The Surprise Billing Conundrum.
Nobody likes getting catastrophically big, unexpected medical bills after an emergency situation. We’ve all seen the headlines where patients get slapped with thousands of dollars in emergency room bills from out of network providers.
But what is surprise billing? Where did it come from, and what’s the latest news?
2019 Surprise Billing Recap – Updated September 2019
Since our last surprise billing update in May, there’s been plenty of squabbles (as you can imagine) between providers, insurers, and Congress.
Of course, everyone wants a solution to the surprise billing problem, but each side ALSO wants the solution that will maximize their benefit.
The politics involved is a mess, too. Congressional representatives might prefer to let patients continue to struggle with these bills rather than hand the current administration a healthcare victory.
The current Surprise Billing predicament.
Proposals from Congressional leaders were taking shape on the surprise billing front, rhetoric was good, and it looked like a surprise billing solution was inching closer to the finish line as legislation hashed out the details.
Texas and California make a Surprise Billing push.
Meanwhile, states were making their own push against surprise billing. Texas and California became two of the dozen-or-so states with legislation either partially or fully banning surprise billing practices.
Each state developed its own way to deal with the issue (Texas with third party arbitration between the provider and insurer, California with previously agreed upon, benchmarked median in-network rates for out of network emergency bills).
Surprise Billing comes to a not-so-surprising halt.
As Congress returned to class in September after its summer recess, all of a sudden, the lobbying scene was flooded with a huge amount of pushback on the surprise billing front.
The culprit? A ‘dark money‘ group apparently backed by major national physician staffing companies.
Given this development, many national media outlets described surprise billing initiatives as in legislative gridlock.
Both sides – providers, who favor third party arbitration – and insurers, who favor rate-setting benchmarks for out-of-network care – aren’t giving up any ground yet. As you can tell, the issue is pretty tricky.
Translation: we might be back to where we started, despite all the back-and-forth rhetoric.
As a response to the lobbying blitz, Congressional leaders in the House launched an investigation into private equity groups that back these physician staffing companies.
We’ll see if any major surprise billing initiatives come through the federal level. For now, I would turn your gaze toward the states.
TL;DR. Bi-partisan support for surprise billing largely exists and is very real. But insurers and providers can’t compromise on a solution. With a new provider group lobbying to take down any surprise billing legislation, we might be in for a long ride.
For a timeline of surprise billing events from earlier in the year, keep reading below:
1.25.2019 – Trump raises the issue of Surprise ER Billing.
Getting along for once.
Add surprise medical bills to the short list of things that politicians agree on. This week, President Trump held a chat with patients and experts on surprise medical billing, where patients are charged with the brunt of an unexpected out of network medical bill after insurers say “we won’t cover this.”
Trump and many members of Congress are seeking ways to end the practice of surprise billing after hearing countless stories of people getting hit with huge medical bills over seemingly simple medical procedures.
It’s everywhere.
You can Google “surprise medical billing” and see that it’s become a pretty big issue in healthcare. The current administration is striking an aggressive tone over the issue, and we could see this be one of the few healthcare related issues passed through Congress this year.
2.1.2019 – What is Surprise/Balance Billing?
Emergency Care Costs.
The countless stories of patients receiving extravagant bills from the ER for simple care (like a flu shot) give bad optics to the healthcare industry. The issue has gotten so out of hand, in fact, that Vox started asking individuals to submit their emergency room bills to create an online database.
Billing Bonanza.
The problem of Surprise Billing and Balance Billing (note: these are two distinct terms) emerged from a few sources, including payor-provider scuffles over emergency care coverage, and the increased prevalence of freestanding emergency rooms (think urgent cares, but for emergency services).
Because these emergency rooms were freestanding and not connected to a hospital, patients 1) initially did not understand the difference between this facility and an urgent care, and 2) were billed emergency room rates, instead of what they thought were urgent care rates. Imagine receiving a $20,000 bill from a small bike accident.
Needless to say, a lot of people were confused by emergency care billing practices. Insurers stopped paying the exorbitant rates charged by out-of-network emergency care providers. Naturally, the emergency care providers then simply would pass on the rest of the bill to the patient, hence the name ‘Balance Billing.’ Luckily for patients, Balance Billing is largely illegal, now. But Surprise Billing isn’t (yet).
What Surprise Billing Is.
Surprise Billing occurs when a patient receives a much larger-than-expected medical bill from services and treatments received while at the ER. The most important thing to remember when it comes to surprise billing is that a HOSPITAL can be in-network on a patient’s insurance plan, but the PHYSICIAN might not necessarily be covered.
If the physician practice is out of network with the patient’s insurance, they can bill much higher out-of-network rates that the patient is completely responsible for.
This unfortunate fact happens because hospitals generally contract with physician groups, who then contract SEPARATELY with insurance plans. That’s why patients generally receive two bills whenever they go to the ER. Physicians can easily opt out of any insurance plan if they don’t like the negotiated rate that the insurance plan is offering.
Patients grew confused – “Wait,” they thought. “I thought my insurance covered an emergency room visit?” Well, yes, Karen – your insurance might cover the facility (hospital) portion of the bill, but the emergency physician treating you (who is separately contracted and probably works in an emergency physician practice) might not be covered at all. Which would put YOU on the hook for 100% of that out of network bill. Yikes.
So, in summary, patients receive 2 bills for an ER visit – one from the hospital, called the “facility” bill. Then, one from the physician, called the “professional” bill. The physician bill can be out-of-network, even though your insurance covers the hospital bill.
Surprise billing is so contentious because patients in a medical emergency can’t exactly CHOOSE which hospital they can go to. Obviously, they’re going to go to the closest one. And if the ER physicians at that hospital are out of network with your insurance? Well, you’re SOL.
In the News.
Obviously, the practice of Surprise Billing gained huge notoriety and a vast media presence. Now, emergency physicians and bi-partisan lawmakers are looking for solutions to the problem to ending Surprise Billing once and for all. Intermountain Healthcare in Utah is already ahead of the game by proactively negotiating with insurers.
4.8.2019 – Panels Form and Ideas Take Shape.
A Solution in the works.
Along with controlling drug prices, ‘surprise billing’ is one of the rare public policy problems that has both bipartisan support and active solutions working through Congress. Insurance companies (think United Health) and providers (i.e., physicians) have been spatting for months about who’s to blame when a patient receives an exorbitantly large bill after an emergency visit. This week, panelists met with Congress to work through potential solutions to the issue – one that states have been working on for a while now.
So…any progress?
Main takeaways and ideas from the testifying witnesses included removing the incentives in place for doctors to remain out of network with insurers, forcing arbitration between the insurer, patient, and provider to find a reasonable payment solution, pinning out of network payments to Medicare rates, and implementing a bundled payment for all services rendered (i.e., one payment given for all hospital and physician bills).
Most witnesses honed in on limiting the out-of-network status of physicians administering care at hospitals, ESPECIALLY in an emergency setting where patients have little to no say in where they receive care.
5.13.2019 – Trump joins the Surprise Billing Chorus with force this time. States take Surprise Billing Action.
A Tricky Issue.
President Trump continued his comments regarding support for a solution to surprise billing. Oddly enough, doctors, hospitals, and insurance providers all want to end surprise billing price gouging practices, yet they all seem to be at odds over the proper solution to the issue. Moral of the story: nobody wants to get stuck with sticker-shocking ER bills to pay.
What are the Proposed Surprise Billing Solutions?
The Trump Admin seems to be in favor of bundled payments – where the hospital and provider would receive one payment for services rendered. Some states, including Colorado, have introduced legislation to limit surprise billing to a maximum fixed percentage of Medicare – in Colorado’s case, no more than 125%. Others, like New York, prefer arbitration.
Under New York’s arbitration, patients are not required to pay more than in-network rates, and an independent arbitrator resolves the payment difference between the insurer and provider.
Although many solutions have been proposed (with some even already implemented at the state level), none have taken a firm federal hold. Stay tuned!
5.16.2019 – For the first time ever, tangible legislation is proposed specifically to take on Surprise Billing.
Proposed House Bill.
The No Surprises Act, which is the nifty name for the proposed Surprise Billing bill (that’s a bit repetitive) drafted by the House, would ban surprise medical billing for good and set a minimum payment rate for out of network providers based on median geographical in-network payment rates for those ER services. In other words, the House is trying to CAP out-of-network payments.
Notably, this bill does not include an arbitration clause – where a third party arbitrator would negotiate a rate between providers and insurers for the out of network bill. Insurance companies would be the big winners if this bill were to pass.
Proposed Senate Bill with a Key Difference: Arbitration.
Essentially, the STOP Surprise Medical Bills Act is the same as the House bill, except that this bill includes arbitration. Hospitals and providers are more into the arbitration idea, but the Trump Administration opposes it, citing the potential for disruption, less pricing transparency, and increased administrative burden associated with arbitration.
Both branches think that some sort of Surprise Billing legislation will be ready to sign by Trump by the end of summer.
5.23.2019 – Different Sides of the Same Coin.
Who wants what?
Well, as previously mentioned, everyone wants to see patients protected from out of network bills. But we’re still struggling a bit to get there.
What providers (physicians, hospitals) want.
Arbitration to settle payment disputes for out of network emergency bills. Arbitration would allow providers to negotiate for favorable rates.
The American Hospital Association went on to release a statement in favor of an arbitration clause, arguing that any “rate capping” measures taken by Congress would give insurers more leverage – possibly even removing any incentive for insurers to contract with providers for reimbursement (since Congress would now be arbitrarily setting reimbursement rates).
What insurers want.
Unsurprisingly, in direct contrast to providers, insurers want Congress to cap payments at some agreed upon rate. Whether that payment rate is at a fixed percentage of Medicare (e.g., “we’ll give physicians / hospitals 200% of Medicare for the out of network portion of the bill) or the median in-network rate adjusted for geography, it would be a big win for insurers for something like payment caps to get through Congress.
What the White House (currently) is thinking.
Trump isn’t too keen on arbitration, much to the dismay of providers (cue a collective sigh). The administration is actually looking into bundled payments – as in, the hospital and physician collectively send that patient’s insurer ONE bill, instead of billing separately.
That’s it for now. Be sure to subscribe to keep up on the latest healthcare news and trends!