Federal Rule to Revise Out-of-Network Billing

New surprise billing rule taking effect on Jan. 1 may be an unwelcome financial surprise for pathologists

CEO SUMMARY: Remaining out of network with health insurance companies may boost revenue for providers, including anatomic pathologists and emergency room physicians. But the good times may soon end. Last month four federal agencies issued rules that implement new requirements under the No Surprises Act. Data on how much certain specialists charge for out-of-network care show about half of all pathologists file at least somecout-of-network claims.

PATHOLOGISTS MAY NOT BE AWARE THAT THEY ARE IDENTIFIED in a federal report on surprise medical billing as one of six medical specialties responsible for a significant proportion of out-of-network (OON) bills, according to data published earlier this month. 

This fact should get the full attention of pathologists, their practice administrators, and their financial advisors. Approximately 75 days from now—on Jan. 1, 2022—the new federal interim rule on surprise billing will become effective. This rule has the potential to significantly reduce the amount of money certain pathologists have been paid for out-of-network claims in recent years. 

Most pathologists and lab administrators know that out-of-network bills can often result in consumers getting unanticipated “surprise” medical bills. Bowing to criticism from patients and consumer groups, Congress passed the No Surprises Act on Dec. 27, 2020, as part of the Consolidated Appropriations Act. 

Next, on Sept. 30, four federal agencies issued new rules to implement the law. One requirement in the surprise billing rule specifies arbitration between the provider and the patient. Thus, if pathologists and other providers continue to submit bills that consumers do not expect, they could end up in arbitration with patients who are unhappy about those bills. 

Out-of-Network Bills

In an Oct. 1 report published on his blog, “Discoveries in Health Policy,” which was based on a 2017 study of six medical provider specialties: anesthesiology, behavioral health and psychiatry, cardiology, emergency room physicians, pathology, and radiology (see table below), Bruce Quinn, MD, showed that emergency room physicians and pathologists filed the most out-of-network bills. 

Quinn’s company, Bruce Quinn Associates LLC, advises pathologists and clinical and genomics laboratories, among other providers, on federal payment and coverage policies.

In his blog, Quinn cited “Requirements Related to Surprise Billing; Part II,” a report that four federal agencies—the federal departments of Health and Human Services, Labor, and Treasury and the federal Office of Personnel Management—published on Sept. 30 as part of an interim final rule. The rule is part of the departments’ efforts to implement the No Surprises Act. 

Days later, this interim rule was published in The Federal Register on Oct. 7. In commentary, the four agencies noted that those six medical specialties issued more surprise bills than other specialists because consumers generally cannot shop for those services. “Surprise billing occurs more often in specialties that are not shopped,” the report noted. 

The source for the data in The Federal Register comes from a report the Health Care Cost Institute (HCCI) published, last year, titled, “How Often Do Providers Bill Out of Network?” 

In that report, HCCI researchers noted that most healthcare providers who submit out-of-network claims do so less than 10% of the time. HCCI also noted that pathologists were outliers among these six medical specialists. Some providers, “always, or almost always billed out of network,” the report said. 

“For instance, 36% of pathologists billing out of network for inpatient visits and 20% of pathologists billing out of network for outpatient visits did so more than 90% of the time,” the report noted. “In contrast, virtually no cardiologists billed out of network this often.” 

As The Federal Register explained, the data from HCCI came from researchers who examined claims from 13.8 million visits to 35,000 providers in six specialties in 2017. From that data, the researchers estimated the percentage of providers who had at least one out-of-network claim and whether the procedure was inpatient or outpatient. “The survey found that less than half of specialist providers surveyed billed at least once on an out-of-network basis,” the Federal Register added. 

29,227 Laboratories

The four agencies that issued the interim rules on Sept. 30 under the No Surprises Act estimated that the rules will affect 29,227 diagnostic and medical laboratories, although some labs might be counted twice in these estimates, particularly facilities that have in-house laboratories, the report noted. 

In addition, the rules will affect 16,992 emergency and other healthcare facilities, 6,090 hospitals, 270 independent freestanding emergency departments, 9,280 ambulatory surgical centers, and 1,352 critical access hospitals. 

The No Surprise Act is designed to protect patients from surprise billing and excessive cost sharing, and it implements consumer protections against surprise medical bills, such as an independent dispute resolution process and a patient-provider dispute resolution process. The act also calls for all providers to provide good-faith estimates for uninsured or self-pay patients and gives consumers more rights for external review of surprise bills.

The CAP Pushes Back

The Dark Report reached out to the College of American Pathologists (CAP) for comment on the HCCI data. In response, the CAP said the HCCI data are misleading by saying that nearly half of pathologists regularly bill out-of-network. 

In addition, the CAP said, “There are two big problems with Table 2 [shown below.] First is the number of pathologists reported and second is the potentially misleading use of data from HCCI and from AAMC [Association of American Medical Colleges] estimates of workforce sizes. 

“The HCCI numbers are accurate but presented in a somewhat misleading manner,” the CAP added. “The HCCI data is extremely heavy on the tail-end of the distribution, which makes the average appear so high. Table 2 [in the federal report] focuses only on the frequency of billing, not the size of the bills, and pathologists have some of the smallest out-of-network bills of any specialty. Frequency of billing is only half the story.

“The median national average size of out-of-network bills for pathology and lab services in the HCCI study was about $67 in the inpatient setting and about $78 in the outpatient setting, making pathology and laboratory service bills some of the smallest compared to other specialties,” the CAP noted.

In addition, the CAP said, a moderate percentage of pathologists appear to have made out-of-network claims at least once, and most do not do so regularly. “Fewer than half of pathologists bill out of network, and about half of those bill out of network less than 10% of the time,” the CAP added.

“The CAP took issue with the HCCI’s data when those numbers were released last year,” the CAP added. “It’s unclear if the HCCI data include only pathologists billing out-of-network claims, or pathologists and others in the clinical laboratory business that also bill claims for a wide range of pathology and laboratory services.”

The CAP next addressed the pathology workforce numbers in the HCCI report. “With regards to the number of physicians billing pathology, a 2020 study by members of the CAP found data compiled by the Association of American Medical Colleges undercounted the pathology workforce by 40%,” the CAP said. 

“The American Medical Association Database Products Division recorded 21,292 active pathologists in 2019. The CAP has recommended that the AAMC alter the way it reports the pathology workforce so that it includes all physicians in the AMA master file who are active practicing pathologists.” 

Out-of-Network Billing Report Was Issued in 2020 by Health Care Cost Institute (HCCI)

IN THEIR OWN REPORT ABOUT A THE SURPRISE BILLING RULE, four federal agencies drew heavily from a report on out-of-network billing published by the Health Care Cost Institute (HCCI) in 2020. The table below is reproduced as presented in the federal rule and commentary, and published in the Federal Register as “Requirements Related to Surprise Billing; Part II.”

Of particular interest for pathologists is “TABLE 2: Physicians with Out-of-Network Claims,” which was included in the federal report. The HCCI analysis showed that, during 2017, pathology had the second highest percentage of providers submitting at least one out-of-network (OON) claim that year. Pathology ranked second behind emergency physicians for the “mean percent of visits with services billed OON.”


Source: Federal Register, “Requirements Related to Surprise Billing: Part II,” Oct. 7. 2021.



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