[Page 46 of the full report was modified - April, 2005]
Senate Joint Resolution 125 would have established a 14-member joint subcommittee to examine issues related to reimbursement of non-contracting ancillary services providers. The Senate Committee on Rules forwarded SJR 125 to the Joint Commission on Health Care (JCHC) for study.
SJR 125 cited "situations whereby a consumer receives services, primarily surgery, within a participating hospital from a participating physician and assumes that all services in this setting will be provided by participating providers. Frequently, although health carriers notify consumers that coverage may be limited in situations requiring specialty care or hospital services, consumers are surprised and chagrined to receive unexpectedly large bills from non-contracting ancillary services providers."
These types of situations most often occur when the consumer has a managed care insurance plan. In 2002, 93% of employer-sponsored health insurance coverage was provided through a managed care plan. Managed care plans typically seek to control the cost of coverage by establishing provider networks, negotiating provider reimbursement, and preauthorizing some procedures.
Health care providers are not always satisfied with the terms of the contracts offered, and sometimes decline to contract with some health insurance plans. Hospitals and other medical facilities often contract separately with health care providers, particularly providers of such ancillary services as anesthesiology, radiology, and pathology.
The Virginia Department of Health's Center for Quality Health Care Services and Consumer Protection reported that 2 of 63 complaints received from January - June 2002 addressed the issue of reimbursement of non-contracting providers.
The State Corporation Commission's Office of the Managed Care Ombudsman indicated that less than 1% of all insurance-related complaints typically address this issue. The Bureau of Insurance surveyed other states regarding the issue of balance billing by non-contracting providers. Of the 32 states that responded to the Bureau of Insurance survey:
• 29 states had received complaints * 13 states did not provide estimate of the percentage of complaints that balance billing represented * 9 states estimated < 1% of total * 1 state estimated > 1% of total * 6 states estimated between 4% and 10-15%.
• 7 states have statutes or regulations to address reimbursement of non-contracting providers.
• All 7 states protect the consumer from having to pay non-contracting providers more than what they would have to pay a contracting provider (usually a co-pay) * Colorado, Florida, Maine and North Carolina do not specify payment amount but it appears to be billed charges * Maryland specifies that trauma physicians be paid 140% and other physicians be paid 125% of Medicare rate * Utah requires the same reimbursement as contracting providers under a non-capitated arrangement * West Virginia requires "normal charges" be reimbursed; how "normal charges" are determined is a source of controversy.
Some approaches such as providing better consumer notification would fail to ensure that an enrollee would never have to pay directly for the services of a non-contracting provider; to reach that goal would require significant marketplace interventions.
A group of interested parties was convened by the Virginia Association of Health Plans. The following statement was sent to JCHC staff regarding the consensus reached by the group:
"In discussions this summer...there was consensus that this issue does not lend itself well to a legislative solution. The groups agreed to continue to work cooperatively and with respective members to better facilitate communication with patients/enrollees."
A number of policy options were offered by JCHC regarding reimbursement of non-contracting ancillary providers for public comment. The policy options are shown on pages 25 and 26. A summary of the public comments received is included in Appendix B.
Action Taken by JCHC
JCHC voted to accept Option 1, to take no action.
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