Surprise Medical Bills – An Update
On Wednesday, September 18th, the House Education and Labor Committee called off plans to vote on legislation related to “surprise” medical bills.
The public and Congress has become increasingly enraged by the problem of “Surprise” Medical Bills. Every year, millions of patients seek emergency care at their closest hospital only to find that either the hospital or one of the many providers involved in their care are not in-network with their insurance plan. As a result, they often are responsible for a much larger bill and a much higher deductible than they had anticipated. Surprise! Their insurance doesn’t provide them with the coverage they thought it did. The resultant medical bills can be staggering.
The Affordable Care Act of 2010 provided protections that ensured that patients with an emergency medical condition could not be subjected to higher amounts of co-pays and co-insurance than they would have if their provider was in-network. This protection did not extend to deductibles. As a result, patients often have much higher personal responsibility for their bills than they had anticipated.
Many states have passed legislation to address this issue but these state-by-state protections only pertain to insurance plans subject to state insurance regulations. Nearly 65% of commercial insurance across the nation is not subject to state regulations. These so-called ERISA plans are usually offered by large employers and are regulated by federal law.
There are currently two bills being considered in the Senate to address this issue. The Lower Health Care Costs Act of 2019, championed by Senator Lamar Alexander, coming out of the Health, Education, Labor and Pensions Committee, addresses this issue by benchmarking rates to the median in-network rates for a geographic area. Apparently in anticipation of this rate setting, several groups in various states have had their contracts canceled because they were being paid above the median. The median, in effect, becomes the ceiling. The Congressional Budget Office estimated that this bill would save the federal government $7.5 billion over the next decade.
A competing bill, the Stopping the Outrageous Practice of Surprise Medical Bills Act of 2019, championed by Senators Bill Cassidy and Maggie Hassan, is based on a baseball-style arbitration system that has been in New York since 2015. At its core, if out-of-network providers and insurers can’t agree on a payment, the two parties would submit their final and best offer to an independent arbiter. The arbiter then chooses the most reasonable offer. This creates an incentive for both parties to be reasonable. Last year, under that system, out of 7.5 million ED visits, only ~850 out of network charges were sent to Independent Dispute Resolution. Out-of-network ED visits fell from 20% to <7% due to the nature of the IDR. By rewarding reasonable actors and "punishing" bad actors, the process has driven the providers and the insurers to the table with a genuine shared interest in finding agreement. While some might argue that the NY process has the potential risk of unreasonable charge inflation by providers, this hasn't happened in the four years the process has been in place. In fact, in-network charges have decreased 9%. This bill has 27 Senators listed as co-sponsors. The Congressional Budget Office estimated that this bill would save the federal government $17 billion over the next decade.
The Surprise Medical Bills solution advocated by Senator Alexander poses such a risk to emergency physician reimbursement that many groups would likely need to withdraw from providing physicians and Advanced Practice Providers at rural hospitals. These hospitals are unable to fill the resulting wage gap. Rural hospitals do not have the financial strength to make up the difference and it is doubtful that groups would be able to find physicians willing to work if they are paid less than market rates.
Jay Mullen MD MBA FACEP
Chair-Elect, Democratic Group Practice Section