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‘Surprise’ Medical Bills: Easy to Define, But Not to Solve

WASHINGTON — The problem of “surprise” medical bills might not have an easy solution, but everyone speaking at an event Friday sponsored by the Brookings Institution agreed on one thing: get the patient out of the issue.

“It’s important to take patients out of the middle when this happens, and leave it between the insurer, the hospital, and the provider,” said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy.

“We support legislation to take [patients] out of the middle — to ban balance billing — and [instead] have consumers be responsible for [their usual] cost-sharing amount,” said Jeanette Thornton, senior vice president for product, employer, and commercial policy at America’s Health Insurance Plans, the insurers’ trade group.

“Our first principle is that the patient shouldn’t receive balance bills in emergency care or when they go to hospitals and providers they expect will be in network,” said Molly Smith, vice president of the Coverage and State Issues Forum at the American Hospital Association (AHA).

An Easy Definition

There was also general agreement on the definition of surprise billing: Bills for out-of-network care that the patient had no control over receiving — for instance, a patient who receives care at an in-network hospital by an emergency physician not included in the network.

Pennsylvania Insurance Commissioner Jessica Altman gave another example that she heard from a Pennsylvania state senator. “Women in her district were seeking mammograms — which under federal and state law are supposed to be at no cost to the patient — but these women were going to a mammography center that was in network, and somewhere a scan was sent to someone who wasn’t even on-site, a radiologist who was out of network, and they were getting a bill they never should have gotten.”

Mary Moody, Office of Sen. Bill Cassidy, MD; Jane Beyer, Office of the Washington State Insurance Commissioner; Jessica Altman, Insurance Commissioner of Pennsylvania; Lauren Block, National Governors’ Association; Mark Hall, Brookings Institution (moderator) (Photo by Joyce Frieden)

Agreement on solutions to the problem isn’t easy to come by. Adler, whose organization issued a report last month on the problem, presented two possible solutions. One is billing regulation. “Every state that has addressed this issue has used some form of this … you prohibit the provider from balance billing, you tell the insurer to treat the services [as] in-network, and then you set some sort of minimum payment standard that the insurer has to pay to the provider,” he said. “Putting a cap on the physicians’ charges at a reasonable rate, that largely solves the problem for everyone in your state,” including self-insured plans.

Setting such a cap can be tricky — too high, and all doctors will go out of network to get the higher rate; too low, and hospitals will have trouble getting doctors to work for them. In that latter case, the hospital could pay their providers a little extra to “top them up,” he said. A rate of 125% of what Medicare pays seems like a good place to start, Adler added.

Another approach is to let independent arbiters decide how much the provider should be paid, “but there is some lack of transparency and no reason to think arbiters are better at picking the appropriate rate than lawmakers are,” he said.

A third idea is to prohibit certain specialists, such as emergency physicians, from billing independently and requiring that they contract directly with hospitals. In that situation, the services get bundled into the hospital charges that are negotiated between the hospital and the health insurer, said Adler.

Arbitration Working Well in New York

But not everyone liked all of those answers. “I think there has been a general assumption that hospitals can either absorb the additional costs of subsidies to physicians to prevent balance billing of certain specialties from happening, or that they can simply pass those costs onto the insurer,” said the AHA’s Smith. “If we’re talking about the latter situation, I’m not sure what we’ve gained if we’re just having the insurers pay the hospitals more, and if we’re talking about the former I think there’s a gross misunderstanding of hospitals’ ability to absorb these additional costs without some sort of ramifications for other investments they might make. I think we should be cautious about assuming that hospitals can automatically take on these additional costs.”

L. Anthony Cirillo, MD, a board member of the American College of Emergency Physicians, said arbitration has worked extremely well for the past 4 years in New York state. “When was the last time you heard a story about an out-of-network bill in New York state? I challenge you to find one,” he said. Under the state’s arbitration system, surprise bills that are more than a certain dollar amount and are deemed a legitimate claim are issued a claim number, and parties on both sides send in documentation supporting their position. Cases must be decided within 30 days.

He noted that during a period when there were 3.2 million hospital visits, “there were 552 cases of arbitration, and the decisions were split about 50/50, which means the system is working to do what we really want, to get plans and providers to come back to the table and negotiate solutions we can live with.”


L. Anthony Cirillo, MD, American College of Emergency Physicians (Photo by Joyce Frieden)

Mary Moody, health policy adviser to Sen. Bill Cassidy, MD (R-La.), said that the senator and colleagues were working on federal legislation to address the problem. She noted that although some people have said the problem derives from the increase in “narrow networks” of providers or the spread of high-deductible health plans, “there are [also] some providers who use it as a business plan to stay out of network and balance bills, so there is certainly enough blame to go around between different parties.” Only a few providers appear to be “chronic balance billers,” however, “so how do you target what seem to be bad actions committed by a few?” She told MedPage Today that Cassidy is expecting to introduce a bill sometime this spring.

Air Ambulances at Issue

One issue people agreed on was the need to eliminate surprise billing for out-of-network ambulance services, especially air ambulances. Ground ambulances are seen as more of a local issue, said Lauren Block, program director of the health division at the National Governors’ Association, but “air ambulance is a big problem across states,” especially since interstate transport is involved in some cases. States attempting to address the air ambulance issue are prevented from acting by the Airline Deregulation Act, she added.

The surprise billing issue is complicated because there is no natural regulatory home for it, said Altman. “I regulate insurance companies … on the financing side of the system. Then we have the state board of medicine and we have facility regulation in the Pennsylvania Department of Health. Those functions … are largely about public safety, largely about medical standards, really a health -related function. There are not, in most states, entities that really oversee financing as it relates to the provider side of the healthcare system.”

Despite all these issues, there was general agreement that the problem can be solved. “I’m hopeful it can be a driving force where there … is bipartisan agreement we need to do something,” said Moody. “I’m hopeful it can be an issue that can lead to agreement on other parts of the healthcare system that need addressing.”


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