Why out-of-network balance billing laws are important

New Jersey is the latest state to pass legislation that will affect the amount a radiology practice can collect from patients whose insurance is not accepted by the practice. Such balance billing or out-of-network laws are intended to reduce both the uncertainty and the higher level of patients' liability for payment when they receive services out of network.

While an imaging center would be careful to work with its patients in advance of providing services, the hospital setting does not always afford that opportunity. It is imperative that you know the laws in the state(s) where you practice and also keep abreast of federal regulations that might affect your billing and collections.

Balance billing legislative action in the U.S.

According to an American College of Radiology (ACR) report, as of February 2018 there were 23 or more bills on balance billing either introduced or enacted in 16 different states. The landscape is constantly changing, and the ACR is a good resource for monitoring the situation.

The states below were identified in the February report and a later ACR update.

Services provided "in network" are those for which the physician has a contract with the payor, and payment will be made to the physician at a rate established under the terms of that contract. The patient will typically have responsibility for a deductible, co-payment, or co-insurance amount.

When patients receive services out of network it often means that their insurance plan will not make any payment for that service directly to the practice. The entire cost of the out-of-network service will be billed to the patient at the physician's full fee schedule amount.

While many insurance plans do make payment for out-of-network services, it is impossible to know in advance of the service the amount of coverage the plan will provide. In addition, the patient will likely be subject to a very high deductible or co-insurance, with the result that the patient ends up paying a much larger amount than if the services were provided in the network.

Patients' financial liability is limited for emergency services

The New Jersey law, which is effective September 1, 2018, places a limit on the amount physicians can bill patients for out-of-network services that are provided on an emergency or urgent basis. It also applies to "inadvertent out-of-network services" -- this describes the situation where, for example, the hospital is in the patient's network but the radiology group is not. In the case of either emergency or inadvertent services, the radiology group may not bill the patient more than the patient's deductible, co-payment, or co-insurance amount applicable to in-network services pursuant to the patient's health benefits plan.

It is the responsibility of the insurance carrier to ensure that the patient incurs no greater out-of-pocket cost than he or she would have incurred with an in-network provider. Under the New Jersey law, insurance benefits will be assigned to the radiology group and the carrier will pay any reimbursement directly to the practice, along with a remittance advice that specifies the full reimbursement amount as well as the portion for which the patient is responsible. This will give the practice the information needed to accurately bill the patient.

Disclosure requirements are in effect for nonemergency services

For nonemergency or elective procedures, the New Jersey legislation requires hospitals to disclose to patients whether they are in or out of the network for a patient's plan before an appointment is scheduled. Hospitals must also explain the difference in financial responsibility the patient will have by selecting either an in-network or out-of-network hospital. The hospital must also advise the patient to check with the physician who will be providing the hospital services to ascertain the physician's status with the patient's plan. The hospital must make available its list of standard charges for items and services and post on its website certain information about the plans it participates with, along with contact information for its hospital-based physicians such as those in radiology, anesthesiology, and pathology.

Physicians are also required to provide information to the public, either in writing or on their websites, about the plans with which they participate and the hospitals where they are affiliated. Whenever the practice sees a patient who would be out-of-network, the patient must be informed of this before a procedure is scheduled. At the patient's request, an estimate of the amount the patient will be billed along with the current procedural terminology (CPT) codes to be billed must be provided in writing, along with the statement that these amounts will be greater than the patient's deductible, co-payment, or co-insurance.

NJ balance billing law summary

Beginning September 1, 2018, patients receiving emergency or urgently needed services in New Jersey are not required to pay any more than the deductible, co-payment, or co-insurance they would normally pay whether the hospital and/or its physicians are in-network or out-of-network with the patient's insurance plan. Patients who see an out-of-network physician for nonemergency or elective procedures may still be billed at the physician's regular fee schedule, but they must have the opportunity to review those expected charges before making an appointment for the procedure.

This law is intended to help patients avoid the surprise of large, unexpected bills after their medical services are completed. It contains both financial liability caps and disclosure requirements for out-of-network services. Laws similar to this one in New Jersey will certainly be passed in many states, so radiologists and other specialty physicians must be in tune with the laws in each of the states in which they practice.

Rebecca Farrington serves as the chief revenue officer for Healthcare Administrative Partners. She has more than 20 years of experience in healthcare sales and management roles, focusing on hospital-based and physician revenue cycle management.

The comments and observations expressed are those of the author and do not necessarily reflect the opinions of AuntMinnie.com.