Hey, Americans, I have a question. (Everybody else, sorry, this is yet another discussion of the awful American health care system.)
The Governor of Massachusetts is soliciting opinions from the public about, among other topics:
Reducing Out-of-Network Costs: Developing new standards to protect patients and reduce excessive out-of-network health care costs.
There's a variety of scenarios where patients might need protecting from out-of-network costs, but one of the most egregious is when a patient presents for treatment at a providing institution such as a hospital or clinic that is represented to them (accurately) as being in-network, but then they find themselves treated by a provider in that institution who is not in-network for their insurance. This provider might not be one they have any say in treating them, and they might be sufficiently impaired by the presenting problem they have no opportunity to vet that the provider is in-network. For patients with no out-of-network benefit for their insurance, this can be economically catastrophic, because it means they are effectively uninsured for that provider's care.
I am entertaining submitting my own proposal to redress this, and before I hand it to the government, I'd appreciate your feedback. Please stress test my thoughts, below. I'd like to know if there's some way in which what I'd propose is bad for physicians or other medical professionals working in institutional settings, before I suggest it to my governor. Also I'm sure there are clues I am missing, which I would be appreciative to be offered.
My understanding of why this problem happens in the first place is that it arises unintentionally out of the staffing practices of medical institutions.
A hospital, for instance, might outsource its radiologists, such that the actual imaging is performed by techs who are hospital employees, but the read is performed by a radiologist who belongs to a wholly separate organization, and the patient gets two different bills from two different organizations (which is precisely how it works at the hospital I get my imaging at). Or a clinic might "hire" behavioral health professionals on a contract (1099) basis, who each are individually paneled with whatever insurances would take them; the patient might confirm that the psychotherapist they are seeing takes their insurance, but then when referred to a psychiatrist at the same clinic for med management, might discover the only psychiatrist with openings doesn't take their insurance.
So it seems to me, the problem here is that the institution is exposing the complexities of its staffing practices to the patients. A patient shouldn't need to know whether or not the person reading their MRI when they're febrile in an ICU is a W2 employee of the hospital. The patient should be able to trust that everyone involved in their care while they are in Local General Hospital will have the same coverage under their insurance as Local General Hospital. It should be enough that the patient checked that the hospital is in-network.
If a hospital or clinic wants to contract with a third party to provide some of the services it offers, that's fine, but I propose that from the patient's view point – and the view point of the patient's insurance – absolutely every medical service through that institution must be billed by that institution, not billed independently by the contractor.
Looked a from the perspective of contract law, the present situation, whereby a hospital can have some of the work on a patient case performed by a third party of their choice and that third party can bill the patient directly, is the hospital enjoying the power to unilaterally enter the patient into a contract for service with the third party. The hospital, not the patient, is the one who decides the image will be read by an independent radiologist, and the hospital, not the patient, decides which radiologist it will be, but it is the patient, not the hospital, then – with no meaningful consent and certainly not informed consent – who has legally contracted with the radiologist for the read and to pay for it.
It seems to me that this is absurd and should be illegal. It seems nonsensical that hospitals (in particular, but also other medical institutions) should have the authority to do that. If the hospital (or clinic or practice) wants to contract for services from third parties (whether institutional or individual professionals), that's their right, but then the hospital should be the party with the contractual obligation to pay the contractor. The hospital should be the party to bill the patient's insurance. It was, after all, the hospital that the patient chose to enter into a contract with. The patient should have nothing to do with and not be exposed to the hospital's staffing decisions and hiring practices. If the patient goes to the hospital, then all the care they get at the hospital should be billed by hospital, and it should be none of the patient's concern how the hospital chooses to staff itself. And the hospital certainly shouldn't have the legal authority to enter the patient into a legally binding contract with a third party, which is what the present legal situation amounts to.
Hospitals and other institutions could still outsource medical services under this regime. Nothing about forbidding hospitals to have third party providers billing independently prevents hospitals from contracting themselves with third parties. They can contract with third parties – but they have to pay them directly. They could even contractually make payment to the third party contingent on the institution being paid by the patient (or patient's insurance) to protect the institution from the additional financial risk of having to bill for the third-party's services and potential non-payment.
And I happen to know that it is legal to do this, at least here in Massachusetts, because in some clinical contexts, we already do: these are precisely the terms under which the vast majority of pre-independent-licensed psychotherapists work in Massachusetts. The entirety of my clinical career prior to my opening my private practice was exactly this: working for clinics who billed insurance for my services, even when I was a 1099 contractor; I have never been paneled, myself, with any insurance, ever. See, only independently licensed psychotherapists can bill insurance directly, and the way one becomes an independently licensed psychotherapist is by working as not an independently licensed psychotherapist; so there's a whole industry of outpatient mental health clinics employing junior therapists who can't yet bill insurance for themselves. These clinics hire pre-independent-license mental health professionals, often as 1099 contractors, and bill insurance for their services. Typically, these clinics have contracts with these therapists where the therapist's pay is a percentage cut of the moneys received for their services on a FFS basis. If the insurance doesn't pay the clinic, the contracting therapist doesn't get paid; if the insurance does pay the clinic, the therapist gets a cut after the check clears. This has the advantage for the therapist of not having to credential with the insurances or bill the insurances themselves. It has the advantage for the patient of not having to worry about whether the clinician takes different insurance (surprise!) from the clinic.
That said, I get the impression that perhaps it is the insurance companies, themselves, that prefer that third parties bill separately. I know that there are insurance companies that refuse to participate in the above scheme entirely. Blue Cross Blue Shield of Massachusetts, notoriously, will not contract (or would not, back when I worked for clinics) with mental health clinics (which bill for their pre-individual-licensed clinicians), only with individual clinicians. Do insurance companies require outsourced services be billed by the party to which it is outsourced in certain contexts? Do insurance companies make it hard or impossible for, say, hospitals to bill insurance for the services of an out-sourced radiology practice?
Note, I am not asking if hospitals or other medical institutions would find it disagreeable to have to bill for their contractors instead of leaving the contractors to bill independently. This arrangement I propose would put hospitals in the position of having to adopt the additional labor of billing for more services than they presently do, and it might expose them to interesting new legal liabilities where they adopt some greater legal exposure to malpractice or other wrongdoing committed by their contractees. I consider this a feature not a bug, because it would serve to discourage institutions from contracting out services. Given the problems we have been having with private equity acquiring hospitals, firing whole departments, and replacing them with contract companies, I think it would be a perfectly swell thing if there were some additional negative consequences for doing that.
In summary, it seems to me the solution to patients finding themselves on the hook for out-of-network medical expenses they did not consent to receiving from out-of-network providers when getting care from in-network institutions is to 1) make statute or regulation that forbids medical institutions to provide services which are billed by third parties and, if also necessary, 2) make statute or regulation that require insurances to pay medical institutions for the service their contractors render on their behalf. It doesn't seem to me that this would have a downside for physicians or other healthcare professionals, and might even have some secondary benefits insofar as it might do a bit to discourage one of the exploitive practices of venture capital.
Any problems with this that you can see? Anything I am missing?