Surprise OON bills are not a function of predatory billing practices by physicians. Rather, these surprises result from insurance carrier lies about the expensive health care plans they sell.
The misleading nature of the OON narrative is alarming to conscientious providers of emergency services who treat patients without regard to their ability to pay.
In reality, “Surprise” OON bills result from insurance carrier misrepresentations about the financial protections their plans offer, not from unethical OON billing. Currently, New Jersey residents have no consumer protections at the time they purchase a health plan. They can be sold inadequate plans that woefully under-reimburse providers, typically at 5-10% of Usual and Customary (UCR) charges. These artificially low reimbursements leave the patient with large, unexpected financial liabilities. Consumers will not recognize this fact until they encounter the health care system, at which time it is too late. Hence the “surprise.”
The purchaser of an expensive 80/20 OON plan, for example, might reasonably assume that the plan will pay 80% of a provider’s charge. This is currently not the case in New Jersey. In reality, that “80%” may refer to a Medicare-indexed fee schedule, which typically pays 5-10 cents on the dollar. Carriers are not obligated to disclose to consumers how they calculate OON reimbursements, or how these reimbursements relate to UCR. The resulting paid OON claim might represent only a small fraction of provider charges. The consumer is unaware of this discrepancy until a provider’s bill has arrived.
By way of example, here is a screenshot of a Summary of Plan Benefits provided by an insurance carrier for one of its out-of-network plans:
This plan offers OON benefits at an 80% rate. The fourth column states “Your Cost If You Use an Out-of-network provider” is 20%. Any reasonable purchaser of this health insurance product would conclude that the other 80% refers to an OON provider’s charges, or at least Usual and Customary (UCR), and will be paid by the insurer. The expense of this OON plan is thereby justified.
However, small print buried in the same document suggests otherwise.
In the small print, the insurance company has replaced Usual and Customary (or the doctor’s actual charge) with “allowed amount,” and will pay 80% of that value instead. What does that mean? How does “allowed amount” relate to UCR and billed charges in the community? Investigation will reveal that “allowed amount” is actually only a small fraction of the actual bill.
Most health care consumers do not read the small print, and if they do, are unlikely to discover its meaning, nor understand the significance of Medicare-based reimbursements.
They certainly would not note the misleading nature of the disclaimer above – in the insurance company’s example, there is only a $500 discrepancy between OON “charged” and “allowed” amounts. In reality this discrepancy can be tens of thousands of dollars. That means that the patient is responsible for that discrepancy. The insurance company will not pay it.
New Jersey heath care consumers currently have no protections against the above, misleading insurance company practice. In any other setting, this practice would be considered fraud.
Surprise OON bills are not a function of predatory billing practices by physicians. Rather, these surprises result from insurance carrier misrepresentations about the protections offered when they sell expensive health care plans.
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