Change of Law: Hospital Action Required
To: Chief Executive Officers, Chief Financial Officers, Legal Counsel, and Government Affairs Staff
From: Andrew Busz, Policy Director, Finance | email@example.com, (206) 216-2533
Subject: House Bill 1065, Protecting consumers from charges for out-of-network health care services
This bulletin is to inform hospitals regarding House Bill 1065 and help prepare for new requirements effective January 1, 2020. The bill includes balance billing prohibitions for certain services, a dispute resolution process for payments for out-of-network services, and various communication and transparency requirements. Please forward this Bulletin to the appropriate persons in your facility or group, particularly those responsible for patient billing, health plan contracting, and updating the hospital’s website.
We invite you to attend WSHA’s webinar on Wednesday, June 19 from 12 pm – 1 pm to learn more about the House Bill 1065 and about Senate Bill 5526, the newly enacted public option health insurance plan, also known as Cascade Care. You can register here.
The changes apply to all hospitals and providers that provide services in a hospital or facility setting, including, hospitals, providers of emergency services, surgery, radiology, pathology, anesthesiology, pathology, and hospitalists.
We recommend appropriate staff at hospitals and physician groups, in conjunction with their legal counsel, familiarize themselves with HB 1065 in its entirety to prepare for implementation. This bulletin reflects a summary of key provisions of the bill and is not comprehensive.
Some initial areas of focus for hospitals and provider groups are:
- Determining a reliable process to verify with carriers and groups whether a patient’s coverage is subject to the provisions of the law. This is necessary to avoid inadvertent balance billing and to identify claims for potential dispute resolution. Note that carriers are required to provide a verification process by January 1, 2020. WSHA recommends hospitals test the workability of this process prior to the effective date.
- Ensuring they have processes to update their website to include required information about carrier network contracts, reflect contract changes and to inform carriers of changes to the non-employed groups providing services at the facility. Also, once developed by the Office of the Insurance Commissioner (OIC) and stakeholders, a notice of patient rights must be posted. This is anticipated by the end of 2019.
WSHA will provide more specific information as additional details are known. In the meantime, please contact Andrew Busz with any questions. While the balance billing, dispute resolution, communication, and enforcement provisions of the bill are effective January 1, 2020, hospitals and providers should make sure appropriate mechanisms are in place before that date.
House Bill 1065 was passed during the 2019 legislative session and signed by Governor Inslee May 21. WSHA and the Washington State Medical Association worked with insurance carriers, the OIC, and legislators to ensure provisions of the bill were fair and workable. Major provisions of the bill are as follows:
Under HB 1065 the payment requirements and balance billing prohibitions apply to specific services provided to:
- Enrollees of fully-insured OIC-regulated carriers
- Enrollees of the state Public Employee Benefits Board (PEBB) and School Employees Benefits Board (SEBB)
- Enrollees of ERISA self-funded groups where the group has voluntarily elected to the provisions of the law by registering with the Office of the Insurance Commissioner. Electing groups must register on an annual basis. WSHA will provide additional information when OIC has determined specifics of the registration process. An electing group will receive the balance billing protections for its enrollees for services included under the bill and agree to comply with its payment and dispute resolution provisions.
The balance billing prohibitions and payment requirements do not apply to enrollee groups other than those listed above. This includes most self-funded groups that have not registered with OIC to participate in the provisions of the bill. We recommend hospitals and affected physician groups develop a robust mechanism to accurately determine if specific patients are subject to the bill.
Identification of included enrollees
WSHA worked hard to ensure the law included a robust mechanism for hospitals and provider groups to determine whether a patient’s group is subject to the provisions of the law. Access to this information is critical to avoid unintentional balance billing and to identify services that are subject to the dispute resolution process. The bill requires that:
Carriers must make available through electronic and other methods of communication generally used by a provider to verify enrollee eligibility and benefits information regarding whether an enrollee’s health plan is subject to the requirements of this act.
Carriers must comply with this provision as of January 1, 2020. WSHA recommends hospitals contact carriers and major self-funded groups prior to the effective date and test their eligibility and benefits verification processes to ensure they can access this information by that date.
The balance billing prohibitions and payment provisions apply to:
- Out-of-network emergency services
- Out-of-network surgery, radiology, pathology, anesthesiology, laboratory and hospitalist services when provided at an in-network facility
- The balance billing prohibitions and payment requirements apply to out-of-network emergency services and out-of-network network surgery, radiology, pathology, anesthesiology, laboratory and hospitalist services at in-network facilities for the following facilities:
- Hospitals licensed under chapter 70.41 RCW,
- Hospices licensed under chapter 70.127 RCW,
- Rural health care facilities as defined in RCW 70.175.020,
- Psychiatric hospitals licensed under chapter 71.12 RCW,
- Nursing homes licensed under chapter 18.51 RCW,
- Community mental health centers licensed under chapter 71.05 or 71.24 RCW,
- Kidney disease treatment centers licensed under chapter 70.41 RCW,
- Ambulatory diagnostic, treatment, or surgical facilities licensed under chapter 70.41 RCW,
- Drug and alcohol treatment facilities licensed under chapter 70.96A RCW, and
- Home health agencies licensed under chapter 70.127 RCW, and
- Includes such facilities if owned and operated by a political subdivision or instrumentality of the state and such other facilities as required by federal law and implementing regulations.
These services were identified as ones where a patient has little or no ability to anticipate and choose in advance the specific providers care in order to avoid unexpected out-of-network charges.
The bill also requires carriers to hold the patient harmless for costs in excess of normal cost sharing when the patient receives out-of-network emergency services at a hospital in a border state. This provision would be nullified in the event of federal rule change or interstate agreement prohibiting balance billing for these services.
Payment and dispute resolution
In the event of a payment dispute for a service covered by the bill, the patient must be held harmless and cannot be balance billed for the difference between the allowed amount and charges. The dispute resolution process is between the carrier and the facility or provider. The legislation applies a “commercially reasonable” standard for payments for included out-of-network services and patient categories subject to the bill. The commercially reasonable definition was adopted rather than a default payment rate. The bill includes a 30-day informal dispute resolution process to negotiate mutually acceptable payment. If informal dispute resolution does not resolve the dispute, either party can request arbitration. Details of arbitration process:
- Claims are bundled. Claims that occur within a period of two months of one another, involve identical carrier and provider or facility parties; and involve the same or related current procedural terminology codes relevant to a particular procedure are grouped together. This provision is intended to make arbitration financially feasible for high volume services that may not be large enough to warrant arbitration on an individual claim basis.
- Baseball-style arbitration is used. The arbitrator will choose between the best offers submitted by the carrier or electing self-funded group and the hospital or provider. The parties can submit additional information to the arbitrator supporting their offer.
- All Payer Claims Data Base (APCD) has a role. The arbitrator can refer to the state’s APCD information to assist in determination of commercially reasonable rate for the service. APCD data is drawn from commercial payments for similar services in the same geographic area and includes:
- Median in-network rate
- Median out-of-network rate
- Median billed charge
- Expenses are allocated. The expenses incurred in the course of arbitration, including the arbitrator’s expenses and fees, but not including attorneys’ fees, must be divided equally among the parties to the arbitration.
The bill has provisions to encourage greater network adequacy. Not less than 30 days prior to executing a contract with a carrier, a hospital or ambulatory surgical facility must provide the carrier with a list of the nonemployed providers or provider groups contracted to provide surgical or ancillary services at the hospital or ambulatory surgical facility. The hospital or ambulatory surgical facility must notify the carrier within thirty days of a removal from or addition to the nonemployed provider list. A hospital or ambulatory surgical facility also must provide an updated list of these providers within 14 calendar days of a request by a carrier.
When determining the adequacy of a proposed provider network or the ongoing adequacy of an in-force provider network, the commissioner must consider whether the carrier’s proposed provider network or in-force provider network includes a sufficient number of contracted providers of emergency and surgical or ancillary services at or for the carrier’s contracted in network hospitals or ambulatory surgical facilities to reasonably ensure enrollees have in-network access to covered benefits delivered at that facility.
Communication and transparency
Hospitals and providers must post on their website listing of carrier networks which they are in-network. Health plan provider contracts shall be required to identify the network or networks to which the contract applies.
Hospital and providers must also post on their websites the standard notice of consumer rights (to be developed by OIC and stakeholders).
The OIC may report hospitals believed to engage in “a pattern of violations” of the bill’s requirements, including balance billing prohibitions, to the Department of Health for investigation and enforcement.
Enforcement penalties includes fines up to $1000 per violation.
The law goes into effect January 1, 2020, except for section 26, which pertains to establishment of the all payer claims database. The date for all payer claims database and associated business processes to be available is November 1, 2019.
We expect OIC to complete the standard notice of consumer rights and the process for self-funded plans to register to opt-in to the provision of the law before the end of 2019.
WSHA’s 2019 new law implementation guide
Please visit WSHA’s 2019 implementation guide online, where you will find a list of the high priority laws that WSHA is preparing resources and information on to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for release of upcoming resources on other laws and additional resources for implementation.