I wanted to join Aaron in venting some spleen about Elizabeth Rosenthal’s maddening story from this morning’s New York Times. How can it possibly be legal for your doctor to charge you out-of-network rates when you show at up an in-network emergency room? And how can we change the law to get at the problem?
I answered the first question last week in response to an earlier installment in Rosenthal’s series. Briefly: when you show up at an ER, you’re given an incomprehensible contract to sign. Among the terms you don’t read, you agree to pay the on-call ER physician for her services, whether or not the physician happens to be in-network. Given this “agreement,” the out-of-network physician can name her price.
Now, the courts won’t generally enforce contractual terms to the extent they deviate from what a reasonable person would agree to pay. That’s especially so if you were in medical distress when you signed the contract. It should be possible, especially in these ER cases, to persuade courts that the out-of-network doc should only be paid a reasonable fee—maybe the rate that the patient’s insured would have paid, maybe Medicare rates.
But the amounts in dispute will rarely be large enough to justify litigating. From the patient’s perspective, the smartest thing would be to pay the damn bill.
What’s to be done about this? One straightforward move would be for HHS to invoke its authority under the ACA to “establish criteria” to assure that exchange plans have adequate networks. From Rosenthal’s article, it sounds like a bunch of insurers have no in-network ER docs at all. Why not require exchange plans to contract with ER docs at each of their in-network hospitals?
That’d be a good first step, but HHS’s authority under the ACA does not extend to employer-based insurance purchased outside the exchanges. To get at those plans, state insurance commissioners would have to step up to the plate. State network-adequacy laws vary widely, but most give the commissioners a measure of flexibility in crafting new rules. Following HHS’s lead, or blazing a path on their own, they could require insurers to include ER docs in their networks.
Even if state insurance commissioners acted, however, we’d still be left with a regulatory gap. A federal law—ERISA—strips states of the power to regulate self-funded employer-sponsored plans. And there’s no federal law requiring self-funded plans to have adequate networks.
So does Congress need to act? Maybe. But the Department of Labor, which oversees ERISA plans, could perhaps implement a partial solution even without new legislation. Here’s what I’m thinking. The ACA caps the amount that an individual or family can pay out of pocket in a given year. Typically, out-of-network bills don’t count toward the out-of-pocket cap. The idea is that, if you choose to go out of network, your insurer shouldn’t be on the hook.
The absence of meaningful choice when it comes to emergency care may provide an opportunity for Labor to enact a rule treating the costs of such care differently. What if Labor issued a rule saying that payments to out-of-network ER docs would count toward the out-of-pocket spending cap, so long as the care was received at an in-network hospital?
This would be only a partial solution. Before they reach their out-of-pocket cap, patients would still be on the hook for out-of-pocket payments to ER physicians. But at least they’d have some financial security in the event that they racked up extraordinary out-of-pocket costs.
In any event, these sorts of abusive billing practices have got to end. Regulators have considerable latitude to act, even without legislative action. They should act, and soon.