Surprise billing has been a long-standing battle between out-of-network providers and Payers. A slew of changes has been implemented including the value-based payment models and other regulatory changes to resolve payment disputes and support Physicians and Patients alike. Despite the constant regulations being rolled out in support of the out-of-network Physicians, policymakers are constantly innovating brand-new strategies to facilitate quick and fair resolution of payment conflicts between the stakeholders. This blog is a deep dive into some of the key considerations in terms of standardizing out of network payment models to streamline processes and benefit multiple healthcare consumers.

Determining Out-of-Network Payments

Policymakers across the U.S have devised these key approaches to determine the out-of-network reimbursement rates.

• A Standard Formula. A formula, set either in statute or regulation, used to estimate the amount that a Payer owes to an out-of-network provider. The formula generally takes into consideration, factors like geographic area and complexity of the case.
• A Third-party Involved Resolution Process. A process where an independent third-party, determines the amount that an insurer owes to an out-of-network care provider. The third-party can consider wide-ranging factors including the complexity of the case and the physician’s level of training.
• A Blended Approach. A payment standard with the option for the involved parties to challenge the payment owed to an out-of-network Physician through a commonly agreed process.

Out-of-Network Billing: Key Considerations and State-wide Use Cases

To standardize out-of-network payment processes and to make quick and fair reimbursements, policymakers need to consider these key factors.

Predetermined fee schedule

• Fee schedules, like the Medicare fee schedule has a more transparent payment structure
• Fee schedules vary depending on the region and complexity of the issue.
• Providers however, prefer private payers for fee schedule as Medicare reimbursement rates are lower than commercial payers.

For instance, Oregon regulators set a fee schedule depending on data from the state’s all-payer claims database with adjustments depending on key factors including geographic region and complexity of the issue.

Common benchmarking

• Common benchmarking sets payment amounts based on claim amounts across multiple insurers and physicians and improves transparency.
• This benchmarking database does not necessarily include holistic data and can have challenges for states to operate.
• Some benchmarking databases may display rates as billed by physicians only, rather than rates negotiated by both parties, possibly leading to inflation and higher premiums.

For instance, the Colorado state insists that Payers reimburse the greater of two or three possible payment amounts, amongst which one of them is tied to the in-network costs. This applies to the same service in the same geographic area for the prior year based on commercial claims data.

Insurer’s internal data

• Insurer in-network rates help prevent inflation and premiums.
• The use of average network rates as a criteria for payment for out-of-network providers may foster insurers to further reduce their networks.
• When publicly submitted claims data is not available, a reimbursement amount calculated using insurer in-network rates may not be simply verifiable by other external parties.

For instance, consider the fact that in Maryland, there are certain plans that may be required to reimburse certain out-of-network providers at a whopping 140% of the insurer’s average rate paid in the previous year for the same covered service in the same geographic region.

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Final Words

Healthcare leaders involved in payment policies are grappling with new and emerging challenges in resolving payment disputes and making fair reimbursements.Furthermore, the constantly changing regulations and state laws are having downstream effects on out-of-network billing and reimbursement standards. To rise above the challenges, Policymakers need to simplify out-of-network billing by staying committed to innovating sustainable strategies and solutions that meet the evolving needs of healthcare consumers.

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