Fair Coverage Fact Sheet

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Fair Coverage

Main Points

  • Most people don’t realize how little insurance coverage they have until they need it.  No insurance policy is affordable if it abandons you in an emergency.
  • Patients can’t choose where and when they will need emergency care and should not be punished financially for having emergencies.
  • Lack of insurance coverage is dangerous, because patients delay medical care out of fear of large bills.
  •  Patients must be taken out of the middle in the billing process. To end ban balance billing, insurance companies must be required to calculate reimbursements using a single, minimum benefit standard that will avoid “gaming” by insurance companies.
  • Emergency physicians are calling for transparency by insurance companies and use of independent databases, such as FAIR Health to calculate reimbursement.

Why are people getting “surprise bills”?

People have much less health insurance coverage than they realize, and significant costs have been shifted onto patients through higher deductibles, co-pays and co-insurance. 

  •  Health insurance companies have a long history of denying coverage for emergency patients. They have created narrow networks of medical providers, making it more likely that patients will be out-of-network when they need medical care.
  • The percentage of people enrolled in low-premium, high-deductible health plans rose from 39.4 percent in 2016 to 43.2 percent in 2017.[i]
  • Patients are buying so-called “affordable” policies that cover very little (until large deductibles are met) — insurance companies are blaming the medical providers for the charges.The single biggest factor in choosing health insurance coverage is cost (premiums).

Should balance billing be banned? 

As long as there is an across-the-board federal minimum benefit standard, balance billing could be prohibited.

  • Insurance companies must be required to calculate reimbursement using a single, minimum benefit standard and cover the entirety of the emergency visit, not just the patient’s medical screening exam.
  • Medicare rates can’t serve as that standard, because they do not reflect actual practice costs.  These rates were never intended to reflect market rates, but rather are based on the amount of money that is available in the federal budget.
  • ACEP supports using 80th percentile of charges as determined by an independent, transparent benchmarking database (like CT, NY, and AK) tied to a specific previous year with medical cost of living inflationary updates annually.
  • To ensure accurate data is available, insurance companies must provide claims data to an independent, transparent database being used by the state, such as Fair Health.
  • Emergency medicine is unique because of the federal mandate —the Emergency Medical Treatment and Labor Act (EMTALA) —that guarantees access to emergency care for everyone regardless of insurance status or ability to pay.The Affordable Care Act also includes emergency services as an essential benefit. Together, these laws disincentivize health plans from entering into fair and reasonable contracts to provide services in-networ
  • Insurance companies must provide claims data to an independent non-profit database being used by the state, such as Fair Health.
  • Insurance companies should be required to reimburse emergency care within 30 days of receipt of bills. They also should be required to have transparency by providing details about patients’ emergency care coverage on ID cards informing their beneficiaries about the prudent layperson standard.

What does out-of-network mean?

When insurance companies contract with medical providers or hospitals, they negotiate the amounts they will pay for various services. If medical providers agree with the amounts, they become in-network or “participating providers.”If they do not agree with the amounts, they may not.

Insurance companies are exploiting a federal law [EMTALA] mandating that hospital emergency departments must see all patients, regardless of their ability to pay. This puts emergency medical providers at a disadvantage when negotiating rates with insurance companies.

  • Health insurance companies have a long history of denying coverage for emergency patients.
  • For example, the Fair Health claims database that was developed after United Healthcare was successfully sued by the State of New York for fraudulently calculating and significantly underpaying doctors for out-of-network medical services (Ingenix). The formula they used forced patients to overpay up to 30 percent for out-of-network doctors. The company paid the largest settlement to the state of New York and the American Medical Association. Part of the settlement created the FAIR Health database, which is an independent, unbiased source of health care cost information. It was recognized in 2016 as the “best health care cost estimator” by Kiplinger’s Personal Finance Best List.
  • Health insurance companies for years denied claims based on final diagnoses instead of symptoms. In other words, if chest pain brought you to the emergency department, but turned out to be indigestion, the insurance company wouldn’t pay. Emergency physicians successfully fought back against these policies.

What are the solutions?

  • ACEP supports using an independent and transparent database of physician charges to help determine what insurers should pay out-of-network physicians, such as what Connecticut is using.
  • Emergency physicians are calling for transparency by insurance companies and use of independent databases, such as Fair Health (www.fairhealth.org).
    • Nine in 10 Americans want health insurance companies to be transparent about how they calculate coverage for emergency care (Morning Consult 2017).[ii]
  • State and federal policymakers need to ensure that health insurance plans provide adequate rosters of physicians and fair payment for emergency services.
  • Payments for emergency visits must be based on a reasonable portion of charges (usual and customary), rather than arbitrary rates that don’t even cover the costs of care.
  • Everyone should find out what their health insurance policy covers and demand fair and reasonable coverage for emergency care.
  • States that seek to ban balance billing without ensuring fair coverage of emergency care will create huge benefits for health insurance companies while endangering patients and the medical safety net.
  • Patients and physicians must work together to combat these harmful practices by health insurance companies. (Contact your state legislators.)

[i] National Center for Health Statistics “Health Insurance Coverage:  Early Release of Estimates from the National Health Interview Survey January – September 2017.  https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201802.pdf

[ii] Morning Consult. 2017. This survey was conducted by Morning Consult with 1,791 registered voters as a national tracking poll on February 9-10, 2017, on behalf of the American College of Emergency Physicians. There is a margin of error of ± 2 percent.