Washington Wednesday – Ending surprise medical bills

NICK EICHER, HOST: It’s Wednesday the 26th of February, 2020. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Nick Eicher.

MEGAN BASHAM, HOST: And I’m Megan Basham. First up: Washington Wednesday.

EICHER: Legislative action in Washington pretty much grinds to a halt during election years. This session of Congress hasn’t had much to halt: you had the Mueller-related probes, then, of course, the impeachment inquiry, and now the politics really gets going. With lawmakers retreating to their partisan corners to campaign. 

It is only the extremely rare bipartisan issue that can convince members of Congress to work together in this climate. But this year it’s happened, and the issue is surprise medical bills.

BASHAM: As the name suggests, these are bills patients don’t expect and in many cases struggle to pay. And there’s broad support for putting a stop to them. Not one, but two House committees have drafted bipartisan proposals to protect patients from those bills. The problem is, the proposals take different approaches. And lawmakers can’t agree on how to merge the two.

Joining us now to talk about those sticking points is Thomas Miller. He’s a healthcare policy analyst with the American Enterprise Institute. Thomas, good morning!

THOMAS MILLER, GUEST: Good to be with you. 

EICHER: Let’s start by defining the problem. I think we know what a surprise medical bill is, but can you talk about how they happen and how widespread a problem they are?

MILLER: Well, they primarily happen in two different circumstances. Patients will be going to what they assume is an insured, in-network facility, and there may be other medical providers who are part of the food chain who toss in a bill when they’re not part of an insurance arrangement and certain in-network rates. These tend to be the type of healthcare providers who the patient has little role, if any, in knowing they were going to see them and selecting them. A classic example is an anesthesiologist.

The other situation is more an emergency care operation where the patient has little control over where they’re going to. 

Those are the two main circumstances in which this occurs. There are different parameters for each. And by most recent studies, it’s a significant although not overwhelming problem in maybe as many as 20 percent of surgeries or emergency room situations. It should not be permitted or tolerated, but it’s been going on for some time and it’s a problem that needs to be stopped. 

BASHAM: As I mentioned: two House committees have proposed two different solutions. But you think they both miss the mark. Would you explain your reasoning?

MILLER: Well, this started out as a motherhood issue where every politician wanted to say it’s terrible, patients should not be put in the middle of this. They should not be having these surprising large bills. That’s terrible. Let the hospitals and insurers and other doctors work this out. 

But it turns out even though it’s a motherhood issue, they are brothers from a different mother, apparently, and each one wants to be a little further up the food chain in terms of getting to name their own price kind of priceline style. So, the respective camps have either gone in the direction of leaning toward, you might say, a pro-insurer aspect where they’ll tend to deem contracted rates, which tend to bring down these costs, but the physicians and other parties feel like they’re losing out and they’d be taking a lower reimbursement than they otherwise might have. And so it tends to force them into networks they don’t want to be part of at the price that’s being offered. 

The alternative is you have an arbitration style approach, which is more favorable to physicians in particular, and that usually involves—depending upon the model you use—two prices being submitted, and the arbitrator has to decide one or the other some people call that baseball style but that’s not exactly how it works in baseball. That has, in practice, tended to drive healthcare prices higher, which is why physicians favor it. 

And we’ve got respective camps, different subcommittees in the House and Senate who have leaned in one direction or the other. All we know with Congress is the funding chain for the government runs a little short of some items around next May and that’s probably when we’ll have to reach a conclusion on this, although it’s not in sight at the moment. 

EICHER: You were one of several dozen healthcare policy experts who sent a letter to Congress about this issue earlier this month. That letter urges lawmakers to look for a third option to solve this problem. 

Suppose you’re king of the world here, king of Congress. What would you do? What would you recommend? 

MILLER: Well, there are no kings in Congress. They all think they’re kings even if they’re not running for president. The idea is let’s step aside from the food fight as to who’s up and who’s down and who wins and who loses. I mean, we know the patients lose in any case and secondarily, sometimes, taxpayers. The highest price is not the right one as a default setting.

The argument is let’s be a little more straightforward and transparent about this. Borrowing from other areas of financial practice, as well as some areas of healthcare occasionally, truth in advertising, which says that whoever you are or what party you are in this process, you should be telling the patient what you’re going to charge in advance. And if you can’t tell them that, they’ve got some consequences to deal with. 

So the argument is if you’re holding yourself out as an in-network facility or an in-network insurer and the parties being covered are in-network, then if you don’t actually police that situation, allow others to get involved without a network contract or an understanding, and they try to throw a surprise bill on someone that there will be penalties for either the insurer or the hospital in various cases for not honoring the representation that it’s in-network. 

There also in some other aspects outside of the letter are arguments for saying that you cannot balance bill if you are a healthcare provider if there is the assumption that someone went to a network facility. There’s other regulations that have to be imposed for situations where you go out of network in an emergency situation. But that can be done through basically imposing a certain reimbursement level through federal regulation on what are called emtala emergency required services. 

So, let’s be straightforward about this: It’s one thing to pay more if you know it upfront, but it should not surprise people. It’s part of the larger price transparency argument that if you make the prices and the costs more transparent, people can actually function as real patients who understand what’s going on. 

EICHER: I’d like to get your thoughts on how the issue of surprise medical billing fits into the larger healthcare debate. I mean, Bernie Sanders is looking more and more plausible, and he’s talking full-on nationalization. 

So this is basically two questions: I do want to touch on whether any of this matters if we go Medicare for All, but tackle this question first, because there are other possible health-insurance ideas floating around: how does this surprise medical billing question fit into our current scheme of medical insurance?

MILLER: Well, we rely upon to some and various extent insurers to be the surrogates, negotiators, or protectors of patients. Sometimes they do a better job, sometimes they do a worse job. Sometimes they don’t save as much money as you think they do, but we’ll leave that aside for the moment. But an individual is somewhat at the risk of some powerful entities if they don’t have someone else in their corner to tell them what the rules are and what the deal is, and that’s why people will buy insurance in order to have that type of pricing protection. 

Now, the system doesn’t work perfectly right now, but we could tighten it up with better transparency and making people honor the agreements they make as opposed to figuring out a way around them.

Now, in a Medicare-For-All world, I guess you would get one bad price all the time for everyone is what they’re trying to promise. There are also folks who like the idea of price controls and regulation. And although I think it’s a stretch at the moment, those who are favorable toward we’re going to require that the reimbursement will be this level in these surprise situations would probably like to use that as a building block for saying, well, let’s mandate all the prices so we all get the same price at a lower level and somehow someone else will make up the difference. So there’s a little bit of that suspicion about rate regulation being imported in through this surprise billing situation, which is an abuse of the system and extending it more broadly.

There’s another argument, which is to say if you don’t have a contract, if you haven’t actually talked to your patient about what you’re going to charge them, the straightforward way to get them to practice better is to say no one pays anything until they actually tell you what the price is. That would be a dash of cold water in the face of those who are trying to abuse the patient or figure out ways around things that they can’t do through straightforward market needs. 

BASHAM: So turn now to the Bernie Sanders issue, if we go full-on “health care is a human right,” won’t the question of surprise billing be more of an interagency, government-to-government thing than a thing individuals have to be concerned about?

MILLER: Well, sure it depends on what version of Bernie full on you want, and you know there are variations on that. But in the world in which there’s basically one rate—whether it’s the Medicare rate, which is the great promise, it’ll be so much lower or a higher rate, an all-payer rate. There would be less variation, at least above board, in terms of what’s being charged. 

Whether that would be effectively policed depends upon the rigor with which this is approved politically, which I don’t think is going to happen. So there would be less pricing variation. 

Of course, we’d have medical care varying in other ways. Quality would be distorted and there’d be ways in which people in the healthcare community would adjust what they’re providing to match the price they’re being paid. So we just get kind of a distorted version of other ways to match up supply and demand, not the way we do through more straightforward, transparent markets.

BASHAM: Thomas Miller is a healthcare policy analyst with the American Enterprise Institute. Thanks so much for joining us today.

MILLER: You’re very welcome.

(Photo/Creative Commons, Flickr)

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One comment on “Washington Wednesday – Ending surprise medical bills

  1. Mike Dorrity says:

    Love the podcast and what you all are doing. Keep it up!
    A few thoughts on this story from an emergency physician’s perspective. Insurance companies have gotten a rhetorical win by framing this issue as “surprise billing” rather than “surprise coverage.” When you see a doctor, you know there will be a bill. The “surprise” part is when you find out your insurance doesn’t cover it. Encouraging price transparency in healthcare is a good thing, but a big problem your guest left out of this discussion relates to the 1986 Emergency Medical Treatment and Labor Act. Originally designed to prevent patient dumping, EMTALA has created a de facto safety net for healthcare by mandating hospitals with emergency departments provide care regardless of patients’ ability to pay. This applies to hospital fees as well as professional fees from ER docs and other specialists needed to stabilize and treat emergencies. In addition, our professional oaths (and Christian faith for believing physicians) rightly compel us to give away care to those in need. Insurance companies know all of this and therefore have no incentive to negotiate fair rates with physicians who provide care that’s required by law anyway. Unfortunately, out of network billing is one of the only levers physicians have had to force insurance companies to the negotiating table. A fix to this problem that favors insurance will do much more than reduce “rich doctor” salaries. I get paid well, so I can afford to take a hit if it means my patients will get better access, but I suspect this isn’t what insurance companies would do with those extra premiums. More concerning is that prices fixed too low (like the old Medicare SGR formula) will have dire consequences for patient care. It will eventually drive more of my colleagues into early retirement, further exacerbating impeding physician shortages. It will also keep more specialists from taking ED call, forcing patient transfers and delaying emergency care. Ultimately, declining reimbursement forces rural hospital closures, removing healthcare access from people who need it the most. We all want patients out of the middle of this problem, but the wrong fix could be disastrous. This is why I (along with most of my colleagues) think the only fair solution is the arbitration model. Of course, this is one of many problems caused by third party payment in healthcare, but this is the system we have to work with for now.
    Thanks again for all you do. I look forward to your program daily.
    Grace & Peace,
    Mike Dorrity, MD
    Charleston, SC

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