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Analysis

Federal Fix Needed for Surprise Billing, House Panel Told

By MedPage Today  
   April 03, 2019

A House committee hears suggestions from policymakers and patient advocates to address surprise billing. 

This article was first published on Tuesday, April 2, 2019 in MedPage Today.

By Joyce Frieden, News Editor, MedPage Today April 02, 2019

WASHINGTON -- Patients aren't the only ones who have problems with surprise billing issues, Rep. Phil Roe, MD (R-Tenn.), said Tuesday at a hearing on the topic.

"I've been negotiated out of healthcare networks," said Roe, an ob/gyn and a member of the House Education and Labor Subcommittee on Health, Employment, Labor, and Pensions. "There are no innocents in this, when you look at insurers, at hospitals; everybody's culpable here."

Roe also said he had been falsely listed in some cases as an in-network provider. "Many of those unscrupulous networks will use that to get people to sign up, because 'My doctor is in there' when they're really not, and you get a surprise bill."

Surprise billing refers to bills that patients receive for services that they thought were in-network but turned out not to be -- for example, a bill from an out-of-network anesthesiologist who is practicing at an in-network hospital.

"Despite people paying their premiums, doing their homework, and trying to work within the system, they are being left with unanticipated and sometimes financially devastating bills," said Frederick Isasi, JD, MPH executive director of Families USA, a left-leaning healthcare consumer organization here. "This is happening in part because hospitals, doctors, and insurers are washing their hands of the patient's interest."

States are looking at these issues, noted Jack Hoadley, PhD, research professor emeritus at Georgetown University here.

"Our research shows that 25 states have acted to protect consumers from surprise bills; nine offer what we consider to be comprehensive protection -- they apply in both emergency settings and in-hospital settings, they apply to HMOs, PPOs, and all [other] insurers, they hold consumers harmless from balance billing, and they adopt some kind of payment standard, such as an arbitration process."

However, state laws can't offer complete protection because large, self-insured employers in every state are exempt from state law by the federal Employee Retirement Income Security Act (ERISA).

"Although states are making progress, they are looking to the federal government to address [ERISA plans] they cannot regulate," said Hoadley. "In addition, state officials have noted federal law can help when a state resident receives care across the border in another state."

One impetus for surprise billing is the movement of hospitals to offload their requirements for staffing their emergency departments to third-party management companies, often without requiring the staffing of the department to fit within the networks that the hospital has agreed to, Isasi said. He gave the example of Nicole Briggs of Morrison, Colorado, who awoke one night with intense stomach pain and went to a freestanding ED; doctors there told her that she needed an appendectomy, so she went to a local hospital.

"She did her due diligence, confirmed repeatedly that the hospital and its providers were in-network," he said. "However, months later she received a surprise bill from the surgeon who, it ended up, was out of network. The bill to Nicole was $5,000."

Briggs tried negotiating with her insurer, to no avail. "Within 2 years, a collection agency representing the surgeon took her to court and won the full amount, including interest. As a result, a lien was placed on her home and the collection agency garnished her wages each month," Isasi continued.

"This is inexcusable behavior on the part of doctors, hospitals, and health insurers," he said. "They each know, or should know, that patients have no way of understanding the financial trap they just walked into. It is the providers and insurers, not the patients, who should bear the burden of settling on a fair payment."

Several witnesses at the hearing criticized providers who took advantage of surprise billing.

"Because volume doesn't depend on the prices set by providers, going out of network frees them to bill patients at any rate they choose," said Christen Young, JD, a fellow at the USC-Brookings Schaeffer Initiative on Health Policy here.

"Physician specialties who can bill out-of-network have extraordinarily high charges compared to other doctors." For instance, "for most physician types, median out-of-network charges are about double what Medicare pays for the same service, but for anesthesiologists and ED physicians, charges are about five times greater than the equivalent Medicare payment," Young said.

There are many providers who still go in-network, she added, but even then, "they appear to receive some of the highest in-network rates in the healthcare industry ... One way to understand the high in-network rates is these physician [specialties] exploit the fact that they could remain out-of-network to demand very high payment rates when they do go in-network."

Young had two suggestions to solve the problem: one would be to establish an amount that these doctors will be paid when they deliver care out-of-network. The price could be established directly or through arbitration, and in addition, "[lawmakers could] prohibit balance billing by the provider above this amount, and require that the insurer treat it as in-network. The goal is not to establish the exactly correct payment rate for the service, but rather to establish conditions that diminish the attractiveness of the out-of-network option, and leave these providers to go in-network or work with hospitals to get paid a fair rate for the service."

A second idea is to get these physicians out of the business of billing directly to patients and instead have them be paid by the hospital, she said.

Committee members all seemed to agree that surprise billing was a problem they would like to fix, although how to do it remained elusive. "I'm struck by the fact that we all seem to be wanting a solution to this problem, but the solutions I'm hearing don't sound really workable in the context of our present medical system, and that's where I struggle to understand how we're going to fix this," said Rep. Susan Wild (D-Pa.).

“This is inexcusable behavior on the part of doctors, hospitals, and health insurers. They each know, or should know, that patients have no way of understanding the financial trap they just walked into.”


KEY TAKEAWAYS

One impetus for surprise billing is the movement of hospitals to offload ED staffing to third-party managers.

Advocates suggest establishing, directly or through arbitration, an amount doctors would be paid when they deliver care out-of-network.

Lawmakers were urged to get physicians out of the business of billing patients, and instead have them be paid by the hospital.

State laws can't offer complete protection because large, self-insured employers are exempt from state law by ERISA.


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