Yesterday, Fox 8 News in New Orleans had a story on a bill moving on Capitol Hill that would address the issue of surprise medical billing, something lots of Americans are familiar with as an unwanted aftereffect of a hospital visit.
A bill in the U.S. Senate could help stop the surprise medical bills that cost Americans thousands each year.
Senator Bill Cassidy, R-Louisiana, helped write the Stop Surprise Bills Act of 2019. A bill that has 27 co-sponsors, more than a quarter of the U.S. Senate. He is hopeful the full senate will take up this bill in the summer.
“If the patient goes to an in-network facility, or if it’s an emergency and she goes to any facility, she gets the in-network rate,” Cassidy said. “She is no longer a point of leverage where the provider and the insurer duke it out.”
Steve Fair visited a New Orleans hospital while in town from Oklahoma. He woke up from his New Orleans hotel room scared, when his uvula had swollen five times its normal size. He visited Tulane’s emergency room and spent about ten minutes with a doctor. He said he was diagnosed with an infection and strep throat, was given a shot and went on his way.
Fair paid his copay and the insurance company paid the rest. But a month after his emergency visit, he got a surprise bill for $1,400.
The bill did not come from Tulane, instead, it came from The Schumacher Group, which billed just for the emergency room physician’s ten minutes and they charged Fair $1,360.
“If this guy is making this kind of money, he’s making $2.5 Million a year as an ER physician, working 50 hours a week,” Fair said. “I mean, there’s no possible way he can justify this kind of charge.”
Fair sent a letter to Senator Cassidy, who is also a medical doctor, calling it a “classic example of price gouging.”
“It seems like this is astronomical, that this is out of control,” Fair said. “And my question to Tulane was that: Why have you… what do you do? Do you know how much your third-party physicians charge? Those guys who are actually there, doing the work in your ER – are they employed by you? Obviously not, because I’m getting a bill from a third party.”
Essentially, what happens is that if you find yourself going to a doctor who isn’t in the provider network your health insurance company has you in, there will usually be a difference in the rates the doctor charges and the insurer pays for whatever medical services you get from that doctor. The doctor will charge a discount for in-network patients.
The surprise comes when the doctor and the insurer can’t agree on a split of the difference. So they just send you a bill for it. Horror stories result. Mr. Fair’s experience in New Orleans is an example, but by no means the worst one.
They call this “balance-billing.”
There is some bipartisan support for doing something about this phenomenon, something that really does need to be fixed if the private health care system is going to survive the Democrats’ demands for socialized medicine.
There are three basic elements to the bill the Senate is working on…
- Emergency services: The bill would ensure that a patient is only required to pay the in-network cost-sharing amount required by their health plan for emergency services, regardless of them being treated at an out-of-network facility or by an out-of-network provider.
- Non-Emergency services following an emergency service at an out-of-network facility: This bill would protect patients who require additional health care services after receiving emergency care at an out-of-network facility, but cannot be moved without medical transport from the out-of-network facility.
- Non-Emergency services performed by an out-of-network provider at an in-network facility: The bill would ensure that patients owe no more than their in-network cost sharing in the case of a non-emergency service that is provided by an out-of-network provider at an in-network facility. Further, patients could not receive a surprise medical bill for services that are ordered by an in-network provider at a provider’s office, but are provided by an out-of-network provider, such as out-of-network laboratory or imaging services.
It’s a good bet something will pass, but the question is whether there would be an arbitration proceeding based on a “baseball-style” method or whether the government is going to dictate rates that the provider and insurer may work from.
Cassidy’s preference is for the “baseball-style” model. A Bloomberg piece from earlier this year explained what that means…
One possible solution, already in place in New York and a handful of other states, puts insurers and doctors through so-called baseball-style arbitration. Each side submits a price, and an arbiter chooses one. Both sides are bound by the decision. Patients’ charges for out-of-network care are limited to what they would owe to in-network providers.
By forcing an arbiter to pick an offer, rather than forging a compromise, both parties are, in theory, encouraged to moderate their bids.
“If it’s loser-pay, you’re going to make a reasonable offer,” said Vidor Friedman, president of the American College of Emergency Physicians. “If you’re acting outrageously in the marketplace, you’re going to lose every time.”
For policy makers, final-offer arbitration can address situations where markets break down without the government stepping in to set prices. “You’re actually trying to simulate, if you had a market, which you don’t, where might the market come out,” said Paul Ginsburg, a health economist and director of the USC-Brookings Schaeffer Initiative for Health Policy.
The other approach is “benchmarking,” which essentially means if there’s a difference between a doctor’s charge to a patient outside his provider network for emergency care and what the patient’s insurance agrees to pay, the doctor would be forced to accept the average of rates in the community for that care. The bill moving through the Senate at present is based on benchmarking, which a CBO study released Tuesday said would save the federal government some $7.6 billion and which the White House has signaled support for. That’s the approach the House wants to use, which has a lot more of a big-government feel to it – as it’s the government who will determine what the “benchmark” is.
The insurance companies hate the baseball-style arbitration. They think it’s a means for doctors to go for broke with outrageous rate demands.
But there is a potential compromise that would fuse the two methods; namely, that benchmarks would be in effect but they wouldn’t be the end of the story. If a doctor wasn’t satisfied with the price paid for his services he could appeal the “benchmark” rate to an arbitrator if the difference was more than $1,250.
Cassidy, who’s adamant about getting something done, is willing to try that compromise…
HELP Committee Chairman Lamar Alexander (R-Tenn.) has indicated he’s open to discussions. Other members of the panel, such as Sen. Bill Cassidy (R-La.), applauded the House action.
“The House is taking a step in the right direction,” Cassidy said in an email. “We need to end up in a place that gives patients security while having a level playing field for providers, hospitals and insurers.”
But the large employers are screaming, because they don’t like the baseball-style arbitration idea, and they pulled their support for the House bill when the arbitration amendment was added. And the doctors aren’t happy, because they don’t like the $1,250 threshold; they say it takes most of these disputes out of the realm of arbitration.
Getting something done is going to be a mess, and pressure is building on Senate Republicans for having embraced benchmarking as part of the solution. For example, FreedomWorks is equating rate-setting with a step toward socialized medicine, and is buying ads around the country to push that message…
“Senator Lamar Alexander (R-TN) is advancing a plan to eliminate surprise medical bills by giving bureaucrats in Washington the power to set prices for healthcare across the country. We are disappointed that some in GOP leadership have turned on their commitment to free-market healthcare by advancing proposals that increase regulations and grow government as the ‘solution’ to prevent surprise billing.”
“It’s concerning that Republicans in the Senate would consider advancing such dramatic healthcare reforms without giving the public a transparent process and access to the CBO score requested by Senator Alexander March 21st, we can and we must do better.”
Nevertheless, the House bill is out of committee and awaiting floor action, and something could well pass before the August recess.