state insurance commissioner because physicians who don't sign the new contracts could lose their HMO customers.

But Meek said Nevada Care has not sent out any new contracts as a result of the prompt pay law. He said HMOs that attempt to shirk their responsibility to reimburse providers in a timely fashion "face pretty tough regulatory scrutiny." He said fewer than 1 percent of the consumers and providers who deal with his company have billing complaints, and most of those are resolved internally.

HMOs deny medical provider bills for a number of reasons that they say have nothing to do with their desire to make money on invested premiums. It could be that the doctor provided a service or had laboratory work done that wasn't covered by the plan. It could be that the patient was dropped from the plan because he was fired or didn't pay his premiums but didn't tell that to the physician. Or it could be that the patient's HMO covered the clinic but not the treating physician.

But HMOs also cause foul-ups. Isabel Runnels of Las Vegas called her HMO last summer because she needed to get some X-rays. They sent her to a hospital close to her house.

Imagine her surprise when the hospital billed her about $1,200 for the X-rays and related services. She assumed the HMO covered her expenses since they referred her to the hospital, but she spent months fighting the insurer to no avail. Eventually, she took her complaint to Consumer Health Assistance in the governor's office, which convinced the insurer that Runnels never should have been billed.

"I better be more careful and ask questions of my HMO before I go quickly into these new places," Runnels said.

There are numerous other reasons why consumers may end up with faulty bills, mostly attributed to human error. It could be that the HMO was billed for the wrong service. Or it could be that the medical staff didn't submit specific enough information about the service given the patient.

For instance, the general billing code for a diabetes diagnosis may be the number 250. But Smith said that, depending on the stage of diabetes begin diagnosed, the proper coding contains two additional numbers that are specific to that diagnosis. If those numbers are not included, the HMO could simply delay reimbursement because it doesn't have enough information.

"Sometimes it's an honest mistake," Smith said. "If the doctor had coded the billing report properly, he could have gotten paid faster by the HMO."

The chances for faulty billing caused by human error are exacerbated by high turnover among billing and front-office medical clerks. The result is a large number of inexperienced clerks who must decipher numerous complex medical plans, leading to human error.

"All the different plans have different reimbursement methodologies," said Laurie England, director of Consumer Health Assistance. "There are different discount rates with different HMO plans. It's a very complex system, and it takes a talented, knowledgeable staff to figure it out."

HMO patients also may receive faulty bills because a physician or clinic is attempting to perpetrate a fraud, hoping the consumer is too gullible to realize he doesn't owe money. But local experts say such schemes, when they do happen, most often involve government-backed Medicare and Medicaid plans.

Health care experts say instances where doctors are attempting to cheat patients covered by employer-backed insurers are hard to prove and are rare.

"That would be unethical and is probably illegal," Matheis said. "Physicians shouldn't be doing that and I don't think that they are."

Nevadans' complaints prompted Assemblywoman Barbara Buckley, D-Las Vegas, to author the state's Patient Bill of Rights in 1997. Last year she led the effort to create a state health care advocate, the job England took over in October.

Billing problems

"People are frustrated by the amount of time it takes to iron out billing problems," Buckley said. "Every time you turn around you get another explanation that doesn't make sense."

In her first six months on the job through March 31, England said her office fielded more than 700 calls from Nevadans concerned about their health coverage. Roughly 10 percent of those calls were related to billing problems, she said. England will often contact the insurer to iron out billing disputes.

"It's the patient's responsibility to know what's required to get prior approval for whatever medical service is needed," England said. "The patients are responsible because they are the ones receiving the benefits. You are always going to have billing problems. You will always have business inefficiencies."

Individuals are encouraged to contact their insurer or their human resources adviser at work before calling England's office or the State Insurance Division, which regulates Nevada's nine HMOs. Those HMOs cover about 18 percent of insured Nevadans. Most other Nevadans are covered through private insurers or self-insurance plans such as those operated by the large Strip resorts.

Confusion over bills is one reason why groups such as the Council of Ethical Organizations in Alexandria, Va., are pushing for HMO reforms that benefit consumers, said president Mark Pastin.

"Patients' rights legislation is trying to set up a clean process to get these matters resolved," Pastin said. "It's in the lap of Congress, which has been punting this issue back and forth."

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