Last year, Congress passed the No Surprises Act to protect patients from huge surprise medical bills.
With the law set to go into effect in January, some of North Carolina's most egregiously overpriced providers are starting to feel the pinch and it's making them mad.
The American Society of Anesthesiologists is accusing the state's largest insurer, Blue Cross and Blue Shield of NC (BCBSNC) of using "strong arm" tactics to lower anesthesia costs.
Why is BCBSNC trying to reign in these costs?
Most likely because North Carolina is one of the nation's most expensive states for anesthesia.
According to the independent Health Care Cost Institute, the median cost of anesthesia services for employer-sponsored plans in North Carolina was the most expensive or second-most expensive in the country for the majority of the procedures the study examined.
The study looked at the most commonly billed anesthesia services and compared the median commercial rate to what Medicare would pay. Here's what they found:
- C-section: Anesthesia charges were 7.7 times higher than what Medicare would pay, the second highest in the country.
- Planned vaginal delivery: Anesthesia charges were 5.2 times higher than what Medicare would pay, the second highest in the country.
- GI tract using endoscope: Anesthesia charges were seven times higher than what Medicare would pay, the highest in the country.
- Procedure in upper abdomen: Anesthesia charges were 6.8 times higher than what Medicare would pay, the highest in the country.
- Procedure in lower abdomen: Anesthesia charges were seven times higher than what Medicare would pay, the highest in the country.
How Did Anesthesia in NC Get So Expensive?
It is not by accident that North Carolina anesthesiology costs are so high.
Anesthesiologist practices have exploited a loophole in the state's healthcare billing laws to extort higher and higher payments from patients.
Here’s what the law says:
“No insurer shall penalize an insured or subject an insured to the out-of-network benefit levels offered under the insured's approved health benefit plan… unless contracting health care providers able to meet health needs of the insured are reasonably available to the insured without unreasonable delay.”
On its face, the law makes sense.
Let’s say you live in Charlotte and you are at the beach on vacation. You’re in an accident and need emergency care, but your in-network ERs are back in Charlotte. In this instance, the law should protect you from a high out-of-network bill because an in-network ER isn’t “reasonably available” without “unreasonable delay.”
Now, if everyone acted with honest intentions then this would be a commonsense consumer protection.
But that’s not happening.
Specialty practices, most notably for-profit anesthesiology groups, have manipulated the law in two ways.
First, they deliberately refuse to accept your insurance. They can do this because often times anesthesiologist groups don't actually work for your in-network hospital. They are a big, separate, for-profit entity and just because the hospital they work at accepts your insurance, doesn't mean they have to.
Here is how it works: you are headed into surgery at your in-network hospital. Of course, you are going to need anesthesia, and since the for-profit anesthesiologist practice is the exclusive provider of anesthesia at the hospital, they know they are the only one “reasonably available.” By simply refusing your insurance, they can charge any amount they want, and the law guarantees they’ll be paid it.
This, of course, causes premiums and out-of-pocket costs to skyrocket.
The second, and more common way the law's loophole is exploited is through contract extortion. For-profit anesthesiologist groups will use the threat of going out-of-network to extort huge payments from your insurer. Anesthesiologists know insurers have no negotiation power. An anesthesiologist can stay out-of-network and charge whatever they want. Or, your insurer can agree to a take-it-or-leave-it rate.
What happens? The insurer agrees to a vastly inflated rate. After all, for example, it is better to pay an extorted $5,000 for a $1,000 service than an out-of-network $8,000 charge.
New Surprise Billing Law Provides a Solution
So why are anesthesiologist groups so mad all of a sudden?
Congress took away their leverage with the No Surprises Act.
Starting in January, if an anesthesiologist group wants to stay out-of-network and send an inflated bill to patients, an independent arbiter will set a fair-market rate. An insurer must pay that fair-market rate and the anesthesiologist must accept it.
This is a huge threat to anesthesiologists’ bottom-line. If they can't stay out-of-network and get a guaranteed check for their inflated price, then the price-gouging these groups depend on, and the leverage that goes along with it, is no longer in play.
With the new law beginning in just over a month, one insurer has already notified the most egregiously overpriced doctors that they need to accept reasonable rates for their services or go through the arbitration process.
Either path cuts into the anesthesiologist groups' bottom-lines. And it appears that's left them mad and scrambling.
Extortion has been a good business model for anesthesiologist in North Carolina for quite some time.
But thankfully for patients, Congress put an end to that effective January 1.
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