An article published in the August issue of JAMA Internal Medicine confirmed what many suspected: There has been a recent uptick in both the number of surprise bills patients face after emergency department (ED) admissions and the average potential financial responsibility of such bills for patients. Every stakeholder agrees that this problem must be solved and that patients should not be held responsible for surprise bills, but Congress has spent the past year grappling with the other side of the equation—who is ultimately responsible for unexpected bills, and how much money should an out-of-network (OoN) physician be paid?
Long-standing principles of AAOS
AAOS believes that narrow networks—put in place by insurance companies as a money-saving measure—are the culprits in surprise billing. AAOS supports and has consistently advocated for the following principles as critical to solving the issue of surprise bills:
- Patients must be held harmless for resulting surprise bills and instead be liable only for the amounts they would have been charged had care been provided in network.
- The process for settling any disputes over bills must be quick and fair. AAOS advocates for independent dispute resolution (IDR) or arbitration, similar to what is used in MLB negotiations. An arbiter would consider a physician’s bill and the offer from the insurance company, then chose one, with the loser paying the arbitration costs. Crucially, the arbiter would base the decision on an independent database of charges (such as FAIR Health).
- Insurance network transparency must be required. Insurance companies should be responsible for keeping accurate records of physicians’ network status and should be held liable if and when patients are misinformed that providers are in network.
- The frequency of OoN billing must be reduced. In New York, “baseball-style” arbitration has reduced the practice of OoN billing by 34 percent.
Unfortunately, these principles are not always well received on Capitol Hill. Insurance companies, emboldened by the supposed unbiased voice of the Brookings Institution, claim that physicians purposely stay out of insurance networks to maintain their ability to charge unreasonable prices to unsuspecting patients. Although the opposite has been observed in New York, insurance companies also claim that arbitration is a costly mechanism and that a nationwide system would increase healthcare costs for everyone, harming consumers. In reality, ED doctors’ charges have dropped, on average, by 9 percent in New York.
Unintended consequences of benchmarking
Insurance companies contend that legislation that benchmarks all OoN bills to the median in-network rate is the only viable solution that will not increase administrative burden or healthcare costs.
However, benchmarking is problematic for several reasons. In that legislative scenario, median in-network rates would be set by insurance companies, with little to no influence from other sources. Physicians, who are already crippled by antitrust laws that do not apply to insurance companies, often have very little choice other than to accept the rates offered by insurance companies. Rural physicians are under even greater pressure to accept such contracts. Many leave their areas or stop providing ED call coverage, reducing access for patients. Setting all OoN bills to benchmarks would further incentivize insurance companies to simply cancel contracts with their higher-cost providers in order to slowly decrease the median rate. Benchmarking solutions do not account for variations in patient populations or complexity of patient diseases and treatments. Ultimately, physicians refusing below-cost contracts would be forced to accept the rates unilaterally imposed by benchmark-based solutions.
Status of current legislative proposals
The Lower Health Care Costs Act of 2019, which is scheduled to be debated on the Senate floor this fall, benchmarks payments to median in-network rates with no dispute mechanism. Although there has been some discussion of including an IDR process, no such language has been circulated as of publication. After a last-minute compromise, the House Energy and Commerce Committee included IDR in its surprise-billing proposal, the No Surprises Act. Although AAOS is encouraged by this step in the right direction, IDR would be used only for bills that are expected to be more than $1,250, and the arbiter still would be instructed to use median in-network rates—not charges—to assess final prices of bills. The House Ways and Means Committee and the Education and Labor Committee are expected to take action, although it is unclear what mechanisms they will put into place.
Advocating for the right solution
AAOS continues to push legislation styled after the New York state law. As of the beginning of August, 71 members of Congress had agreed to cosponsor legislation that would introduce baseball-style arbitration for all OoN bills, whereby an arbiter would be asked to consider a multitude of factors when deciding a final price, including a fair and independent database of charges, the complexity of the case, specialization of the physician, etc.
Although considerable progress has been made in educating legislators and their staffs about the benefits of a New York-style bill, your help is needed. There is still time to send an alert to your members of Congress, encouraging them to reject government rate-setting and instead engage in thoughtful conversations on the topic. With President Donald Trump weighing in and calling on Congress to find a solution, as well as the constant stories of patients faced with unexpected and high bills, federal action is imminent. An approach that would help physicians represent themselves fairly regarding unanticipated bills is the best solution.
Catherine Hayes is a senior manager of government relations in the AAOS Office of Government Relations.