This week, the Empire State is taking a bold step toward boosting consumerism in the healthcare industry, with enactment of a new transparency law that sets responsibilities for providers, payers, and patients.
New Yorkers know how to cut a deal.
Ambitious healthcare transparency legislation approved a year ago in Albany goes into force this week. The "Emergency Medical Services and Surprise Bills" law features consumer protections for out-of-network care, a pricing benchmark for healthcare services based on nearly 2 million NY insurance claims, and an independent dispute resolution process for providers and payers to arbitrate contested billings.
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Robin Gelburd |
FAIR Health Inc., a not-for-profit corporation founded in 2009 to build a national database of insurance claim information and serve as a resource for the healthcare industry, is providing the data for setting the new transparency law's pricing benchmark. FAIR Health President Robin Gelburd says the new law has thrust the Empire State into the healthcare transparency limelight.
"New York was successful in getting the law passed because it seeks to afford consumers tangible protections but there's breathing room in the law," Gelburd told me this week. "It's not intended to be overly intrusive on provider network design. It's a workable solution and approach."
She says the new law was adopted with widespread support, even among healthcare providers, who have been wary of transparency initiatives in other states.
"There's a balancing of a variety of different interests. In New York, the medical society was at the table, as well as the hospitals. … There was a lot of give-and-take, and there was general satisfaction in the compromises they had to make"
Fittingly with Major League Baseball returning to action this weekend, the independent dispute resolution (IDR) mechanism in the new law features "baseball arbitration." The Medical Society of the State of New York website says the IDR mechanism ensures fairness for providers and payers.
"Either the physician or insurer could bring the claim to the IDR process. To encourage reasonableness on both sides, the IDR entity would be required to choose between the plan's payment or the non?participating physician's fee ("baseball arbitration"). Only in the rare instances where the reviewer believed that a settlement is reasonably likely or both the physician fee and insurer payment represent unreasonable extremes, the reviewer can give the parties ten business days to negotiate a fee without consequence if one or neither party wished to participate in such a re?negotiation."
The pricing benchmark is a crucial component of the new transparency law because it exemplifies the initiative's attempt to "properly contextualize" healthcare information and "create a common vocabulary" to promote apples-to-apples comparisons, Gelburd says.
Under the new law, pricing of healthcare services is geared to usual and customary costs (UCC) drawn from FAIR Health's insurance claim database. The UCC pricing benchmark is 80% of the average billing for a service found in the FAIR Health database.
"Health plans have to describe how they reimburse relative to that benchmark, but they don't have to pay at that level," Gelburd says. "New York took the step of applying a standardized meaning to usual and customary cost."
She says the pricing benchmark is slated to play a pair of crucial functions. "It will serve as a point of articulation for benefits that are available to a health plan member. It will also play a role in dispute resolution. If the insurer and the provider don't agree on the bill for services … UCC becomes one of the relevant factors to look at. It gives you some structure, some guide posts to help guide the conversation."
Gelburd says the FAIR Health claims database is serving as an indispensable source of truth for healthcare stakeholders in New York and across the nation.
"Everyone needs independent data to advance decision-making. Our database has become an oasis that many people are coming to drink from," she told me, adding that the national database is helping healthcare officials to craft network adequacy regulations, develop benefit design innovations, and direct epidemiological research. "It's become a real looking-glass for the country. We feel the responsibility of the trust that people have placed in us."
New York’s new transparency law has great promise but much work lies ahead.
"Given the creativity and the good intentions that went into crafting this law, there are many more steps to take," Gelburd says. "Now, the real challenge is to make sure there's consumer awareness of the law, and all the key stakeholders have to make sure there are resources available to consumers."
For health plan members, the new transparency law provides several consumer protections related to provider networks, she says.
"Networks are the source of the river [for claims disputes]. One of the key issues that's being addressed by the law is surprise bills. To avoid surprise bills, you have to go to the source of the river and find out what's in-network and out-of-network. This law places the burden on everyone."
Under the new law, if a health plan member cannot find a particular service or doctor in-network, "there is a pathway to get that certification" and avoid out-of-network billing, Gelburd says. The law allows plan members to request access to a particular service or doctor to be considered in-network and for health plans to evaluate the requests. Patients have appeal rights.
Transparency is essential to make sure providers, payers, and patients are treated fairly, she says: "For this law to work, consumers need to go to information that's reliable, robust, and up-to-date."
Healthcare Consumerism has Far to Go
New York has taken a leap forward in achieving healthcare industry transparency; but on a national scale, the journey has just begun, according to the findings of a consumer survey that the National Health Council released last month.
The survey focused on people with chronic illnesses who purchased health coverage last year on the new public insurance exchanges. The research included six focus groups in three cities and more than 400 health plan beneficiaries polled nationwide. A significant information gap is among the top findings of the research: Only 42% of gold plan enrollees reported having enough information to select a health plan, with even worse results for silver and bronze enrollees, who reported having enough data to make an informed decision 37% and 24% of the time, respectively.
Marc Boutin, CEO of the NHC, which is a Washington, DC-based nonprofit patient advocacy group, says consumerism is establishing a tenuous hold in the healthcare industry. "The first stage of consumerism is there's a demand in the marketplace. What we're seeing in healthcare is there is consumer demand for information, and now the system needs to build up to meet that demand," he told me this week.
Boutin says the healthcare industry needs to reach three milestones before consumers can play a constructive role in the marketplace: transparency in transactions; making transaction information easily accessible, useful and uniform; and presenting information in a "machine-readable" format.
"There's been a lot of movement on the transparency side, but you need all three elements to create the tools that make consumerism work," Boutin says, adding that providing consumers with information on health service cost appears to be an obstacle nationwide. "Cost is not reported in a way that is transparent, uniform, or machine-readable yet."
While fostering consumerism in healthcare will take several more years of effort, Boutin is hopeful the country has reached a tipping point.
"We're still pretty close to the ‘hopelessly opaque’ mark on the spectrum, but we're seeing dramatic movement. Transparency and uniformity are the first two big steps you have to take. And this needs to go farther than the exchanges. It needs to go to the broader insurance industry. It's just a matter of time."
The transparency law in New York applies to all health plans that are purchased or renewed after April 1.
Christopher Cheney is the CMO editor at HealthLeaders.