Even with balance-billing protection, a tiered network may cause tears

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My last post involved a close look at the severely tiered provider network in the silver plans sold in the ACA marketplace by Independence Blue Cross, the dominant insurer in Philadelphia and southeastern Pennsylvania.  On a second look, a thought occurred to me: tiered networks that place go-to hospitals in higher tiers put an asterisk of sorts on balance-billing protections for emergency care, including those due to come online nationally when the No Surprises Act takes effect on January 1.

Under the No Surprises Act, emergency care is billed at in-network rates whether or not the hospital or facility is within the provider network of the patient's health plan. But what exactly is an "in-network rate" in a tiered network? Depends on the tier.

Independence's HMO plans sold in the ACA marketplace have three tiers. Its second-cheapest silver offering on Pennie, Pennsylvania's ACA exchange, the Keystone HMO Silver Proactive plan, posts a deductible of $0. But that's in Tier 1 only. For enrollees with incomes too high to qualify for Cost Sharing Reduction (CSR),* Tiers 2 and 3 have a deductible of $6,000 for an individual and $12,000 for a family. 

That deductible does not apply to most services. But it very much applies to inpatient hospital care. The patient copay for such care (for a silver plan with no CSR) is $600/day in Tier 1, with no deductible. In Tiers 2 and 3, hospital service is subject to the deductible ($6,000) and runs to $900/day (Tier 2) or $1,300/day (Tier 3), to a maximum of five days.  The plan has an annual out-of-pocket maximum of $8,550 per individual and $17,000 per family.

Just about half of the enrollees on Pennie in Pennsylvania's Rating Area 8, where Independence's Keystone plans dominate the market, have incomes under 200% FPL and so qualify for strong CSR that sharply reduces these tiered fees. The fees under the two strongest levels of CSR are detailed in the note at bottom.

The deductible does not apply to an emergency room visit per se, which is billed at $550 across tiers.  But it does apply if you are admitted to the hospital and it is in Tier 2 or Tier 3.  The plan summary explains:

For Keystone HMO Proactive plans, if you are admitted to an in-network hospital from the emergency room, the out-of-pocket costs for inpatient hospital will apply based on the tier of the in-network hospital. If admitted to an out-of-network hospital following an emergency room admission, the Tier 3 in-network level of benefits will apply. Out-of-network providers for emergency services will be covered at the Tier 3 level of benefits.   

According to an Independence agent, the emergency fee covers "anything that happens in the emergency room" -- including, in the case of a broken arm, x-rays and surgery. If admission to the hospital is required, however, Tiers 2 and 3 are equivalent to an out-of-network facility.  A cost-conscious plan member might want transfer to a Tier 1 hospital prior to admittance, if feasible.

As Antoinette Kraus of the Pennsylvania Health Access Network explained to me back in 2018, in the tiered Keystone plans, some top facilities are in the higher tiers. University of Pennsylvania and Mainline Health, the latter key to the suburbs, are both in Tier 3. That's still true. Doctors are generally affiliated with one health system or another, with their tier following suit.

Exposure for insured people to high in-network out-of-pocket costs, generally and in emergency care, is far from unique to tiered networks. About a third of ACA marketplace enrollees are in bronze plans, in which deductibles average close to $7,000.  In employer-sponsored plans, single-person deductibles average about $1,600 generally and $2,300 in plans offered by small employers. Deductibles are above $3,000 for 13% of people covered in employer plans, according to KFF.  But such costs are fixed and, under the new law, will not vary for emergency care regardless of where the patient is treated. 

The balance billing protections for emergency services under the No Surprises Act apply to "certain services in an emergency department of a hospital or an independent freestanding emergency department, as well as post-stabilization services in certain instances," according to a CMS fact sheet.  Once stabilized, or after having received a measure of post-stabilization care, a patient may have to arrange to be moved to an in-network facility to maintain balance billing protection. Health Affair's Katie Keith summarizes in some detail how far the balance billing protection extends:

...the NSA defines emergency services to include post-stabilization services, except under certain conditions. This means that patients are generally protected from balance bills for post-stabilization services. Post-stabilization services are what they sound like. This includes additional care that the plan or insurer would otherwise cover that is, in this case, delivered by an out-of-network provider or at an out-of-network facility after a patient is stabilized. These services fall under the NSA regardless of where in a hospital such services are furnished; they may be provided as part of outpatient observation or an inpatient or outpatient stay if provided together with emergency services.

Post-stabilization services are not treated as emergency services under the NSA (meaning a patient could be legally balance billed) if certain conditions are met. Patients could face balance bills for post-stabilization services if 1) the patient’s attending emergency physician or treating provider determines that the patient can travel to an in-network facility using nonmedical or nonemergency transportation (but the patient opts to stay at the out-of-network facility); 2) the patient gives informed consent to the out-of-network care (and agrees to be balance billed for this care); and 3) the provider or facility satisfies any other conditions laid out by the agencies. Providers and facilities must also comply with relevant state laws (including, for instance, state laws that prohibit patients from waiving balance bill protections).

The agencies include additional patient protections in interpreting these conditions and emphasize that post-stabilization notice and consent procedures should be used sparingly and in limited circumstances. For instance, a receiving in-network facility must be within a reasonable travel distance. A patient simply cannot give consent when they are far away from any in-network providers and unable to use nonmedical transportation. The same is true if an individual faces unreasonable travel burdens (such as being unable to afford transport or not well enough to take public transit). These limitations prevent them from giving consent. When a patient cannot consent, the NSA’s protections continue to apply to post-stabilization services and the patient cannot be balance billed.

In short, care to which the No Surprises Act protections apply when delivered post-emergency in an out-of-network facility is subject to complex rules. Emergency care at a higher-tier facility in a tiered network may add an extra layer of vulnerability, if care beyond the immediate ER fee is billed at higher-tier rates.

Update, 1:30 p.m.: assume, for the sake of argument, that the final rule fleshing out the No Surprises Act requires tiered health plans to treat emergency care as Tier 1. Independence's flat ER fee with no deductible would not encompass all services treated as "emergency care" -- which may include post-admission services under certain circumstances. From the Interim Final Rule, p. 32 (my emphasis):

Under section 9816(a)(3)(C)(ii) of the Code, section 716(a)(3)(C)(ii) of ERISA, and section 2799A-1(a)(3)(C)(ii) of the PHS Act, emergency services include any additional items and services that are covered under a plan or coverage and furnished by a nonparticipating provider or nonparticipating emergency facility (regardless of the department of the hospital in which such items and services are furnished) after a participant, beneficiary, or enrollee is stabilized and as part of outpatient observation or an inpatient or outpatient stay with respect to the visit in which the other emergency services are furnished. Such additional items and services (referred to in this preamble as post-stabilization services) are considered emergency services subject to surprise billing protections unless the conditions enumerated in section 9816(a)(3)(C)(ii)(II)(aa)-(cc) of the Code, section 716(a)(3)(C)(ii)(II)(aa)-(cc) of ERISA, or section 2799A-1(a)(3)(C)(ii)(II)(aa)-(cc) of the PHS Act, as applicable, are met, as well as such other conditions as specified by the Departments under paragraph (dd) of the respective sections. 

By way of context, the rule notes (p. 27): "The terms “emergency medical condition,” “emergency services,” and “to stabilize” generally have the meaning given to them under the Emergency Medical Treatment and Labor Act (EMTALA), section 1867 of the Social Security Act [42 U.S.C. 1395dd].

Update, 11/18/21: Guidance for New Jersey's balance billing protection law, enacted in 2018 (from the state Dept. of Banking and Insurance), includes this specification: "If the covered person is covered by a tiered health benefits plan, the cost-sharing applied for inadvertent and/or involuntary out-of-network services should be the preferred, lowest cost tier." I humbly suggest that that same rule be implemented for the country.

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* Cost Sharing Reduction reduces the out-of-pocket maximum in the Keystone Silver Proactive plan to $2,100 for enrollees with incomes up to 150% of the Federal Poverty Level ($19,140 for an individual), $2,850 for enrollees with incomes in the 150-200% FPL range (up to $25,520 for an individual), and $6,000 for enrollees with incomes in the 200-250% FPL range (up to $31,900).  At incomes up to 150% FPL, the Tier 2-3 deductible is $200, the ER fee is $50, and the per-day hospital inpatient fee is $250 in Tier 2 and $500 in Tier 3. At incomes in the 150-200% FPL range, the deductible is $1,750, the ER fee $200, and the inpatient day rates are $500 and $900 in Tiers 2 and 3, respectively. 

In Pennsylvania's Rating Area 8, where the Independence tiered network dominates individual market enrollment (with market share exceeding 90%), 85% of enrollees with  incomes under 200% FPL select silver plans and are subject to these sharply lower OOP maxes. At low incomes, however, these reduced fees are at least proportionately burdensome. Claims data indicates that high-CSR enrollees access far less medical care than people in employer-sponsored plans with comparable cost-sharing.

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