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Surprise Medical Bill Legislation: What's Next?

In December 2019, a bipartisan bill designed to curb surprise medical billing appeared to be fast-tracking its way through the legislative process; President Trump seemed eager to sign the bill into law. But now that 2020 has begun, none of that happened. Our experts discuss where the bill may have gone off track and where it could be headed next.

At the end of 2019, legislation that would help patients resolve billing disputes between providers and insurance companies, also known as surprise medical bills, seemed promising. There was bipartisan consensus in both the House and Senate on curbing exorbitant bills from out-of-network providers. President Trump signaled his willingness to sign legislation into law once it was passed by Congress. His administration set a conciliatory tone, issuing a statement that read, in part: “This compromise…is the result of months of delicate work to reach a deal among congressional members and the White House that protects patients.” 

On December 8, 2019, The New York Times posted an article that reflected the optimism. “Turns out, even as the impeachment debate blazes, Democrats and Republicans can agree on one thing: They don’t like surprise medical bills.” However, the new year arrived and members of Congress were unable to finalize the details of how to resolve out-of-network payments, resulting in the bill never reaching the floor for a vote.

The bipartisan legislation that was headed for passage—drafted by the House Energy and Commerce Committee—called for disputes to be resolved by setting the default payment amount to the health plan’s median in-network payment rate in 2021 and indexed to inflation in subsequent years. However, at the 11th hour, a rival bipartisan bill was introduced by the House Ways and Means Committee that calls for disputes to be resolved by an outside arbiter. 

Backers of the new legislation explained that it would have been mistake to push legislation through in 2019 if it were only to declare a bipartisan victory. Those same backers opted to have a policy debate in 2020, and then send a bill to the President. Supporters of the original draft of the bill think otherwise. They believe the reason for delay is the private equity firms and clinician staffing services behind the new bill and their worry that default/benchmark pricing resolution will eat into their profit margins. Proponents of quick action now worry that surprise medical bill legislation will not be considered at all in 2020. 

First Report Managed Care consulted experts to weigh in on political maneuverings, the impact such legislation—if passed and signed into law—will have on overall health spending, whether arguments against surprise medical bill legislation are valid, and the fairest way to resolve out-of-network billing disputes.

In a Perfect World

In less politically tumultuous times or in a perfect world, it would be a no-brainer to pass a bipartisan bill resolving an easily understood problem that directly impacts consumers. Surprise medical bill legislation fits the mold. But these are not normal times, said William Rogers, MD, chief medical officer at Applied Policy in Washington, DC. “This political environment makes it difficult to bring even reasonable legislative proposals to vote.” Moreover, the rancor appears to be going from bad to worse. “Think about it. No voter is going to be upset if [surprise medical bill] legislation passes. But we’ve been politically hamstrung for 3 years, and it’s so much worse just over the past 3 weeks,” noted Dr Rogers days after US tensions with Iran escalated and weeks after President Trump was impeached. 

Dr Rogers’ colleague at Applied Policy, Melissa Andel, vice president of health policy, thinks that enacting and implementing a surprise medical bill law is dependent on how quickly the Republican-controlled Senate concludes an impeachment trial. But “that aside, this is a great re-election issue because to both Republican and Democratic voters, this seems like a slam dunk. This is probably easier to pass than drug pricing reform.” She acknowledged that there will be pushback from industry, and the key will be whether such pushback can withstand the public’s frustration. 

Some believe the tug-of-war between industry and the public will largely go unnoticed, which is bad news for those who want to see movement on this issue. “While it’s possible something will happen on this issue in Congress, it is more likely that it will languish until impeachment is resolved,” said F Randy Vogenberg, PhD, RPh, principal at the Institute for Integrated Healthcare in Greenville, SC. Norm Smith, a Philadelphia-based principle payer market research consultant added, “I believe the surprise medical billing issue will become collateral damage—nothing will get done.”

Gary Owens, MD, president of Gary Owens Associates in Ocean View, DE, agreed that Washington is likely too paralyzed to get something done. “It should be a no-brainer. Out-of-network providers working in in-network facilities create problems for both the payer and the member. In the case of the payer, the charges generated by out-of-network providers are substantial compared to the contracted rate. Members think they are doing the right thing by going to a network facility only to find out they are being billed for large balances by these out-of-network providers. So, they complain to the payer, causing increased call and appeal volumes. Moreover, many patients can’t afford these out-of-network charges, causing stress on them.”

A Significant Issue? 

The Congressional Budget Office (CBO) estimates that a law addressing surprise medical bills will save between $22 and $25 billion over 10 years. That amount is a mere speck compared to the overall US health care spend, which was estimated to be $3.6 trillion in 2018.

However, Dr Owens believes that is the wrong way to look at the issue. “The problem is significant,” he said, citing a March 2019 study by the Health Care Cost Institute. Investigators analyzed claims data from nearly 620,000 hospital admissions and found that about one in every seven patients using an in-network hospital was billed by an out-of-network medical provider. This balance billing practice was found the be prevalent in anesthesiology, emergency medicine treatment, and lab services. “While the savings are not that significant overall, this is simply the right thing to do,” said Dr Owens. 

Dr Rogers, an emergency physician by training, added that he perceives balance billing “as a huge opportunity to squeeze whatever possible out of patients. It’s not something I’m very proud as an emergency physician.” He added that this appears to be the new reality that can only be changed through legislation. “So many emergency medicine groups have been purchased by private equity firms, so much so that the practice of medicine has become much more bottom-line oriented.” 

Arthur Shinn, PharmD, president of Managed Pharmacy Consultants in Lake Worth, FL, said he was surprised the savings estimated by CBO was so low. Regardless, he added, addressing the issue is the right thing to do by patients.

He suggested that legislation should not only curb out-of-network surprise medical billing practices, but also address the patient’s journey through the system. “Think about the typical Medicare patient filling out paperwork in the waiting room. There are so many forms to fill out, it is easy to miss that you just signed a form stating that Medicare may not pay for some services.” While technically not an out-of-network problem, Dr Shinn said that patients—particularly older and more vulnerable individuals—need help knowing the ramifications of signing such paperwork. 

Unwanted Spotlight on Provider Charges

Ms Andel said she wonders if providers and hospitals (and their financial backers) worry that conceding ground in this area could potentially shine a spotlight on a much bigger and real issue—that provider charges overall make up a significant portion of the overall health care spend and, thus, deserve scrutiny. It is estimated that hospital care comprises more than 30% of US health care expenditures, and physician and clinical services makes up 20% of the pie. Meanwhile, prescription drugs account for just 10% of overall costs. Even though “this discrete issue doesn’t make a huge fiscal impact, and probably touches a relatively small portion of the population at large,” Ms Andel explained, providers are not interested in seeing the conversation steered toward how much they charge and how those charges are determined. 

A number of medical organizations—including the American Medical Association (AMA) and American Hospital Association—are on record opposing surprise bill legislation that resolves disputes though default/benchmark pricing. In October 2019, these organizations sent a letter to Congress stating that resolving bills in this manner “will likely lead to access problems for patients seeking hospital-based care from on-call specialists, as well as precipitate staffing shortages in rural areas and other underserved communities.” 

The unbalance begs the question; Is this a real concern or has organized medicine overplayed its hand? 

“I don’t think it is a scare tactic,” noted Ms Andel. “There is a straight line between the failure of states to expand Medicaid and the fiscal health of hospitals in rural areas. We know they are struggling, so it is fair to ask if this could be something that tips the scales in areas that are already on the edge. But I also don’t think it will impact hospitals in a uniform way.” 

Mr Smith agrees that rural care could be impacted. “Developing networks in rural areas is driven by access to health care practitioners in those regions. Plans already pay high reimbursements in rural areas.” He suggested that plans could address the issue by creating more inclusive networks in rural areas, which would reduce out-of-network billing. 

Still, others see it differently. “They are clearly overplaying their hand,” said Dr Vogenberg, referring to organized medicine’s stance. “Moreover, it is not a very strong hand, given consumer sentiment on the issue.” He added that officials seeking reelection are likely to side with consumers, not organized medicine, on the issue. 

Frank Assessments

“The out-of-network clinicians are way off base,” Dr Owens said. “They found a loophole in the system and are gouging patients and payers for excessive fees. They have no basis for their argument. Access to care will not change. Once these providers can’t balance bill, they will be forced to comply or not see patients who are covered by insurance at all. The latter is not a viable business strategy for them.” 

Dr Rogers was also frank in his assessment, though his criticism was not aimed at clinicians. “I would dispute the term organized medicine.” He said the AMA no longer has the clout it once did.

Dr Rogers suggested that if you peel away the layers, individual clinicians probably think more like he does—that surprise medical bills should be addressed through federal legislation because it is the right thing to do. The real drivers of resistance, he noted, are the
private equity executives who are trying to preserve market capitalization. 

Speaking of private equity, these groups are helping organized medicine carry the torch about the best way to resolve out-of-network billing disputes. Last summer, a group called Doctor Patient Unity began running ads opposing surprise medical bill legislation. It turns out much of the backing for these ads came from two private-equity supported companies that own physician practices and staff emergency rooms. Our panelists agreed this is not a good look. 

Mr Smith said, “Private equity firms have no patient focus, so they are not helpful at all.” Ms Andel explained that the presence of these groups “is particularly dangerous because private equity has such a negative reputation among the general public.” 

Resolving Disputes Equitably

As for the major sticking point in surprise medical billing legislation, dispute resolution, which approach do our experts find to be the most equitable? Most said default/benchmark pricing was the most realistic to pull off, though Dr Shinn expressed concern. “No one is ever going to be completely happy if this approach is implemented,” he said. “People will complain about how you set the rate, what you used as a benchmark, the frequency at which you benchmark, and the like.” Dr Rogers acknowledged that there will need to be a mechanism to share fee schedules in a way that ensures confidentiality. 

Still, from a practical standpoint, “defaulting to benchmark pricing makes the most sense,” said Mr Smith. “Negotiating will take nonreimbursed time from providers.” Dr Owens agreed. “Default/ benchmark pricing can be systemically implemented and allow claims to pay in a timely manner.” Subjecting the number of expected claims to arbitration “will bog the system down and create backlog of cases, which will delay reimbursement.”  

Dr Rogers said that default/benchmarking is most logical. “Insurance companies need to have the ability to negotiate prices down, and medical groups need to do their best to make sure their costs are being met. The fact that the price would be based on the price that most of the local groups have survived on seems to be the most equitable arrangement.” He added that he would not mind seeing a sliding scale based on patient income. “The insurer would pay the benchmark rate, and those with higher income would pay a percentage above the benchmark.” 

Dr Vogenberg said he wonders if an amalgam of federal and state authority is the answer. “That would create consistency nationally but allow for alternatives.” The AMA has pointed to an existing New York state law that resolves disputes through arbitration. Since 2015, it has reportedly saved more than $400 million on emergency care, and out-of-network bills have been reduced by 34%. 

Suggestions like the ones from Drs Rogers and Vogenberg seem worthy of serious consideration. But then we remember the current state of Washington and our politically fractured nation. In the past, this issue might be viewed as a salve to help heal divisions, especially in a presidential election year. However, Mr Smith concluded that in this political environment, “neither party wants to give the other a trophy to be used in campaigning. That’s a sad situation.”  

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