by Stuart A. Hayman, M.S.
In September 2008, as the NYSSA’s new executive director, I attended a joint hearing of the New York Insurance Department and the Department of Health on out-of-network insurance coverage and surprise billing. NYSSA officer Dr. Scott Groudine accompanied me that day, and he did an impressive job testifying on behalf of the NYSSA and the specialty of anesthesiology.
In a packed hearing room, patients shared egregious examples of excessive medical bills. At the conclusion of the testimony (from physicians, insurers and patients), Mr. Troy Oechsner (then the Insurance Department’s deputy superintendent for health) addressed the room. He said: “We must take the patients out of the middle of this issue and make this between the provider and the insurer. We need adequate disclosure and transparency from the healthcare facilities, physicians and insurers. We need adequate reimbursement from the insurers, and we need adequate physician networks that ensure up-to date information and protections.”
New York’s out-of-network/surprise billing legislation was needed because many insurance companies were drastically reducing what they covered for out-of-network care, often covering only a meager percentage of the actual cost of care. Health insurers based coverage decisions on the severely inadequate Medicare fee schedule. They also gave patients and employers the false impression that their policies covered the policyholder’s physician of choice when, in fact, these policies often barely covered any out-of-network costs, leaving patients with unexpected, potentially enormous bills.
At the time, health insurers also seemed to be doing an end run around the important settlements that New York Gov. Andrew Cuomo fostered when he was attorney general. These settlements were supposed to end deception in out-of-network health insurance coverage. Insurers were forced to stop using the manipulated Ingenix database as the benchmark for out-of-network charge data, and they were required to contribute tens of millions of dollars to create a new, self-sustaining, independent benchmarking database called Fair Health.
The regulations that took effect in New York as a result of this new legislation established a system with baseball-style arbitration, utilizing data/analytics that represented the claims of the privately insured only. For the patients who purchased out-of-network benefits, this meant that insurers would have to pay out-of-network claims based on nongovernmental and reasonable reimbursement (no Medicare or Medicaid data artificially lowering reimbursement rates). The insurers complained and threatened that insurance premiums would experience double-digit inflation; this never materialized. In fact, to this day I am not aware of a single complaint by New York insurers, going back to the implementation of this system in 2014.
Additionally, many in the medical community expressed apprehension that the cost and time associated with the appeals process would be a deterrent to physicians seeking fair payment for their services. However, New York state created a loser pays system, with simplistic forms, defined review criteria, and a 30-day window for arbitration. The results: We have not heard any complaints from physicians about the arbitration process.
Finally, the patients were taken out of the middle. This has made out-of network/surprise billing a nonissue in New York state. The number of patient complaints since this legislation took effect has diminished to a negligible number. The media no longer publishes stories about patients being saddled with excessive medical charges. New York’s legislation was a win for the governor, legislators, insurers, physicians and patients. How many times can you say that about a piece of legislation?
Dr. Scott Groudine’s testimony in 2008, along with the efforts of many other physicians, medical society staff members, and government staff, led to the passage of what is now touted as the BEST out-of-network/surprise billing legislation in the U.S. Many additional years of hard work led to the implementation of the final regulations in 2014. A special thank you is owed to Dr. Groudine and many other physicians and medical society staff, including NYSSA members Drs. Michael Simon, David Wlody and Larry Epstein, as well as former MSSNY officer Dr. Andrew Kleinman and lobbyist Moe Auster.
As states across the country have struggled to pass legislation and regulations to tackle the problems associated with out-of-network/ surprise billing, many have looked to New York to see what regulations we have implemented and if they are working. Unfortunately, few states have found a way to follow our lead. Of the states that did pass some type of out-of-network/surprise billing legislation, none have anything comparable to New York. Nearly five years after New York’s legislation was implemented, U.S. Sen. Bill Cassidy (R-La.) began working with a bipartisan group of senators to write legislation that would tackle this issue on the federal level. I commend the Senate’s effort. As we have seen in New York, resolving this problem requires removing the patient from the middle and creating a level playing field for physicians and insurance companies to resolve their disagreements.
Sphere is published four times per year by the New York State Society of Anesthesiologists, Inc.
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