Association between "Balance Billing" Legislation and Anesthesia Payments in California: A Retrospective Analysis

Abstract

Background: Insured patients who receive out-of-network care may receive a "balance bill" for the difference between the practitioner's charge and their insurer's contracted rate. In 2017, California banned balance billing for anesthesia care. This study examined the association between California's law and subsequent payments for anesthesia care. The authors hypothesized that, after the law's implementation, there would be no change in in-network payment amounts, and that out-of-network payment amounts and the portion of claims occurring out-of-network would decline.

Methods: The study used average, quarterly, California county-level payment data (2013 to 2020) derived from a claims database of commercially insured patients. Using a difference-in-differences approach, the change was estimated in payment amounts for intraoperative or intrapartum anesthesia care, along with the portion of claims occurring out-of-network, after the law's implementation. The comparison group was office visit payments, expected to be unaffected by the law. The authors prespecified that they would refer to differences of 10% or greater as policy significant.

Results: The sample consisted of 43,728 procedure code-county-quarter-network combinations aggregated from 4,599,936 claims. The law's implementation was associated with a significant 13.6% decline in payments for out-of-network anesthesia care (95% CI, -16.5 to -10.6%; P < 0.001), translating to an average $108 decrease across all procedures (95% CI, -$149 to -$64). There was a statistically significant 3.0% increase in payments for in-network anesthesia care (95% CI, 0.9 to 5.1%; P = 0.007), translating to an average $87 increase (95% CI, $64 to $110), which may be notable in some circumstances but did not meet the study threshold for identifying a change as policy significant. There was a nonstatistically significant increase in the portion of claims occurring out-of-network (10.0%, 95% CI, -4.1 to 24.2%; P = 0.155).

Conclusions: California's balance billing law was associated with significant declines in out-of-network anesthesia payments in the first 3 yr after implementation. There were mixed statistical and policy significant results for in-network payments and the proportion of out-of-network claims.

Figure 1:. Percent Change in Payment Amounts and Portion of Claims Occurring Out-of-Network for Anesthesia Care Following Implementation of California Balance Billing Law

Figure 1 shows adjusted percent change in in-network and out-of-network payments (in green), and the proportion of claims occurring out-of-network (in blue), for anesthesia care in the period following implementation of California’s balance billing law (after the third quarter of 2017) compared to the period before. Percentage change in payments (depicted as green columns) translated to an average $87 increase in in-network payments (95% CI $64 to $110) and an average $108 decrease in out-of-network payments (95% CI −$149 to −$64). Estimates were calculated using a difference-in-differences approach, weighted by frequency of the number of claims underlying the payment data associated with each of the procedure code-county-quarter-network combinations, and adjusted for county, procedure, and quarter fixed-effects, as well as county-level demographics. Anesthesia care was defined using the 15 most common Current Procedural Terminology codes representing intraoperative or intrapartum anesthesia care. Error bars represent 95% confidence intervals and were calculated using robust standard errors clustered at the procedure level. All dollar values presented are standardized to 2021 dollars. *p<0.05

Figure 2:. Adjusted Changes in Average Payment Amounts Over Time for In-Network and Out-of-Network Anesthesia Care, Before and After California’s Balance Billing Law

Figure 2 shows adjusted differences in in-network and out-of-network payments for anesthesia care relative to the quarter immediately before balance billing reform was enacted on July 1, 2017 (i.e., payment amounts are relative to those in the second quarter of 2017). The y-axis is rescaled to the adjusted payment amount for the second quarter of 2017 (see Supplementary Tables 6 and 7 for adjusted coefficients depicted in this figure, and for estimated dollar amounts paid for anesthesia care by Current Procedural Terminology code in the second quarter of 2017. Payments were estimated using a difference-in-differences approach that accounted for secular time trends in payments (using physician office visit payments as the comparison group), adjusted for county, procedure, and quarter fixed effects and annual county demographic characteristics, and weighted by frequency of the number of claims underlying the payment data associated with each of the procedure code-county-quarter-network combinations. Error bars represent 95% confidence intervals and were calculated using robust standard errors clustered at the procedure level. The vertical line delineates pre- and post-balance billing law reform. All dollar values presented are standardized to 2021 dollars.