What to know about mediation process to settle out-of-network medical bills

After taking an ambulance to Huguley Memorial Medical Center in November for what he thought was a bleeding ulcer, Dennis Harkcom instead got another diagnosis -- early-stage lung cancer.

The Burleson resident quickly began treatment. He also quickly began incurring medical charges.

Harkcom said he didn't realize a pulmonary group and a pathology group, as well as a lung specialist at the hospital, weren't in Blue Cross Blue Shield of Texas' network. That left him responsible for a sizable balance of out-of-network deductibles and co-pays.

"I had no choice," he said. "I could see the bills racking up and racking up, but I thought my insurance would cover it. Now there is over $3,000 that Blue Cross says I owe."

Fortunately, Harkcom turned 65 on Dec. 1, becoming eligible for Medicare, and since then his medical bills have been covered by either Medicare or Blue Cross, he said. Now he'd like to persuade Blue Cross to lower his out-of-network charges, and that led him to research a little-known 2009 state law that created a mediation process to settle out-of-network medical bills.

Little-known, and even less used.

In the two years the law has been on the books, "We haven't had any actual claims go to mediation," said John Greeley, spokesman for the Texas Department of Insurance in Austin. "We have the structure in place but haven't gotten to that stage."

In one sense, that could be seen as a positive.

Blue Cross Blue Shield of Texas receives a small number of requests about the mediation process, said Margaret Jarvis, spokeswoman for the insurer. Although the insurer cannot discuss individual cases, Jarvis said that "to date, all such requests have been resolved at the informal or first level of the process and have not proceeded to the actual mediation level."

She added that most patients work inside the Blue Cross network, with 96 percent of claim dollars going to in-network charges.

Greeley said the Insurance Department has had 10 inquiries into the mediation process. Some cases were settled before the process could take place, while others didn't meet the $1,000 minimum bill, per provider, after all insurance reimbursements have been made. (Other provisions are listed below.)

Out-of-network charges, also called balance billing, are pervasive in Texas, especially for ancillary healthcare services like anesthesiologists and pathologists in a hospital setting. When state Rep. Kelly Hancock, R-North Richland Hills, wrote the mediation bill he discovered that state employees alone were balance-billed to the tune of almost $400 million in 2007-08.

I experienced an out-of-network-bill headache myself when my son had surgery for a broken nose at a Fort Worth outpatient clinic. While the clinic and doctor were in network, the anesthesiologist wasn't. After receiving the out-of-network doctor bill for more than $2,000, I called the doctor's billing department. They told me they would run it through my insurer again and let me know. Fifteen months later, I have yet to hear back.

But not everyone is so lucky, and hence Hancock's legislation.

Since the law was passed, the Insurance Department, the Texas Medical Board and the State Office of Administrative Hearings have been putting rules in place and rolling out the program. A stakeholder meeting over the new program by the department will be held Feb. 8.

One aspect of the law has caused mediators to shy away from the process.

"The law gave a bunch of us a severe case of heartburn," said John Dowdy Jr., an Arlington lawyer and mediator and past president of the Association of Attorney-Mediators, a national organization based in Dallas. At issue is a requirement in the law that mediators report to the department if any party in the mediation process -- the doctor, insurer or patient -- is acting in "bad faith."

"It requires a mediator to make a subjective decision," Dowdy said. "But I can't get into someone's head and make that determination."

The requirement also directly conflicts with the Dispute Resolution Act, part of the Texas Civil Practices and Remedies Code, Dowdy said.

"The statute prohibits talking about it. Otherwise the whole process would be compromised," he said.

A recent e-mail blast by the association to its Texas members did not turn up a single one who has signed up for the balance-billing mediation process.

Michael Schless, president of the association and an Austin mediator, said the law enacted without the group realizing it.

"This bill slipped by our lobbyist," he said. "It was completely under the radar. We were not aware of it until it became law."

Schless says the bad-faith requirement hinders the process of mediation and was not necessary.

"Whoever drafted the statute was not familiar with the mediation process," he said. "No ethically minded mediator ought to sign up to take these kinds of cases as long as that provision is in the statute."

But some mediators have indicated interest in handling these types of disputes, said Renee Rusch, an administrative law judge in charge of alternative dispute resolution for the State Office of Administrative Hearings, which is in charge of maintaining a roster of outside mediators.

The mediators have also submitted documentation reflecting that they meet the qualifications, she said.

Hancock is aware of the bad-faith disclosure issue and is waiting for the department's Feb. 8 meeting to see whether the agency's rules address the issue, his spokeswoman said. If not, he may revise the law this legislative session, she said.

In the meantime, Schless recommends that patients caught with out-of-network bills to either seek legal counsel or private mediation. Before you hire out, however, first call your insurer and out-of-network healthcare provider to see what can be worked out.

Teresa McUsic's column appears Fridays.