Consumers Need Strong Insurance Laws To Protect Them From Balance Billing

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CPPP's Stacey Pogue

A couple of bills filed this session address “balance billing” in health insurance.  HB 3270 by Rep. Smithee puts into state law important new consumer protections against balance billing first adopted by the Texas Department of Insurance through agency rules in February.  As filed, SB 1197 by Sen. Taylor will strip some of those same consumer protections against balance billing established in TDI’s new rule.

But first, an explanation of balance billing.  Consumers who’ve been victims of balance billing can often recount in frustration or anger exactly how many hundreds or thousands of dollars it cost them, but people aren’t generally aware of balance billing until after it happens to them.  Most insurance plans are set up so that consumers save money if they get their care within a specified network of providers—stay in-network and you’ll have a lower deductible and copays.  You can see doctors outside of the network, but your out-of-pocket costs will be higher.

There is often a large difference between the amount medical providers charge and the amount insurers will pay.  That difference isn’t your concern when you see an in-work doctor, because in-network providers have agreed up front to accept an insurer’s reimbursement as payment in full.   But no agreements on prices exist between insurers and providers outside the network.  When out-of-network providers turn around and bill directly to the consumer the difference between their charges and the insurers’ reimbursement, it is called balance billing.

Balance billing is most troubling when a consumer gets care from an out-of-network provider through no fault of their own.  This happens in two scenarios: (1) in emergencies, and (2) when an insurance network lacks a specialty provider, so the enrollee has to go out-of-network to get needed care.  Even diligent consumers can end up with unexpected balance bills.  For example, you can make sure you go to an in-network hospital in an emergency, but you’ll have no control over the ambulance that takes you there or the ER doctor, anesthesiologist, radiologist, or pathologist who treats you.  All of these providers could be out-of-network even at a hospital that is in-network.

Rules recently adopted by TDI (CPPP comments here) essentially prevent consumers from being balance billed in the two scenarios described above, when they have no choice in provider.  It is the right thing to do.  TDI’s final rules were supported by consumer advocates but denounced by insurance companies and doctors alike.  Bills have been filed this session, one to uphold these protections, and another to strip key protections:

  • HB 3270 will formalize in state law consumer protections adopted by TDI just two months ago that essentially end balance billing when consumers go out-of-network through no fault of their own.
  • As filed, SB 1197 will strip key existing balance billing protections and re-institute balance billing in Texas.

Insurers do not like the way TDI’s new rules prevent balance billing and have raised concerns about potential unintended consequences.  But the Texas balance billing  rules were just adopted couple of months ago, and they should be given a chance to work.  Should unintended consequences arise, they can be tracked in the meantime, and dealt with during the next legislative session.  We may find that the rules work well to protect consumers.  Colorado, for example, has gone down the same path Texas is on and reports positive outcomes for consumers.

Consumers do not have the ability to prevent balance billing in situations like emergencies when they can’t select the doctors who’ll treat them.  That’s why consumers need strong state insurance laws that protect them.

At the Center for Public Policy Priorities, we believe in a Texas that offers everyone the chance to compete and succeed in life. We envision a Texas where everyone is healthy, well-educated, and financially secure. We want the best Texas - a proud state that sets the bar nationally by expanding opportunity for all. CPPP is an independent public policy organization that uses data and analysis to advocate for solutions that enable Texans of all backgrounds to reach their full potential. We dare Texas to be the best state for hard-working people and their families.

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