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Why surprise medical billing happens – and how we can fix it

Surprise billing has been making headlines across the country — and, more importantly, making life harder for our neighbors across Tennessee. These unexpected out-of-network bills aren’t all that common, but we understand the stress they can cause for our members.

We want to work together with health care providers to resolve this issue on behalf of Tennesseans. First, we need to accurately diagnose the problem.

What are surprise medical bills — and who sends them?

Surprise billing is a type of balance billing, so let’s start there.

Balance billing happens when an out-of-network provider chooses to bill a member for the difference between their “list price” and what BlueCross pays for the services provided.

Sometimes members choose to see out-of-network providers. If they do receive services from an out-of-network provider who chooses to send a balance bill, the member is responsible for paying it.

But surprise billing is more problematic. Here’s why: It happens when a member uses an in-network facility but receives services from a provider the member didn’t know was out-of-network. Then that provider sends an unexpected balance bill.

Providers don’t have to send balance – or surprise – bills to their patients. 

It’s their choice, and we’ll take a closer look at that in a moment.

Surprise bills most commonly come from certain provider specialties such as pathologists, anesthesiologists, radiologists, and emergency room doctors. Members rarely choose which of these providers treat them, so they may not be aware they’re receiving out-of-network services during their visit to a health care facility.

It’s important to note that relatively few Tennessee providers even send surprise bills. That’s because most of them choose to participate in our networks.

And if one of our members does get a surprise bill, they can call us for help. We’ll try to negotiate with the provider on their behalf.

Why do provider networks matter?

BlueCross members get the most from their benefits when they get health care services from in-network providers. When possible, members should ask each provider they see whether they are in-network. (In an emergency situation, we know that’s not always possible – so we cover emergency room charges at in-network benefits.)

Health care providers and health plan members both benefit from networks. Providers accept lower rates for their services, but get access to more patients. (Members, then, get discounted rates for care – which they can see reflected on their claims summaries.)

Networks aren’t just about costs, though. We put requirements in place to help make sure our members get care that meets clinical quality standards.

Our largest commercial network includes 29,000 providers. And 90% of them participate in our smaller network, too.

Some providers claim narrow networks are to blame for surprise billing, but calling either of our networks “narrow” is inaccurate.  And both networks pay higher rates for these specialty care than Medicare or Medicaid.

With broad networks, why is surprise billing a big issue?

We work collaboratively with in-network health systems to avoid surprise bills, and many ask their non-employee providers participate in the same BlueCross networks the hospitals do.

But some emergency physicians and specialists, especially those in private equity-backed practices make a conscious choice not to join the same insurance networks as facilities where they practice.

Why? So they can charge and collect higher rates from patients.

Some provider groups claim networks just exist to boost insurers’ profits. But federal law requires insurers to spend at least 80% of premiums on medical care. That leaves 20% for operating expenses, taxes (yes, BlueCross pays local, state and federal taxes) and net income. Over the past five years, we’ve earned an average 2.1% margin.

You can read this article or check out this infographic to see for yourself how we used our members’ premium dollars in 2018. And ask yourself, how many health care providers offer the same level of transparency?

Unlike insurers, health care providers don’t have legal restrictions on their operating expenses or profits. It seems clear that some providers are using surprise billing to drive their profit margins even higher. 

How can we solve surprise billing?

There are also a variety of federal legislative proposals being debated that are designed to solve surprise billing. One of them, introduced by Senator Lamar Alexander, would use a method called benchmarking to set rates for out-of-network services that lead to surprise bills.

Some providers claim using benchmarking for out-of-network bills would allow insurers to “arbitrarily set their own prices.” But that’s not true: benchmarking would be based on in-network rates providers in each state have chosen to accept.

Arbitration, an alternative solution favored by providers, would likely be time-consuming, frustrating and costly for consumers.

Ultimately, providers and insurers need to work together to solve surprise billing. 

The best way to do that is for providers to join the same insurance networks as the hospitals where they practice, to eliminate this issue for the people they’ve pledged to serve.

Infographic: the story of a surprise bill

Download a PDF of our infographic.

About Roy Vaughn, Senior Vice President & Chief Human Resources Officer

A photo of the authorRoy is responsible for managing all functions of the BlueCross human resources division and properties and corporate services division, as well as corporate culture and employee engagement.

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