Arizona has joined the national trend of trying to solve the “problem” of “surprise medical out-of-network bills.” The prevalence of this concern was reported in the New England Journal of Medicine which stated that 22% of patients who visited an emergency department received a surprise bill from an out-of-network provider. A “surprise bill” arises when an enrollee of a health plan receives care, and a medical bill, from a health care provider who does not belong to their health insurer’s provider network. These bills are typically for medical services that are rendered at an in-network health care facility or at the request of an in-network physician. The enrollee is then billed by the out-of-network provider for the remaining amount of the charge that is the difference or the “balance” of the charge less the allowable insurance amount paid under the enrollee’s health plan. In contrast, in-network providers are generally prohibited from balance billing a patient under their plan contracts.
The Arizona Senate Bill 1441, signed on April 24, 2017 by Governor Ducey, amends Title 20 of the Insurance Law, Section 20-3102 by adding Article 2 “out-of-network claim dispute resolution.” S.B. 1441 provides that an enrollee may dispute the amount of the bill by a dispute resolution process so long as the enrollee meets a threshold amount for out of pocket cost-sharing of at least $1,000. The process starts with an informal teleconference, but may proceed to final binding arbitration, if requested, and certain criteria are met. The Bill also includes a disclosure requirement that, if acknowledged by the patient, will preclude dispute resolution and permit balance billing.
S.B. 1441 reflects an uneasy and technically complex compromise between insurers and providers. The benefit for providers is that it provides a mechanism to quickly resolve and obtain compensation for services soon after the services have been billed, rather than having to pursue the patient and the insurer for payment. Additionally, for enrollees to pursue arbitration, the price of admission is to first resolve their cost sharing obligations to the provider (either paid or to be paid under a written fee agreement) and the insurer’s out-of-network allowable. S.B. 1441, if applied, requires that the insurer pay the provider the applicable out-of-network payment. Anecdotal evidence suggests that many providers consider payment of such amounts by the patient and the insurer to be a “win.”
If the bill is successful, it is because all parties have the incentive to resolve surprise bills without incurring the time and expense of arbitration. However, the bill as written is merely a framework. The Arizona Department of Insurance must still formulate regulations to implement the bill beginning in January, 2019.