Jonathan
Keisling July 10, 2019
EXECUTIVE
SUMMARY
- Surprise medical bills often arise from out-of-network
ancillary services provided at an in-network facility, and both the House
and Senate are considering legislation to limit the occurrence of the
situation.
- S. 1895 attempts to curb surprise medical bills by
allowing patients to pay in-network rates unless they are given advance
notice about a non-ancillary service being out of network; ancillary
services are automatically charged at the in-network rate.
- While shifting costs to insurers and providers in this
way would be expected to raise premiums, a study indicates that it could
instead lower them by reducing the incentive for doctors to jump between
networks in an effort to bargain for higher rates.
INTRODUCTION
One of the more
unpleasant features of America’s health care system is the existence of
“surprise billing”—the unexpected cost of paying for care from a provider who
is not in the network of a patient’s insurance company. There are three main
situations where the phenomenon of surprise billing takes place:
- Visits to the emergency room,
where a patient usually does not have a choice in providers;
- Ancillary care services (e.g. care from an
anesthesiologist) that are performed as a supplement to the primary care
received during a procedure or test;
- Ambulance
services, where a transport shows up and a patient typically has no say in
which hospital they go to or which provider or services they receive.
In the last few months, lawmakers have
introduced various pieces of legislation seeking to reduce the existence of
surprise billing. The Senate Committee on Health, Education, Labor, and
Pensions (HELP) produced legislation in recent weeks to reduce the existence of
surprise billing: S. 1895 or the “Lower Health Care Costs Act.”[1]
The House Energy and Commerce Committee is also considering similar legislation
as the text for H.R. 3630—or the “No Surprises Act”—is scheduled for markup
this week.[2] While
S. 1895 seeks to restrain surprise billing, it goes beyond that issue, aiming
to reduce the cost of drugs, increase transparency and the exchange of
information in health care, and improve public health. This paper will outline
and analyze how S. 1895 would seek to reduce surprise billing and increase
price transparency and information exchange between providers, insurers, and
patients.
SURPRISE BILLING
As noted, surprise billing frequently occurs
when ancillary care is administered to patients. Surprise bills are most
troubling when patients are receiving care from an in-network facility, and are
thus safe from out-of-network charges. Therefore, S. 1895 gives particular
attention to out-of-network care provided at in-network facilities.
Under S. 1895, patients receiving care at
in-network hospitals would be held harmless for any ancillary care provided to
them by an out-of-network provider. As a result, for any out-of-network
ancillary care that patients may receive, they would only be subject to the
in-network cost-sharing amount they agreed to when they purchased their
insurance plan.
In the case that patients receive non-ancillary,
out-of-network services at in-network facilities, the facilities must provide
patients notice at least 48 hours prior to the patients receiving the service.
Otherwise, the patients will only be subject to the in-network cost-sharing
requirements of their insurance provider. The table below summarizes how cost-sharing
works in each of the situations described above.
|
In-Network Facility?
|
In-Network
Service?
|
Ancillary
Service?
|
Notice?
|
Cost-Sharing
|
|
Yes
|
No
|
Yes
|
N/A
|
In-Network
|
|
Yes
|
No
|
No
|
No
|
In-Network
|
|
Yes
|
No
|
No
|
Yes
|
Out-of-Network
|
S.
1895 also provides for patients stabilized but in need of additional care after
receiving emergency care at an out-of-network facility. For such patients, the
facility must give them an advanced notice of any additional out-of-network
care, complete with the estimated costs for patients, before that care is
administered to them. The facility must also give patients alternative options
for in-network care.
Finally, S. 1895 stipulates that patients
receiving air ambulance services from an out-of-network provider are also only
subject to the in-network cost sharing requirements of such services. The bill,
however, does not address surprise bills that result from ground ambulance
services.
For the cases above, when out-of-network
services are performed, insurers would pay providers a median in-network rate.
The median in-network rate for a particular service would be determined by the
median rate that an insurer has contracted with providers for the same (or
similar) service in a given geographical area. The bill gives authority to the
Secretary of Health and Human Services to determine these geographical areas.
An insurer may not be able to produce their own median in-network rate for a
given geographical area, however, because they simply lack enough claims or
have been unable to contract with any provider for such a service. In such a
scenario, the insurer must use a database (i.e. a state’s all-payer claims
database) with sufficient information in order to produce a suitable median
in-network rate.
It is at this point that the Energy and Commerce
Committee’s bill, H.R. 3630, deviates from S. 1895 on the issue of surprise
billing. While S. 1895 uses the median in-network rates for the given year,
H.R. 3630 would use median in-network rates from the year prior to the bill’s
enactment as a benchmark and then inflate that benchmark in subsequent years by
CPI-U.
Would This Law Increase Premiums?
The purpose of this bill is to protect patients
from expensive, surprise bills, and any bill attempting to move this risk from
patients to insurers would shift costs from patients to insurers, providers, or
both. S. 1895 would mandate that insurers reduce beneficiary cost-sharing for
many scenarios where insurers currently provide little or no coverage. It would
also soften the blow for insurers by requiring providers in such scenarios to
charge rates that an insurer has already negotiated with others. Nevertheless,
this bill would likely raise costs for insurers, or lower revenue for
providers, or some combination of the two. Following this line of reasoning, it
seems likely that the passage of this bill would put pressure on both providers
and insurers to increase rates, and that consumers would see this upward
pressure in the form of increased premiums or cost-sharing.
There is, however, evidence to the contrary. One
study shows that a similar surprise billing law instituted in the state of New
York produced in-network payment rates that were 9 percent lower than before
the law was instituted.[3]
The study suggested that, under the current system, physicians will often jump
in and out of insurance networks in order to renegotiate higher rates with
insurers. Over time, this dynamic leads to inflated in-network rates. These
findings suggest that laws reducing the incentives for providers to leave
networks, such as S. 1895, lead to lower in-network rates over time, thus
leading to reduced premiums and cost-sharing for patients.
This bill’s potential impact on the cost of
health care is complicated as a result. On the one hand, there is a cost shift
from patients to insurers and providers that would seem to put upward pressure
on prices and premiums that patients face. On the other hand, there is a
reduced incentive for providers to jump in and out of networks for the purpose
of negotiating higher rates, which would put downward pressure on patient
costs. The interplay of these two forces would determine how a bill such as S.
1895 would impact patients’ pocketbooks. But if the interplay is similar to
that in New York, then patients can be hopeful that the reduction of surprise
billing could also lead to reduced premiums.
PRICE TRANSPARENCY
S. 1895 seeks to provide consumers more
knowledge of the prices of health care and their in-network provider options by
removing gag clauses and banning anticompetitive terms in contracts between
providers and insurers, among other things.
Hospitals with large portions of market share
have been known to introduce gag clauses and anticompetitive terms to contracts
with insurers in order to steer patients into their facilities.[4] The
bill would seek to avoid such things by prohibiting contractual agreements that
would prevent patients, insurers, or providers from seeing cost and quality
data on providers. S. 1895 also explicitly prohibits any hospitals from
inserting anti-steering clauses in contracts with insurers; such clauses
prevent insurers from encouraging their patients to seek care at facilities
with better care or lower prices. The bill would exempt certain kinds of health
plans from having to comply with these rules. Plans such as Health Maintenance
Organizations (HMOs) and Accountable Care Organizations (ACOs) are explicitly
mentioned as being exempt. When a consumer enrolls in such plans, they know up
front that they are purchasing a plan with a restrictive network.
In addition to the transparency and information
exchange provisions above, S. 1895 also includes a requirement that facilities
and providers send patients bills within 45 days of the service, and a
requirement that insurers provide accurate and up-to-date network information
to their beneficiaries.
As AAF has stated elsewhere, mandating transparency for the
price of every service that insurers negotiate with providers could be
counterproductive. The transparency requirements outlined by S. 1895, however,
do not go that far and are much more reasonable: It makes sense that consumers
purchasing a health plan would have access to all the benefits that they are
purchasing, especially when it comes to the providers in their network, and
what those providers charge.
CONCLUSION
Surprise medical bills require substantial
resources from the recipient. Normally insurance is purchased for such events,
but the problem is that surprise billing takes place in the context of an
insurance contract, leaving the beneficiary exposed to something the insurance
otherwise would cover. A reasonable legislative solution will move the burden
of cost from the beneficiary to the insurer and provider without creating undue
premium burdens or otherwise. The specifics of S. 1895 and other forthcoming
proposals will no doubt be debated in the months ahead.
[2] https://energycommerce.house.gov/sites/democrats.energycommerce.house.gov/files/documents/BILLS-116hr3630_Surpise%20Billing.pdf
https://www.americanactionforum.org/insight/assessing-the-legislative-responses-to-surprise-billing-and-other-transparency-issues/#ixzz5tNQK2uyM
Follow @AAF on Twitter
No comments:
Post a Comment