Ken Alltucker

The Republic | azcentral.com

A new bill allows consumers to challenge large out-of-network medical bills through arbitration.

Doctors and hospitals relaxed their opposition after legislators changed the bill's language.

Arizona consumers could get some limited relief from surprise medical bills that exceed $1,000 under legislation approved by the state Legislature.

Senate Bill 1441, sponsored by Sen. Debbie Lesko, R- Peoria, passed a contentious House committee hearing last week before sailing through the Senate. Gov. Doug Ducey signed the bill into law Monday.

The measure seeks to limit the financial exposure of consumers who get care from a hospital or doctor that are part of their insurance provider's network — only to be billed by an out-of-network anesthesiologist, emergency-medicine doctor, surgical assistant or others who were part of the chain of care.

Consumers have been left with expensive medical bills, stuck between an insurance company that doesn't want to fully pay and a medical provider refusing to take less. In some cases, medical providers send unpaid bills to medical debt collectors, who can chip away at a consumer's credit score.

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'It is really good for the patients'

The legislation, which takes effect in 2019, will allow a consumer with an out-of-network bill exceeding $1,000 to contact the Arizona Department of Insurance to request the appointment of an arbitrator.

The insurer and health-care provider must try to settle the dispute through an informal telephone conference within 30 days of the consumer's arbitration request. The case advances to arbitration if the two sides cannot agree to an amount, with the insurer and health-care provider splitting the cost. Either party would have the right to appeal an arbitrator's decision to the county Superior Court.

"It is really good for the patients," Lesko said. "Once the process starts, the consumer can't get balance billed."

Doctors and hospitals relaxed opposition to the bill following concessions earned during multiple legislative stakeholder meetings and an amendment adopted during last week's House debate.

A group representing Arizona's four largest hospital systems — Abrazo Community Health, Banner Health, Dignity Health and HonorHealth — sought to clarify a provision addressing what health providers must disclose in the event of an emergency. That language change was necessary to ensure hospitals would not need to delay emergency surgeries, said Jennifer Carusetta, Health System Alliance of Arizona's executive director.

Doctors also pushed for a requirement that patients and insurers must pay part of a disputed bill rather than withhold payment until the end of arbitration.

Before a consumer’s billing grievance could advance to arbitration, a patient would need to make arrangements to pay the amount of the bill that they are responsible for under terms of their insurance policy. That is, the consumer must pay a deductible, copay or coinsurance required by their insurance plan.

Insurers also would be required to pay an amount they would customarily pay for such an out-of-network services.

READ: Consumers seek relief as 'Obamacare' rates rise

Legislation concerned some doctors

Doctors were concerned that payments could be withheld for several months during the arbitration process, said Pete Wertheim, executive director of the Arizona Osteopathic Medical Association.

"We felt we made enough changes for now and that we could work with this," said Wertheim.

Some doctors warned that legislation curbing billing is unfair because federal law requires hospitals and doctors to assess and stabilize a patient who seeks emergency care at a hospital. So hospitals can't turn away patients even if they are unable to pay medical bills.

Dr. Michael Sheehy, president of the American College of Emergency Physicians' Arizona chapter, said doctors fear that the legislation could empower insurers to negotiate contracts with lower payment rates.

"In my opinion, they (legislators) are protecting the insurance industry more than they are protecting patients," Sheehy said. "They certainly are not protecting physicians."

However, consumers in Arizona and other states have become increasingly vocal about getting large bills at in-network hospitals from physicians or other providers who aren't part of their insurance plans. Colorado, Connecticut, Florida, Illinois, Indiana and Texas have passed legislation limiting out-of-network billing.

The Arizona House last Wednesday passed the bill 40-19, and the Senate approved the bill 26-4. The final vote crossed party lines, and even medical professionals serving in the Arizona Legislature disagreed on the bill's substance.

Rep. Randall Friese, D-Tucson, said the legislation provided an important layer of consumer protection.

"What option does a patient have today? Let's protect the patient, let's give them an option to dispute that bill," said Friese, an emergency medicine surgeon.

Rep. Regina Cobb, R-Kingman, said during last week's House debate that the legislation would harm the medical profession.

"If you think you are going down this road with just medicine, you are sadly mistaken," said Cobb, a dentist. "This is an anti-free enterprise bill."

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