The practice of sending insurance reimbursement for services directly to a patient, rather than the provider who performed the services, significantly impairs a provider’s ability to collect the payment and ultimately could create access issues for patients themselves.
While experts say this practice isn’t necessarily common in the industry, it can occur during denial reviews or in cases where a patient has used an out-of-network provider. Even though more treatment centers are going in-network, a large number of residential centers remain uncontracted. Reduced provider choices for patients can cause an increasing number of disputes on coverage, says Randy Notes, principal in the Healthcare Life Sciences Practices at KPMG.
In these situations, payers may decide to adjudicate the claim and send payment to the patient instead, making it difficult for a provider to be reimbursed for the services it already provided.
“The odds of collecting that are really low,” Notes says, adding that once a bill surpasses the 120 or 180 day mark on the books, it’s unlikely to ever be paid.
According to Tami Mark, senior director of behavioral health financing for RTI International, consumers are three times more likely to go out-of-network than in-network for psychiatric services due to a lack of available providers. Mark and her colleagues recently examined reimbursement disparities between in-network and out-of-network providers for a study published in Psychiatric Services in 2017.
Tactics that make collecting reimbursement more challenging for providers will only continue to reduce access for patients.
“We’ve set up this system where we have the providers on one side who are trying to charge as much as possible and make as much income as possible, and then we have the insurers on the other side who are trying to pay as little as possible and make as much income as possible,” Mark says. “And we have these little patients who are crushed in between or just trying to get care and not go bankrupt.”
Providers bring the issue to the forefront
Some providers have started to fight back against the practice of sending reimbursement directly to patients.
In the summer of 2016, Blue Cross and Blue Shield of Georgia faced two separate lawsuits from two different providers who accused the payer of sending reimbursements for emergency room services directly to the patients.
The Polk Medical Center, one of the providers suing the insurer, claimed that the practice was being used in retaliation for not agreeing to be part of the insurer’s network, according to a Kaiser Health News article written at the time of the lawsuit.
In both cases, the providers claimed the practice had significantly hurt their institutions financially.
According to Notes, collecting payment later from the patient can often be difficult for hospitals or other providers because by the time a provider tries to collect, patients may have already spent the money they received, which in some cases could be several thousand dollars.
“That’s not to say that patients are dishonest, but they get paid the money, then they don’t understand why. So they may spend it,” he says.
Hospitals can go after the patient for payment—and in some cases send the bill to collections.
“Most hospitals do not like to do that because the fallout usually is worse,” Notes says.
Providers who are impacted the most are those who are obligated to make sure a patient is stabilized and treated under the Emergency Medical Treatment and Labor Act (EMTALA) regardless of their insurance status or provider. Once services are provided, the provider is then left to try to recoup payment on their own from the patient. Too often the unpaid bill is accounted as bad debt.
Payers know all too well the challenges providers have in collecting payments from patients who receive reimbursement directly and may choose to capitalize on that during contract disputes in the hopes that a provider may return to the negotiating table and be more agreeable in reaching a deal.
“It really presents all sorts of issues for the provider in particular,” Notes says.
Impact on patients
Certainly, there are ethical concerns with sending patients large sums of money while they are trying to maintain sobriety. Imagine a person with just a few weeks’ recovery time getting an unexpected, unexplained check for $2,000 or more. It’s all too tempting to spend the money on bad choices.
Notes says adopting policies or procedures that don’t incentivize behavioral healthcare providers to participate in in-network agreements, such as sending reimbursement to the patient, may ultimately hurt the patients seeking treatment services.
“The real devastating component of tactics like this in the behavioral health arena would be around access,” he says.
Providers who aren’t obligated to treat a patient under EMTALA could force patients to go to another provider, come back when they have insurance that is accepted at the facility or require payment upfront for services.
According to data from Mental Health America, one out of five adults with a mental illness already reports being unable to get the treatment they need.
Impact on behavioral healthcare