An out-of-network provider, or non-participating provider, does not have a contract with a particular health plan to render services at a negotiated rate. Depending on the type of plan, using an out-of-network provider could result in no coverage of the service rendered or coverage of a less generous amount than had the service been rendered by an in-network, or participating, provider.
Managed care is a system that relies on contracts as the foundation to set forth the various players’ rights and responsibilities. Patients (or their employers) have contracts with a payor that specify the services covered and the procedures to be employed to access the services (i.e., gatekeeper system, access to a limited universe of contracted providers, prior authorization, etc.) Payors contract with providers (both institutional and professional) to provide the care that the patients/enrollees are entitled to. Under the contract, the parties agree to certain processes (i.e., prior authorization, verification of eligibility, etc.) and a reimbursement methodology. Superimposed upon the contract foundation are the statues, case law, rules and regulations which define and circumscribe the contracts and the conduct of each party. Within the contracted universe, although disputes arise, the rights and obligations of the parties can usually be determined.
When there is no contract between the payor and the provider, however, this orderly system collapses. If an enrollee requires emergency care, for example, he or she will be taken to an Emergency Department, without regard to whether the hospital has a contract with the enrollee’s payor. Further, the ED/hospital may be contracted, but not the physicians staffing the ED. Or, the ED physicians may be contracted, but not the on- call specialist or the hospital based anesthesiologist, radiologist or pathologist. Accordingly, an enrollee may access the care of a nonparticipating provider without having done anything “wrong” in managed care terms and despite their best efforts to stay within their network.
Excerpt from Carol K. Lucas & Michelle A. Williams, The Rights of Non-Participating Providers in a Managed Care World: Navigating the Minefields of Balance Billing, Reasonable & Customary Payments, & the Right to Control Care, Hospitals & Health Systems Law Institute (February 2009).
The courts have been busy for many years hearing disputes between health plans and non-network providers. The disputes can be categorized, generally speaking, into three areas.
A. Recognition of Assignment of Benefits. Plans that seek to draw bright line distinctions and incentives between non-network and network providers frequently use the refusal of assignment as a means to discourage the use of non-network providers and encourage the use of network providers. If non-network providers can mandate the acceptance of assignment, however, one of the key distinctions between non-network and network providers is eliminated.
B. How much is a Non-Network Provider Entitled to be Paid? Without the benefit of a rate negotiated before the service is rendered the plan and non-network provider are forced to confront what may be a striking difference in perception as to the dollar value of a service that has already been rendered.
C. May a Non-Network Provider Balance Bill the Patient? Often, Plans pay less than a non-network provider’s billed charges. May the provider bill the patient for the difference?
These issues frequently overlap with each other. They also intersect with a number of other issues that arise in a managed care context.
Excerpt from Carol K. Lucas and Larry Foust, Health Plans Versus Non-Participating Providers, In-House Counsel Program (American Health Lawyers Association 2007).