Ending surprise medical bills has risen to a national priority with bipartisan political interest. In January, President Donald Trump directed Cabinet officials to find a solution, and multiple congressional bills were proposed in the last Congress with the same goal. Surprise medical bills consist of unanticipated charges from out-of-network clinicians—often when the facility or primary physician is in fact in-network. Patients are often left footing the “balance bill” when facilities or physicians charge them the difference between their charges and what the insurance plan will pay.
Exactly how often patients receive surprise bills is unknown, but several estimates suggest as many as one-fifth of emergency care episodes involve an out-of-network bill. As a result, various states have enacted surprise-billing legislation. But these state-level policies vary widely in scope and more importantly do not protect patients in self-insured plans—which comprise 60 percent of employer-sponsored insurance—due to a stipulation of the Employee Retirement Income Security Act of 1974 (ERISA). Thus, surprise billing will go incompletely addressed with state-based solutions alone.
There was significant interest in a federal solution from the 115th Congress: Two separate bills were introduced in the House in 2017 by Representatives Michelle Lujan Grisham (D-NM) and Lloyd Doggett (D-TX). Senators Margaret Wood Hassan (D-NH) and Jeanne Shaheen (D-NH) introduced two companion bills in the Senate in 2018, and a bipartisan group led by Sen. Bill Cassidy (R-LA) (and including Sens. Michael Bennet [D-CO], Chuck Grassley [R-IA], Tom Carper [D-DE], Todd Young [R-IN], and Claire McCaskill [D-MO]) released a discussion draft of yet another bill in 2018. Attempting to tackle the issues of payment standards, dispute resolution, and service coverage while simultaneously navigating the complex insurance market, these bills varied widely in scope.
Although at the time of writing, no surprise billing legislation has been introduced in the 116th Congress, each of the recent attempts will likely influence future attempts at federal surprise billing policy. Here, we review differences among their approaches and outline some key considerations for the next wave of federal surprise billing policy.
Provider Definitions: Cover Ambulatory Surgical Centers And Ambulance Services
While all of the previously introduced bills mentioned hospitals and their physicians, the definition of “providers” still varied in important ways. For example, all federal proposals except the Hassan bill omitted ambulatory surgical centers (ASCs). ASCs are particularly relevant because their care inherently involves a diverse team of physicians—surgeons, anesthesiologists, assistants, pathologists, and others. Patients may choose surgeons and ASCs that are in-network, only to receive a surprise out-of-network bill from an anesthesiologist or pathologist. Although the impact of out-of-network billing at ASCs has not been precisely quantified, a recent analysis suggests as many as 15 percent of ambulatory surgery episodes include out-of-network claims (using outpatient service days with both a facility fee and an anesthesia claim as a proxy for ambulatory surgery episodes). As such, they are explicitly mentioned in the state-level laws in New York, California, and New Hampshire.
Also, notably absent from all proposed federal bills was a provision for ambulance services and even costlier air ambulances. With patients unable to choose ambulance agencies and more than half of all ambulance rides being billed out of network, it is unclear why they have been omitted from federal policy proposals. State-level legislation recently passed in Marylandprohibits balance billing on the part of ambulance companies, and other states are considering similar policy. As for air ambulances (that is, helicopters), their billing practices have been regulated by the Federal Aviation Administration, which is why state-level policy has been unable to address them.
Settling Payment Disputes: Binding Arbitration Versus Fixed Benchmarks
Prior federal proposals have also grappled with how best to pay out-of-network clinicians when they charge more than an insurer is willing to pay. Three approaches predominated: establishing a case-by-case, “baseball-style” binding arbitration process; using a benchmark based on Medicare or commercial insurance payments; or deferring to states to decide on a process.
Binding arbitration, the key feature of the Hassan bill, is already used in several states. In this process, an independent arbitrator chooses between the health plan’s and the provider’s offers to determine the reimbursement amount instead of establishing the amount independently.
Another option would be setting a payment standard (such as 125 percent of Medicare payments or the eightieth percentile of commercial insurance payments), which is an administratively simpler process in use in multiple states such as California and Oregon. This was proposed in the bill by Cassidy and colleagues.
In both binding arbitration and payment standards, there is a risk that setting too high a payment level may increase overall costs and encourage physicians to go out of network. Some also suggest that binding arbitration is essentially a less transparent version of rate-setting, leaving benchmarks up to the arbitrator instead of legislators. Thus, another solution proposed by economists Zack Cooper and Fiona Scott Morton has been to bundle the reimbursement of hospitals and hospital-based physicians (emergency department physicians, anesthesiologists, and so forth) so that they are not billing separately. This would keep physician network participation in line with hospital network participation and better reflect how patients choose where to get care. It is unclear whether binding arbitration, bundling, or a fixed benchmark would provide better results, and much depends on the details.
Insurance Definitions: Protect The Uninsured
As mentioned above, one of the major mandates for federal surprise billing legislation is the inability of state-level policy to protect patients in self-insured plans. All proposals reviewed covered self-insured as well as traditional group insurance, but they varied in the way they covered the uninsured. Strictly speaking, the uninsured do not fall under most definitions of surprise billing since they do not have insurance plans; no one is in or out of network if there is no insurance plan. But the uninsured are once again growing in importance. As the federal individual mandate has been eliminated and Medicaid eligibility has narrowed, the number of uninsured Americans is again rising for the first time in years. Twenty-seven million Americans are now estimated to be uninsured, who are subject to inflated chargemaster prices instead of the negotiated rates charged to insured patients. Only the Shaheen bill, as a companion to the Hassan bill, explicitly includes the uninsured. It would limit payment obligations for the uninsured based on a fixed benchmark (see Exhibit 1). Including the uninsured in a new federal policy would take advantage of the immense political support for a broader solution to predatory billing practices and inflated list prices.
Other Considerations Deductibles
Several federal proposals did not state whether patients’ payments to out-of-network providers should count toward their annual deductibles. With deductibles on the rise—for workers with a deductible, the average annual deductible in employer plans is currently $1,573, and deductibles exceeding $5,000 are not uncommon—future proposals ought to be explicit on this matter.
Allow Balance Billing With Notification And Consent?
Another area of ongoing variation is in whether balance billing should be prohibited entirely or whether an exception should be made if the out-of-network provider gives the patient prior notice and obtains consent. Although the Lujan Grisham, Doggett, Hassan/Shaheen proposals allow for an exception if notice is provided and patient consent is obtained, the Cassidy bill does not allow for such an exception. It is possible that, given the amount of paperwork they receive, patients might inadvertently consent to balance billing. On the other hand, if a patient seeks a specific out-of-network clinician for elective care, it may be reasonable to allow that physician to balance bill the patient his or her “premium” instead of refusing to care for the patient.
Today’s bipartisan momentum for comprehensive surprise billing policy is stronger than ever, especially now with a president in search of a federal solution. Industry and professional groups have also entered the fray, marking their positions with their own policy proposals. Those crafting comprehensive federal legislation would do well to build on the strengths of each of the last Congress’s policy proposals and take lessons from existing state laws as they work toward protecting Americans from predatory medical billing.
For More Information: https://www.healthaffairs.org/do/10.1377/hblog20190221.859328/full/