When the cure for surprise medical billing is worse than the problem

OPINION:

Americans are increasingly frustrated by what they perceive as inaction by both parties in addressing the mess that is the U.S. health care system. And surprise medical billing is one of its most frustrating problems. This is when a patient treated at a health care facility — usually in an emergency setting — receives a bill from a hospital that was, unknowingly to the patient, not covered by his or her insurance plan. This problem is growing, and it can cost an unsuspecting patient thousands of dollars out of pocket, despite having good insurance coverage.

It should come as no surprise that there is bipartisan, bicameral support to stop this practice. Politicians finally agree on something, and everyone in Washington wants to play the hero. Unfortunately, the Senate’s proposed “solution,” called the Lower Health Care Costs Act (S1895), would wreak even worse havoc on patients than surprise medical billing.

The Senate bill, introduced by Lamar Alexander, Tennessee Republican, and Patty Murray, Washington Democrat, would require doctors to kowtow even further to the very insurance companies responsible for surprise medical billing. Ultimately, the bill would force physicians to shutter their private practices.

The Alexander and Murray legislation aims to end surprise billing by compelling out-of-network doctors to accept the average in-network rate for a given procedure. Many patient advocates and health care policy “experts” think that this is a fine fix to a problem that victimizes patients. As is often the case, however, the issue goes much deeper.

First, why does this problem even exist? The answer is because of the insurance industry’s greed. The six major health insurers — United Healthcare, Anthem Blue Cross/Blue Shield, Aetna, Cigna, Humana and Kaiser — have reported record profits in every quarter since 2012. Yet, they are always looking for ways to make more money. 

And one way is creating narrow networks of doctors who will accept the low rates insurers offer in “take it or leave it” contracts. The insurance industry often takes advantage of small practices with little negotiating leverage, and patients come out as the biggest losers. This scheme rations care, because patients who don’t like the choice of doctors that their insurance company forces them to see will have no choice but to go outside of their plans and pay out-of-network prices elsewhere.

The so-called solution proposed by the Lower Health Care Costs Act doesn’t just reward insurance companies for this bad behavior. Even worse, the bill creates a mechanism for them to drive down doctor reimbursement so much that private physicians couldn’t remain in practice. 

How would this mechanism work? It would terminate contracts with physicians, thus making them out-of-network providers. Insurance companies would set the rates they would pay doctors — then progressively lower those rates until doctors are forced to shut down their private practices and work for a hospital. Private medical practices won’t make enough money to stay open. 

Does this scenario seem far-fetched? Well, it’s already happening. Moody’s reported on Aug. 8 that United Healthcare decided to terminate two-thirds of the physicians in Team Health — one of the largest providers of emergency room physicians across the country. This choice happened without cause, and 90 percent of Team Health’s United Healthcare revenue will be affected. The insurance company’s move also triggered a downgrading of Team Health by financial rating services. If the Lower Health Care Costs Act passes, insurers will follow United Healthcare’s lead, and more private practices will suffer the same fate. 

The bill fails to prevent predatory practices by insurance companies that have a long record of bad behavior. Furthermore, there is no proposal in this bill for dispute resolution. Doctors are compelled to accept whatever insurance companies decide to pay, in full, and this legislation backs up the companies. The full power of the federal government supports insurers operating this way, while the doctors who care for us are left for dead. No other field in the world functions like this. 

Neither patients nor doctors should suffer because of legislation that indulges insurance companies’ worst tendencies. There must be a solution that protects patients, punishes insurance companies acting badly and helps the only group in health care that actually provides care. If this bill passes as written, Mr. Alexander will have succeeded where all progressives so far have failed: Ending private-practice medicine in America.

• Hal Scherz, a physician, is a co-founder and the board secretary of Docs 4 Patient Care Foundation and president and managing partner at Georgia Urology.