America’s Health Insurance Plans (AHIP) is the national trade association representing the health insurance community. AHIP’s members provide health and supplemental benefits to millions of Americans through employer-provided coverage, the individual insurance market, and public programs such as Medicare and Medicaid. AHIP advocates for solutions that expand access to affordable health care coverage to all Americans through a competitive marketplace that fosters choice, quality, and innovation. Visit www.ahip.org for more information.
Since California passed legislation in 2016 to protect patients from surprise medical bills, there have been questions about whether the law would reduce the number of in-network specialty physicians. A new, comprehensive study shows that in-network specialty doctors in the state have actually increased–not decreased–since 2017.
This article was written by Jeanette Thornton, senior vice president for Product, Employer, and Commercial Policy for AHIP.Since California passed legislation in 2016 to protect patients from surprise medical bills, there have been questions about whether the law would reduce the number of in-network specialty physicians. A new, comprehensive study shows that in-network specialty doctors in the state have actually increased—not decreased–since 2017.
Too many hardworking Americans receive a surprise medical bill. Everyone agrees this is a problem that we must—and can–solve, from members of Congress to health insurance providers to doctors and hospitals. Patients must be taken out of the middle, ensuring that people can get the care they need at a cost that is affordable.
Lawmakers in California took a positive step to protect patients with the passage of AB 72 (2016), a surprise medical bill law that took effect in July 2017. When out-of-network care takes place at an in-network facility at no fault of the patient, that care is treated as if it is delivered in-network. Doctors are paid either the physician’s average contracted rate (ACR) or 125% of the Medicare reimbursement rate, and patients do not receive an additional bill above and beyond that amount. Patients have peace of mind, insurance providers know what the care will cost, and doctors are paid fairly at a benchmark based on locally negotiated market rates.
Critics of AB 72 have raised concerns that the law may cause insurance providers to reduce the number of specialty doctors in their networks. But health insurance providers are required by law to meet certain network adequacy standards—ensuring that each plan has enough physicians and providers in-network to deliver affordable, quality care to their members. America’s Health Insurance Plans (AHIP) took a close look at the real impact of the law, analyzing actual data from insurance providers representing 96% of the covered lives in the fully insured commercial market in California (excluding Kaiser Permanente enrollment–see below).
The results are clear: Since AB 72 became law in California, the number of in-network specialists—including those in general surgery, emergency medicine, anesthesiology, diagnostic radiology, and pathology–has either grown or remained essentially the same, depending on specialty. AB 72 is protecting patients and improving affordability, while ensuring that patients can get the care they need.
Crunching the Numbers
AHIP surveyed health insurance providers offering products in the commercial fully insured market in California. The survey excluded health plans that had fewer than 10,000 enrollees, as well as Kaiser Permanente (KP). While KP is the largest health plan in California, serving more than half of the commercial fully insured market in the state, it was excluded because Kaiser Foundation Health Plan has exclusive contracts with the two Permanente Medical Groups which provide most care through their own physicians.
Insurance providers were asked for the change in the total number of in-network providers between July 1, 2017 and July 1, 2019, for the following specialties:
Results were submitted for 11 different health plans, representing 96% of covered lives in the fully insured commercial market in California (excluding Kaiser Permanente enrollment). For each health plan, the reported number of providers, by specialty, in 2019 was divided by the number of providers in 2017 to obtain the percent change of in-network providers for that plan. Then, a simple average of percent changes was calculated to estimate the overall change in the number of in-network providers in California between the given dates.
The results show that on average, in-network specialty doctors either remained flat, or increased by as much as 26%:
Table 1. Change in the Number of In-network of Providers in California
between July 2017 and July 2019.
In-network Providers, 2017-2019, %
Past studies reinforce what this study found in California. For example, Maryland passed their own surprise billing legislation in 2010. The Maryland Health Care Commission analyzed the law’s impact, finding “no evidence that provider participation rates in commercial networks systematically declined between 2010 and 2013.”
The Results Debunk the Myths
Critics have attempted to make the opposite case based on anecdotal input. For example, a recent study that appeared in the American Journal of Managed Care® (AJMC®) consists entirely of opinions from 28 individuals about the efficacy of AB 72 in the first 6-12 months following implementation. Despite offering no hard data, and despite providing a small snapshot of respondents that does not represent every market in California, researchers argued that AB 72 may be having a negative impact on specialty networks. The methodology is highly flawed and has resulted in misleading conclusions that are not supported by data and facts.
The author of the AJMC® study did note that there were several limitations to that study, including that it was not representative of all local markets in the state, and that the timing was limited to stakeholders’ early experiences.
Critics have also claimed that AB 72 has driven consolidation among hospitals. While provider consolidation is a real problem that can lead to higher costs for patients, it is an issue that has continued to trend upward for years and in every part of the country, starting much earlier than 2017. There is no evidence to demonstrate that AB 72 has increased provider consolidation.
Federal Leaders Can Correct the Same Market Failure
Surprise medical bills have resulted through a market failure that has undermined competitive, locally negotiated market rates. Legislation like AB 72 corrects this market failure to protect patients and consumers by ensuring care is accessible and affordable. Lawmakers at the federal level can adopt policies similar to AB 72 to make certain that every American patient gets the quality care they deserve at a price they can afford.