News & Updates


Sean Shaw: Balance billing must be stopped

Sean Shaw • My View • June 9, 2009 

Supporters of Senate Bill 1122, on managed care, claim that all the bill does is change to whom the insurance company sends the check for payment of covered medical services rendered by an out-of-network medical provider. Instead of sending a check to the insured patient, the check would be sent directly to the provider of services. 

If it were this simple, no one would be opposed. Yet insurers and employers who provide group health insurance to their employees believe this bill will increase health care costs and insurance premiums. I will leave it to them to explain why. What concerns me the most is "balance billing."

Balance billing arises when patients receive treatment from a provider who is not under contract with their preferred provider organization (PPO), usually through no fault of their own, such as in emergency situations.

Under current law and under this bill, a health care provider who is not in the insurer’s PPO can receive payment from the insurer and then bill the patient more on top of that payment. This is "balance billing."

Instead of encouraging this practice, which this bill does, the Legislature should prohibit it altogether. This is not a new concept. Under Florida law, if a health maintenance organization is liable for services rendered to a subscriber by a provider, regardless of whether a contract exists between the organization and the provider, the subscriber is not liable for the payment of any fees to the provider (Section 641.3154, F.S.) In other words, whether under contract or not, a provider who provides services that are covered by an HMO may not balance-bill the patient.

The story of a business owner who contacted the Office of the Insurance Consumer Advocate for assistance on a claim illustrates the unfairness of balance billing. The man’s son had a medical emergency. The child was taken by air ambulance to the PPO’s contract facility, where emergency surgery was performed. The PPO did not have a contract provider for land or air ambulance services, although such services were covered by the policy. The ambulance service submitted a bill for $12,000 to the insurer. The insurer determined that $4,000 was the usual and customary fee and paid this amount. The ambulance service billed the balance of its fee, $8,000, directly to the policyholder.

The PPO also did not have contract for anesthesia services, even though they were delivered in a PPO facility. The insurer paid $13,387.32 for anesthesia performed by a noncontract anesthesiologist. The physician billed an additional $5,170 to the policyholder.


There was nothing that we could do for this business owner, who had provided insurance to his 250 employees. He was on the hook for over $13,000.

The scope of the network of preferred providers in a PPO is not subject to review or regulation — in other words, there is no requirement of law or regulation that a PPO network must include every provider specialty or contract service that could reasonably be expected to be required in order to deliver the benefits of a "major medical" health insurance contract. As a result, consumers who receive services from out-of-network providers usually haven’t done so by choice, contrary to statements by supporters of the bill.

A common problem across the country is the refusal of radiologists, anesthesiologists, pathologists and emergency service providers to participate in a PPO even when working within a participating hospital. Radiologists, anesthesiologists and pathologists are hospital-based physicians, but they are almost never hospital employees. Therefore, they are not subject to the hospital’s contract with the PPO. In instances of emergency care, patients can not reasonably be expected to exercise "choice" of provider services or treatment. They are shocked when they receive bills from providers who they thought were covered by their insurance plans.

In December, the Wall Street Journal reported that "a growing number of state regulators are moving to crack down on balance billing." The "New York State Insurance Department … is drafting proposed regulations that could force more disclosure by medical providers and insurers and shield consumers from unexpected charges. California regulators recently made it illegal for people covered by health maintenance organizations to be balance-billed for out-of-network emergency services. And late last year Illinois put out a bulletin that protects many consumers from balance bills in certain situations if they make a ’good faith’ effort to use in-network doctors."

Allowing SB 1122 to become law would be a backward step from attempts to corral the spiraling cost of health care, and more specifically, the direct cost to consumers. Florida would be heading in the wrong direction and at the wrong time.