Adeptus Bankruptcy Sparks Industry Response to Increase Insurance Oversight
Adeptus Health announced today that it and certain subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. This announcement comes after Adeptus was named in a class action lawsuit regarding the company’s billing practices, which were alleged to be excessive and deceptive. While Adeptus and First Choice are not active members of the National Association of Freestanding Emergency Centers (NAFEC), this event highlights several ongoing concerns for freestanding emergency center operators.
It is now the responsibility of our legal system to determine whether these accusations against Adeptus have merit. NAFEC expects its members to be transparent and honest with patients throughout their freestanding emergency center experience (including regarding the facility’s charges and billing), and to educate the communities in which our members operate about their capabilities and levels of service.
As is the case in any industry, the free market will ultimately determine the success of a business. In most industries, this means that some firms and market participants will not succeed or survive. Conversely, these same market forces are responsible for the creation of the innovative freestanding emergency center model, and will ultimately lead to its evolution in delivering high quality emergency care to patients.
However, what many do not realize is that the amount a freestanding emergency center bills a patient is directly related to the amount insurance companies reimburse healthcare providers for their services rendered. Adeptus has cited chronic underpayment by insurance companies as a reason for its Chapter 11 filing. This comes as no surprise to freestanding emergency center operators, who offer vital access to emergency care, but face challenges to collect payment from insurers.
In response to this filing, NAFEC has taken aim at increasing oversight for Employee Retirement Income Security Act (ERISA) plans, which include federal and self-funded insurance plans. This will protect healthcare providers and ensure patients are not exposed to large out-of-pocket expenses.
When ERISA health plans do not pay healthcare providers adequately for their services, there is no formal entity regulating or providing oversight to these plans, meaning healthcare providers have limited options for recourse. This poor payer behavior certainly contributed to Adeptus’ bankruptcy filing, and must be addressed to prevent insurance companies from controlling the market and intentionally underpaying providers.
NAFEC’s goal is to ensure healthcare providers are not faced with the dilemma of choosing to bill patients beyond what their insurance paid or accept substandard rates that ultimately lead to their demise. Federal dispute resolution reform appears promising, as Congress is expected to send jurisdiction of ERISA plans back to the states, where state entities would have the ability to regulate reimbursement. This increase in oversight would improve the overall healthcare system by ensuring healthcare providers receive sufficient payment for their services and protecting patients from exorbitant medical bills that result from insurance underpayment.
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