17 May 2010

Emergency Protections in the Affordable Care Act

There's just so much that is hidden and buried in the ACA that it's like an Easter Egg hunt trying to find all the goodies. Hopefully the surprises will all be good! ACEP News pointed out one hidden goodie, nicely illustrated in this article from Kaiser Health News:

Under the new health law, insurance companies must extend several new protections to patients who receive emergency care. One of the biggest guarantees: Patients who need emergency treatment will have their costs covered at the same rate, regardless of whether they are treated at "in-network" or "out-of-network" hospitals.

The law also bars health plans from requiring prior authorization for emergency services. And it mandates that plans follow the "prudent layperson" rule. For example, if a person goes to the ER with chest pain, but ends up being diagnosed with indigestion, the claim has to be covered because going to the hospital under those circumstances made sense.

The provisions go into effect for every health plan issued after Sept. 23 – six months after the law was enacted -- that offers emergency coverage.

This is potentially quite significant. As with so many things, the devil is in the details, and the implementation is not yet actualized.

The actual text of the provision is here, from Sec 2719 of the law as enrolled:
If a group health plan, or a health insurance issuer offering group or individual health insurance issuer, provides or covers any benefits with
respect to services in an emergency department of a hospital, the plan or issuer shall cover emergency services (as defined in paragraph (2)(B))-
(A) without the need for any prior authorization determination;
(B) whether the health care provider furnishing such services is a participating provider with respect to such services;
(C) in a manner so that, if such services are provided to a participant, beneficiary, or enrollee-
(i) by a nonparticipating health care provider with or without prior authorization; or
(ii)(I) such services will be provided without imposing any requirement under the plan for prior authorization of services or any limitation on
coverage where the provider of services does not have a contractual relationship with the plan for the providing of services that is more
restrictive than the requirements or limitations that apply to emergency department services received from providers who do have such a contractual relationship with the plan; and
(II) if such services are provided out-of-network, the cost-sharing requirement (expressed as a copayment amount or coinsurance rate) is the same requirement that would apply if such services were provided in-network

It goes on to review the definition of the prudent layperson standard.

So why is this significant? First of all, it appears to close an annoying loophole in the Prudent Layperson statutes that states have passed. A long time ago in a legendary epoch called the nineteen-nineties, insurance complanies used to routinely deny claims from emergency departments, retrospectively, claiming that the diagnosis provided was not in fact an emergency and the patient should not have gone to the ER at all. This created an outcry and many (I think all) states responded by passing laws creating a "prudent layperson" standard which basically says that if a person had reason to think there were having a medical emergency and they went to the ER the insurer had to pay for the care. But the problem here was that these were state laws, not federal. Health insurance plans, particularly the ones purchased by large-ish employers, are usually organized under the federal ERISA statute. ERISA does not contain any prudent layperson language, and it pre-empties most state insurance regulations. What this means is that most group insurance policies are not bound by the prudent layperson standard.

Fun fact: I discovered this when I took a family member to the ER once and the claim was denied as "non-emergent use of the emergency department."

So, if I read the law here correctly, this sounds like it would extend the prudent layperson language to group plans organized under ERISA, which I think represents something like 60% of the group insurance market. I don't know that this is as important an issue as it once was, since most insurance companies don't do this sort of thing any more, but as I learned, some still do.

The other provision I admit I am unclear on how far it extends. The requirement that insurance plans cover emergency care at the same level of cost sharing regardless of whether it is in or out of network could be a minor tweak or could be a real game-changer.

The clear intent is that patients not be penalized for being brought to an nonparticipating provider when they have no choice (i.e. an emergency), So if your plan requires a 80/20 split for in network and a 60/40 split out of network, that would be moot as far as ER care goes. The plan could not impose more than a 20% cost-sharing regardless of network status.

But this is where the ambiguity is. It does not say what the 80/20 split is a percentage of. Say you are brought to the ER and the doctor's bill is $500. An in-network doc probably has a negotiated discount which might bring the cost down to, say, $300. So your 20% of that would require the consumer to pay $60 and the plan would pay $240. But an out-of-network doc does not have a discount agreed to from the insurer. If the insurer does what I expect, they will just apply the discount anyway (calling it their "allowable" charge) and pay the $240. In that case the doctor will then send a bill to the patient for the other $260, expecting payment in full.

I can see a few ways this could play out. Patients could appeal to the insurance commissioner, who could rule that the insurance company is unlawfully imposing a 52% cost sharing in patients who are out of network. In that case, the insurers would have to pay the full $400 and the patient would be responsible for their 20% -- or $100. Or the insurance commissioner could allow the plans to continue with their practice and the patients would be stuck with the rest of the charge. And in some states, including mine, the state has or is considering banning the practice of balance billing, which would force the doctor to accept the cram-down and eat the lost charges.

I will be very interested in seeing how this plays out nation-wide, but I can assure you that in my state once we get our lawyers to review this issue we will be requiting an opinion from our Insurance Commissioner to clarify how this will be implemented. It could really change the relationship between physicians and insurance companies and could substantially add to protections consumers receive from the unfair and unilateral business practices of the insurance companies.


  1. Keep up the wonkishness! No other blog like you out there.

  2. The whole "allowed" charge is a scam as far as I am concerned.

    A few years ago, in Idaho, Blue Cross/Blue Shield, unilaterally decided that the "allowed" charge for neurologists was too high and lowered it significantly. 100% of the neurologists in the State immediately refused to accept Blue Cross/Blue Shield. It got so bad, that they wouldn't even accept an out of network payment. Blue Cross had to send me the check, I would deposit it and write another check to the neurologist.

    Another example. I had to get an MRI for a ruptured disc. I called every MRI place in the region. Everyone was "Out of Network". I called Blue Cross, they said, well if they are out of network, we will pay 60%. I get my bill for $1200, send it in to Blue Cross. Blue Cross sends me $120 because that is 60% of their "Max Allowable Charge of $200 for a radiological procedure". Nobody does MRI's for $200. I tried to appeal it to the State Insurance Commission with no luck. I even argued that an MRI shouldn't be considered a radiological procedure because it didn't involve radiation.

  3. With regards to the scenario you outline in the second-last paragraph, my money is on doctors being forced to accept the cramdown. The insurance companies will claim they already are forced to "reduce the out-of-network cost-sharing for emergencies," so the sentiment will probably be one of "greedy doctors gouging patients in emergencies."

  4. i imagine nobody will address the fact that a lot of what is ordered in the ED is to scare away lawyers.

    and any cost increases this produces for the insurance companies can be dealt with by increasing premiums.


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