Caitlin Westerson, Colorado Consumer Health Initiative
In September 2016, Zoe Williams got the text message that no parent wants to get: her 3-year old child had fallen in the park and was severely injured. Before panic could takeover, Zoe rushed to get her child medical care. After first going to an in-network urgent care center, she followed the advice of her physician and took an ambulance to Denver Health hospital. There was fear her child may have had a spine injury, and she would do anything possible to get the care needed. In the world of parenting, she did everything right.
Almost two years later, Zoe learned that the ambulance and hospital were both out-of-network with her insurance company. She was summoned to court for more than $15,000 in medical bills she thought had been paid. After a protracted legal battle with the health care system, her insurance company ultimately paid the full amount, saving her family from financial ruin but creating months of tremendous stress dealing with the fallout from seeking care for her child.
All across America, patients and parents, like Zoe, are facing egregious surprise out-of-network bills just for seeking necessary medical care—even when they do everything in their power to avoid them. Fortunately, that’s about to change in Colorado.
What did we win?
After a long legislative debate, Colorado will be the 10th state to provide comprehensive protections for consumers from surprise out-of-network medical bills. Starting in January 2020, Coloradans with state-regulated health insurance plans will begin to see the benefits of the passage of HB19-1174.
These protections are aimed at issues arising from two scenarios: (1) consumers facing emergency care situations, and (2) consumers who seek care at an in-network facility but unknowingly see an out-of-network provider. Protections include:
- A prohibition on balance billing. Currently, there’s nothing stopping out-of-network providers from sending balance bills to consumers when the insurance company doesn’t cover the full amount. This bill requires providers and facilities to work out the payment for services with the health insurance company, leaving the consumer out of the middle with the exception of any copay, coinsurance, or deductible amount a consumer would normally owe with their health insurance coverage. Despite the fact that consumers are explicitly allowed to voluntarily seek out-of-network health care services (in which case balance billing may still be permitted), if providers continue to balance bill it will now be considered a deceptive trade practice and the Attorney General has authority to enforce the law.
- Plain language notification to consumers to inform them of their rights.Consumers often complain that no one told them the doctor (or facility) was out-of-network and that they’d be on the hook for the costs of balance bills. The new law requires providers, facilities, and carriers to provide consistent, accessible information to patients about their rights (if any) regarding bills sent by out-of-network providers in both emergency and non-emergency situations.
- Setting a payment rate for out-of-network providers and facilities. In order to prevent the costs of balance bills from being shifted from consumer out-of-pocket expenses to increased premium costs, the bill sets two different payment rates for out-of-network providers and facilities in surprise billing situations:
- Providers will be paid the greater of (1) 110% of the carrier’s median in-network rate for the same service in the same geographic area or (2) the 60th percentile of the in-network rate for the same service in the same geographic area based on claims from the Colorado All Payer Claims Database in the prior year.
- Facilities will be paid the greater of (1) 105% of the carrier’s median in-network rate for the same service in the same geographic area or (2) the median in-network rate for the same service in the same geographic area based on claims from the Colorado All Payer Claims Database in the prior year.
- Creating a process to address out-of-network payments for ambulance services. Like in the case of Zoe, another source of pain from out-of-network costs for consumers is the ambulance transfer to a hospital in times of emergency. While this bill exempts publicly funded, fire-based ambulance providers (because their financing mechanisms usually include taxpayer dollars), it does require the Commissioner of Insurance to identify and implement a payment methodology for out-of-network private ambulance companies that holds consumers harmless.
- An arbitration process for when the payment rate for out-of-network services is not sufficient. If a provider or health care facility believes that the payment rate described above is not sufficient given the complexity of the case, the provider or facility may initiate a baseball-style arbitration process with the carrier.
- Affordability reporting. The bill requires carriers to report their aggregate cost savings to the DOI with their annual rate filings that are the result of the passage of HB19-1174. Carriers will also be required to report information about the bill’s impact on premiums for consumers.
- Counting out-of-network emergency payments towards consumers out-of-pocket maximum. The bill requires any cost-sharing payments (copays, coinsurance, or deductible) made by a consumer for out-of-network emergency services to be applied to the consumer’s out-of-pocket maximum amount allowed under their health benefit plan. Unfortunately, this is not true for out-of-network payments made to providers for non-emergency services at an in-network facility.
We had to work for it
Advancing a legislative initiative with so many changes to our current health care system did not come without its challenges. In fact, this is the fifth year in a row that the Colorado legislature and consumer advocates attempted to pass proposals addressing surprise out-of-network billing. The past four years a proposal never made it over its first hurdle, dying during the first legislative committee hearing. The 2018 political “trifecta,” however, gave proponents a leg up in finally putting these protections into place. In the end, 91 out of 100 Colorado legislators voted in support of HB19-1174—but it took a lot of effort to make that happen.
HB19-1174 was pushed by a large coalition of stakeholders, mainly driven by health care consumer advocates, Colorado health plans, and employer-based groups, all of whom have a vested interest in reducing out-of-network costs, protecting consumers from surprise bills, and just generally “doing the right thing” for patients. In total, 24 organizations supported the legislation with exactly one industry opposed: health care providers.
Despite massive lobbying efforts from the provider community, mainly aimed at increasing the out-of-network payment rate, we were able to successfully leverage consumer stories and legislative champions to get the bill across the finish line. One critical success factor was having bipartisan co-prime sponsors in each chamber. Surprise out-of-network billing can affect anyone, regardless of political affiliation, so support did not split among party lines.
The sponsors of HB19-1174 spent as much time lobbying their colleagues for support, explaining the impact of the payment rate, and dispelling myths, as paid lobbyists did. They were also integral in engaging key players from their districts and using stories from their constituents. These constituents and consumers like Zoe played an important role in communicating about the efforts “under the dome” to communities across the state. Our communications strategy included a series of op-eds in newspapers in the Denver Metro area and in smaller, local publications. In addition, a prominent television station followed the bill from pre-introduction stakeholder meetings all the way through to the Governor’s signature.
It’s hard to know when compromises are worth it in these big legislative attempts, so we made as many changes as were reasonable in order to protect what we saw as the two most important pieces of the bill: a prohibition on balance billing and a reasonable— not excessive— payment rate for out-of-network providers. Everything else was up for negotiation—and it was negotiated. With 73 proposed amendments, the bill underwent significant change from introduction to passage. Ultimately, 24 amendments were added to the bill resulting in concessions from both sides. While the provider community never supported HB19-1174, many changes were made to address their concerns and did bring some individual hospital systems to support the bill.
We learned a lot!
We knew this was a big undertaking when we began working on this bill months before it was introduced. The payment rate is a challenging piece—not only to reach agreement on, but also to explain to folks that are not intimately familiar with the health care system. It really is the crux of the issue, though, and needs to be addressed in order to solve the problem for consumers.
Colorado is lucky. We have an All Payers Claims Database that helped in truly understanding the impact of setting payment rates at various levels under consideration: the median versus 60th percentile versus 75th percentile of in-network amounts. For example, the 75th percentile of in-network claims can be a 54% increase in price over the median. No amount of data, however, would have prevented the provider community from introducing their own bill to add confusion and muddy the policy waters.
The passage of HB19-1174 goes to show what meaningful stakeholder engagement can get you. It went a long way with lawmakers to track the changes we made, and for whom, to show all the evidence of flexibility and compromise. And it helped to be clear about the goals from the beginning, and to know the most important pieces to protect as the bill evolved.
Those pieces will also be imperative to protect through the implementation process. Major portions of HB19-1174 will require state agencies to adopt regulations to implement the bill. For those next steps, we will continue engaging with partners, both national and local, in learning about best practices that will make this important reform effort an easy transition for consumers.