The Texas Association of Freestanding Emergency Centers released an analysis of complaints made to the Texas Department of Insurance from out-of-network healthcare providers showing how “chronic and abusive underpayment by insurance companies is the primary cause of surprise medical bills for patients.” These hospital-affiliated, freestanding emergency centers do not bill out-of-network, take federal payers, and are usually run as a department of the hospital system.
During fall 2016, a third-party billing company acting on behalf of freestanding emergency centers filed complaints alleging insurers ignored legal obligations to pay part or all claims for reimbursement submitted on behalf of policyholders, and requested TDI’s intervention. The billing company filed so many complaints that the department held them until those that had been filed were resolved.
After reviewing 417 claims, TDI reported on Jan. 26 an “additional $457,000 was paid to the freestanding emergency centers” to resolve complaints. TDI recommends patient-initiated mediation as an alternative to resolve issues. As a result, from 2009-2016, TDI received 3,824 patient-initiated mediation requests.
TAFEC reported that 90 percent of patient-initiated requests for mediation were resolved through informal teleconferences between the provider and the health plan without being submitted to the State Office of Administration Hearings for formal mediation. Also, TDI’s data shows the cases that were resolved involved “underpayments by health insurance companies” and resulted in “additional funds paid to providers.”
According to TAFEC, more than $750,000 was paid by insurance companies to providers on behalf of their patients. TDI’s report showed that, on average, insurance companies paid $375,000 per year to providers and/or patients. TAFEC says if TDI had tracked other legitimate mediation-related payments, it would likely have found that insurance companies owed some $3 million in payments to providers and/or patients from chronic underpayments.
Brad Shields, executive director of TAFEC, is not surprised by TDI’s findings, saying the company has “long been aware of intentional, chronic underpayment” by insurance companies.
“To address this problem and protect consumers, guidelines must be set for ‘usual and customary’ reimbursement and insurance companies need to be held accountable for meeting that standard,” Shields told D CEO Healthcare. “When they do not, civil and regulatory penalties must be enforced.”
Shields says TAFEC is advocating for increased transparency in health insurance and to increase the resources and oversight of the Texas Department of Insurance to prevent this kind of systematic underpayment from occurring in the future.
Dr. Nick Peters, chief medical officer of Advance ER, with freestanding emergency centers in Dallas and Park Cities, says those who operate freestanding emergency centers have been dealing with underpayment from insurance companies, which hurts patients.
“The TDI data proves what’s happening,” Peters told D CEO Healthcare. “Worse yet, it appears to be an intentional concerted effort by the insurance companies. This demonstrates why there needs to be consistent enforcement of regulations and transparency of the insurance industry.”
