When it comes to navigating the intricacies of health insurance, Cassie Ray considers herself a bit of a pro. She actually reads her policy, including the fine print.
So when the 57-year-old needed routine follow-up surgery after a mastectomy, "I looked up on my insurer’s network and made sure the outpatient facility that I was being referred to was in my network," says Ray, who lives in Fairfield, east of San Francisco.
But a month later, she says she received an unwelcome surprise: a $580 bill for an out-of-network anesthesiologist.
"I called the facility back and at first, I felt like, this has to be a mistake. They’ll fix it," Ray says.
Instead, the clinic said her only option was to negotiate the bill directly with the doctor.
Ray’s experience illustrates the problem of "surprise" medical bills, the result of patients being treated unknowingly by an out-of-network provider at an in-network facility.
After several failed attempts in recent years, the state legislature last week passed AB 72, designed to protect patients' pocketbooks when they're hit by surprise bills. Gov. Jerry Brown has until the end of September to sign or veto the legislation.
A 2015 Consumers Union survey suggests the surprise bill phenomenon is fairly common. It found nearly one in four Californians who’d had hospital visits or surgery in the prior two years reported receiving an unexpected bill from an out-of-network provider.
"They can range in price from a hundred dollars to many thousands," says Betsy Imholz, special projects director for Consumers Union. "So it’s a big financial burden on consumers."
In Ray's case, she says she tried to speak with a manager at the outpatient clinic, but no one returned her repeated calls. Then the bills stopped coming, so she figured all was resolved. Soon after, however, her bill was sent to collections.
"I was so frustrated," she recalls. "I was just in tears as I was dealing with it."
Ray says it took about seven months of wrangling before her insurance company finally paid the bill and she was able to clean up her credit rating.
"My immediate response was, there does need to be a law to fix this," says Ray. "This is so wrong."
The legislation, by Assemblyman Rob Bonta (D-Oakland) and six colleagues, would limit a patient’s financial obligation to no more than what he would have owed if the provider had been in-network.
While agreeing that "patients should never have surprise bills," Dr. Karen Sibert, president-elect of the California Society of Anesthesiologists, says her organization - along with a number of other specialty medical groups - opposes AB 72.
At issue, Sibert says, is the bill's formula for paying doctors who fill the gap left when insurance companies don't have enough providers in their networks. The legislation would set the payment rate at either the amount the insurer normally pays a doctor on contract for such services or 125 percent of the Medicare rate, whichever is greater.
That's insufficient, argues Sibert.
"It’s a problem because it removes any incentive for insurance companies to reach fair contracts with physicians," she says.
Without such an incentive, says Sibert, insurance companies will continue to stick consumers with inadequate provider networks.
The powerful California Medical Association agrees with Sibert about the bill's payment formula, but it has shifted its position on AB 72 from opposed to neutral, says Janus Norman, the Association's vice president of governmental affairs.
There are a few reasons for the change of heart, he says. First, the bill would create stricter oversight of how in-patient services are delivered, says Norman, adding that it also would allow for tougher regulations on insurers if the state finds their provider networks to be inadequate.
The provision regarding tougher regulations "is one improvement that AB 72 included that prior legislation did not," he says.
In addition, the measure would give out-of-network doctors the chance to appeal payment disputes with insurers through an independent third party, and the decision would be binding - another important change from previous versions of the bill, Norman says.
The California Association of Health Plans and the Association of California Life and Health Insurance Companies do not support, oppose or have a neutral position on AB 72, according to an analysis by the Assembly Health Committee. Instead, they have expressed "concerns" about the measure, the committee said.
"While they laud the authors’ efforts to protect consumers from balance billing," the analysis says, the insurer groups worry that the legislation might lead to higher premiums and cost-sharing, and that the bill's dispute resolution process might spark more lawsuits between providers and health insurance firms.
Consumers Union's Imholz says the California Medical Association's neutral position on the legislation was key in getting AB 72 across the finish line.
She predicts that if Brown signs the measure, a number of other states now considering similar protections against surprise bills will likely follow suit next year.