American consumers of health care want the highest quality, state-of-the art medical care available, but the price tag for these services is often staggering. The truth is that consumers are protected from paying the full cost of care by the contractual agreements negotiated between insurers and health care providers (physicians and hospitals) – agreements that allow consumers to get the health care that they want and need, and that help contain health care costs.
It’s a pretty straightforward proposition. To be included in an insurer’s “network,” health care providers agree to accept the insurer’s reimbursement rates as payment in full and not “balance bill” the member for additional charges.
The reimbursement rates are often substantially lower than the amounts the provider would charge to uninsured consumers. As a trade-off for lower reimbursement rates, the provider is guaranteed direct, prompt payment for the medical services they provide and a steady cash flow directly from the health plan. The promise of direct, prompt payment is a primary economic benefit that encourages physicians and hospitals to participate in the network and not balance bill consumers.
Unfortunately, the Colorado legislature is considering legislation that would turn this system of contract negotiating upside down. Under proposed “assignment of benefits” legislation, Colorado HB 05-1165, health care providers could choose not to participate in an insurer’s network and still receive direct payment.
And, providers could also bill the patient for charges over and above the reimbursement that they receive from the insurer. This dangerous legislation removes the essential quid pro quo from the provider/insurer contract and is, in reality, balance-billing legislation.
Mandating assignment of benefits would increase the numbers of hospitals and physicians that could opt out of private health insurance contracts – at the expense of patients who would pay higher premiums and bills.
Yes, health care costs are too high, but one thing is certain: We won’t solve the affordability problem by forcing consumers to pay more for medical care in the form of balance billing costs.
Paying retail prices for medical services hikes premiums for employers who will pass along these costs to their employees. “Assignment of benefits” legislation is about consumers paying more for health care. Coloradans can’t afford it.
Vice President and General Manager for Anthem Blue Cross and Blue Shield in Colorado and Nevada