Memorandum in Opposition: S.2556 Hannon
Prohibition on Balance Billing of Emergency Services

The New York State Chapter of the American College of Emergency Physicians is opposed to Senate bill 2556. New York ACEP is concerned that the proposed legislation will have the unintended effect of decreasing patient access to specialty services in hospital emergency departments, contributing to emergency department overcrowding, and undermining the financial stability of the State's emergency care network.

This bill requires nonparticipating providers, including hospitals and physicians, to accept, as payment in full, the "usual and customary" fees of commercial managed care plans for emergency services provided to the managed care plans' enrollees. In the case of Medicaid, Family Health Plus (FHP) and Child Health Plus (CHP) enrollees, reimbursement to non-participating providers is limited to the Medicaid rate for emergency services. The legislation also prohibits balance billing for emergency services.

Emergency physicians provide care in emergency departments 24 hours a day, 7 days a week to every patient who walks in the door, regardless of the patient's ability to pay. Increasingly, we do so with reduced specialty physician back-up from on-call specialists such as surgeons, neurosurgeons, plastic surgeons, obstetricians, orthopedic surgeons, and cardiologists. Loss of on-call specialists is occurring for a variety of reasons including the high-risk nature of care in emergency departments, an increase in uncompensated care, and the fact that many surgeries can now be performed in outpatient settings. Numerous studies confirm this erosion of on-call coverage of hospital emergency departments including a 2003 GAO report, a 2003 HHS report, and 2003 survey by the American Hospital Association to name a few. In addition, a press report from Florida last year detailed a care crisis in that state due to the small number of neurosurgeons willing to be on-call in emergency departments.

New York is concerned that this proposal will further reduce patient access to on-call specialists in hospital emergency departments. The proposal will force non-participating specialists to either eliminate their on-call time or absorb further financial losses by accepting payment rates dictated by the managed care plans. Loss of on-call physician services will delay patient access to necessary emergency care and increase the number of patients that must be transferred to obtain the required services. Larger hospitals that currently accept patients in transfer from emergency physicians in rural or smaller hospitals will have less capacity to do so.

New York ACEP is very concerned that this proposal will weaken the financial stability of the emergency care network. Emergency physicians are currently required by state and federal law to serve all patients. Because of this, emergency physicians bear a disproportionate financial burden for uninsured and underinsured individuals. In addition, current Medicaid payment rates are grossly inequitable for emergency care, providing only $17 per visit compared with $30 for a private office visit. Costs for malpractice insurance, billing, overhead and standard benefits per patient vastly exceed the $17 per visit even before considering any compensation for services rendered for patient care evaluation. This bill will mandate that all non-participating emergency physicians accept the Medicaid rate as payment in full for Child Health Plus and Family Health Plus enrollees and further erode the financial resources of the hospital emergency department.

Crowding in emergency departments is an increasing problem in New York State and nationally. Recent surveys by New York ACEP and the State Department of Health show that hospital crowding and ambulance diversion are significant problems in nearly every geographic area of the State. This bill could have the unintentional effect of creating greater incentives for patients to access the ED for routine care by prohibiting balance billing and allowing managed care plans to set the price for services.

In the case of Child Health Plus and Family Health Plus, the bill will set the price for emergency services for non-participating providers at the Medicaid rate. In the commercial market, non-participating providers will be required to accept the managed care plans' rate regardless of whether they are part of the plans' panel. Plans will have less incentive to manage patient care or discourage ED usage because the cost of such care will be greatly reduced. In addition, there will be less incentive for the plan to develop or promote its provider networks because the amount of reimbursement that the plan will be required to provide to non-participating providers will be the same or less (in the case of CHP and FHP) than what they pay their participating providers.

This bill singles out the providers of the State's emergency care safety net and allows managed care plans to dictate the price of their services, regardless of how equitable or fair that price might be. It will undermine the ability of emergency care providers to negotiate fair market rates for their services, or remain independent of contracted relationships when a managed care plan refuses to negotiate a reasonable price.

In many areas of the State, the high concentration of managed care plans has already seriously eroded the negotiating power of physicians to get a fair price for their services. This bill will tip the balance even further in favor of insurers. It will have a negative effect on the emergency care network at a time when the State should be investing more, not less, resources to respond to emergency department crowding, recruiting specialty physicians, decreasing nursing shortages, combating terrorism and ensuring high standards for quality emergency care.

New York ACEP strongly opposes this legislation.