When an emergency medical situation occurs, whether it’s a playground mishap, a car accident or a life-threatening health care crisis, the first priority for patients and their loved ones is getting care and getting it quickly. They may not think about whether the hospital emergency room is in their health plan network and, in some cases, they may not have a choice. Unfortunately, this can lead to large—and usually unexpected—medical bills.

The problem of surprise medical bills for emergency medical care is growing and affects both plan participants and plan sponsors, writes Elizabeth O’Leary in her article, “Out-of-Network Emergency Claims: How to Avoid Surprise Bills,” in the September issue of Benefits Magazine.

Surprise medical bills can result from many scenarios but, in emergency care, they often occur if patients can’t select an in-network provider or if someone involved in their medical treatment is an out-of-network provider. Because the health care provider is out of network, the plan may cover only part of the bill, leaving the individual responsible for the balance.

These bills can be pretty big. A report from the New York State Department of Financial Services highlighted a case in which a patient was billed $99,000 for the costs of an out-of-network plastic surgeon and assistant for reattaching a severed finger.

Several factors have contributed to the problem, O’Leary explains. Plans are maintaining narrower networks to reduce costs, leaving fewer in-network providers to choose from. Hospitals have shifted from directly employing emergency physicians to contracting for physicians who decline network participation.

There also has been a shift from reimbursement schedules based on a percentage of the usual, customary and reasonable rate (UCR) toward set fee schedules that lower the overall out-of-network reimbursement and result in increased balance billing.

[Related: The Battle for Employee Engagement in Health Care]

Although participants usually get the bill, health plans can be on the hook too. Participants might file an administrative appeal or sue the plan for additional benefits. If a patient assigned his or her rights under a health plan to the provider at the time of treatment, the provider may appeal a benefit denial or sue the plan.

The Affordable Care Act (ACA) has some protections against surprise bills for emergency care, and some states and the federal government have made efforts to address the problem. However, there has been no comprehensive solution proposed to date, O’Leary writes.

She recommends the following six steps for plans to manage out-of-network emergency claims.

1. Evaluate plan data on out-of-network emergency claims. For example, if there are frequent complaints about inadequate reimbursement rates, plan fiduciaries should seek guidance on alternative reimbursement rates that might reduce the incidence of balance billing or litigation.
2. Have a clear and unambiguous payment rule. The clearer the rule is, the easier it will be to defend. Certain rules invite interpretation disputes that can lead to unnecessarily complex and expensive litigation.
3. Verify plan compliance with ACA emergency service requirements. Plans should confirm that they are in compliance with ACA requirements for out-of-network emergency payments.
4. Confirm compliance with ERISA claims-and-appeals and disclosure requirements. It is especially helpful to have a bulletproof claims-and-appeals procedure when defending claims for additional benefits for out-of-network services under the Employee Retirement Income Security Act of 1974 (ERISA).
5. Consider offering a voluntary dispute resolution procedure. This lacks the finality that arbitration would provide and does not eliminate the risk of litigation, but it might reduce balance billing and litigation and provide insight on reimbursement levels.
6. Consider adding an antiassignment provision to the plan. Antiassignment provisions prohibit participants from assigning their right under the plan to out-of-network providers and can be effective in avoiding litigation by out-of-network providers.

Kathy Bergstrom, CEBS
Editor, Publications at the International Foundation