California surprise-billing law protects patients but aggravates many doctors
More than two years after California’s surprise-billing law took effect, there’s one thing on which consumer advocates, doctors and insurers all agree: The law has been effective at protecting many people from bills they might have been saddled with from doctors who aren’t in their insurance network.
But the consensus stops there.
“In general, the law is working as intended,” said Anthony Wright, executive director of Health Access California, a patient advocacy group that pushed for the measure, Assembly Bill 72. “Patients are protected and the providers are getting paid.”
Physicians beg to differ. They say the law’s constraints on what insurers now pay has given the companies an unfair advantage in negotiations with doctors, which is leading to major changes in the industry that may affect patients.
Recent analyses by some researchers, however, cast doubt on some of the doctors’ dire warnings.
“The problem is that AB 72 is creating imbalances in the health care marketplace that are decreasing access to care,” said Dr. Antonio Hernandez Conte, an anesthesiologist whose specialty is among those most affected by the law.
The California law, which took effect in July 2017, protects consumers who use an in-network hospital or other facility from being hit with surprise bills when cared for by a doctor who has not contracted with their insurer. If that happens, consumers are responsible only for the copayment or other cost sharing that they would have owed if they had been seen by an in-network doctor.
Federal lawmakers are eyeing the California law as a possible model as they debate legislative proposals that would address surprise billing at the national level.
The California law applies to nonemergency services, since most state consumers were already protected for emergency care through an earlier court ruling.
It’s not unusual for patients who visit a hospital or ambulatory surgical center that is covered by their insurance to encounter specialists who aren’t, even in nonemergency situations.
For example, someone who has knee replacement surgery with an in-network surgeon at an in-network hospital may not realize that the anesthesiologist and assistant surgeon also scrubbing in on the operation are not.
Or a couple may be surprised to learn that the neonatologist caring for their baby in intensive care is outside their insurance network, even though the hospital where they gave birth is inside it. Diagnostic specialists such as radiologists and pathologists whom patients rarely see may be out-of-network at an in-network hospital as well.
Under the California law, the doctor’s payment from an insurer in those situations is based on either the average contracted rate for similar services in the area or 125% of what Medicare would have paid, whichever is greater.
In a California Medical Association online survey released last month - in which 855 physician practices responded - nearly 90% of the doctors said that the law allowed insurers to shrink physician networks, thus limiting patients’ access to in-network doctors. Physicians blame the new law’s reimbursement rates for surprise out-of-network care. The payment standard made insurers less inclined to negotiate payments and reduced doctors’ bargaining power, the physicians say.
Those surveyed said they faced insurer payment rate cuts, refusal to renew their contracts and contract termination, among other problems.
This has led some physicians to try to gain leverage by consolidating practices, a move that can drive up health care costs significantly, the doctors warn.