Emergency Order Issued by Governor Baker of Massachusetts
On April 9, 2020, Governor Baker issued an emergency order (the “Order”), mandating that insurers cover all medically necessary emergency department and inpatient services costs of COVID-19 treatment at both out-of-network (“OON”) and in-network hospitals and other medical facilities, without any cost to the patient, setting the OON reimbursement rate at 135% of Medicare, and prohibiting providers from balance billing. The Governor appears to have relied on § 7 of the Massachusetts emergency preparedness and response law in issuing the Order. Section 7 gives the Governor broad powers during a state of emergency, including “[r]egulation of the business of insurance and protection of the interests of the holders of insurance policies and contracts and of beneficiaries thereunder and of the interest of the public in connection therewith.”
Provider Concerns with the Emergency Order
From a provider perspective, the Order raises at least three concerns. First, the OON payment is based on the Medicare rate, a rate set by the government, not intended to reflect market rates. Second, the Order does not include the right to resolve payment disputes between an insurer and a provider. Third, the excessively low reimbursement rate is problematic because emergency departments, and the physicians staffing them, face unprecedented financial strain because of the ongoing COVID-19 pandemic. To address and allay these concerns, physician groups generally advocate a commercially reasonable payment, based on local charges as determined through a known independent, transparent, and verifiable database (such as FAIR Health), using baseball-style binding arbitration to resolve payment disputes between the insurer and the provider.