My friend Ann has excellent, employer-provided health insurance for herself and her family. Most doctors and hospitals are within her PPO network. Yet when her husband was hospitalized last year for severe complications of diabetes—heart disease and kidney failure from diabetic nephropathy—she nonetheless was stuck with thousands of dollars in bills that she hadn’t expected and couldn’t have avoided if she’d tried.
Inflated hospital prices by the highly respected Los Angeles hospital where her husband was an inpatient? A couple, but nothing major. Huge deductible tucked into her insurance plan? No, the problem was something more insidious: “surprise billing.”
Yes, you might have checked that your hospital and your main doctor were within your network, but that doesn’t keep other doctors from wandering in to check on one thing or another, and you have no control over whether those doctors are in your network or not. How about the radiologist who reads the scans? You picked a surgeon who’s within your network, but you have no say about the anesthesiologist who puts you out before the surgery.
Even if sick people could order doctors out of their rooms and demand an in-network doctor—and who’s going to be in charge of tracking all those health professionals and all those networks?—a severely ill patient is in the worst possible position to think of these details, much less check out the insurance policies of each person who walks into the hospital room.
A 2015 survey by Consumers Union found that almost one in four Californians covered by private health plans had been hit by these surprise billings from out-of-network doctors.
But a new California law protects most patients from ruinous surprises. Under Assembly Bill 72, which took effect July 1, when a hospital is within a patient’s insurance network, the doctors and other healthcare providers cannot charge more than if they were in the network as well, whether they are or not.
The law covers insurance providers within the state’s Department of Managed Health Care and Department of Insurance—about three-fourths of the private companies, according to an article by Kaiser Health News. Not covered are the people covered by self-insured employer plans, which are overseen by the federal government.
The out-of-network doctors would be allowed to bill only for the larger of these two amounts: what in-network doctors receive, or 125 percent of what Medicare pays.
Only two other states, New York and Florida, have such protective laws; about 20 states have similar provisions when it comes to emergency care only.
The addition of California in preventing this hidden source of big medical bills is seen as a major step toward spreading the movement nationwide, because the state is home to about 12 percent of the U.S. population. According to the website Modern Healthcare, lawmakers and officials in several other states including Pennsylvania, New Jersey and George are considering similar moves.
And if out-of-network doctors in California want to continue sending surprise bills, they should be aware of this: They’ll have to refund the overpayment to the patient within 30 days or start paying interest on the amount.