OPINION:
House and Senate leaders announced late Sunday that they’d agreed on legislation to end surprise medical bills.
It’s been more than two years since Congress promised to take on the practice, wherein patients receive unexpected bills for treatment from providers outside their insurance network.
Unfortunately, the solution they’ve settled on will do more harm than good. The pending legislative compromise would rely on independent arbitrators to settle disputes over surprise bills. This approach will enrich providers and the private equity firms that own many of them — at the expense of patients.
A far better solution is to relieve patients of responsibility for surprise bills — and direct insurers to pay out-of-network providers rates commensurate with what other providers in the area charge for the same procedure.
Nearly 60% of Americans have received a surprise medical bill, according to a survey conducted by researchers at the University of Chicago. The bills can run anywhere from hundreds to tens of thousands of dollars.
The most outrageous ones are the product of emergencies, when a patient is incapacitated and unable to select an in-network hospital or doctor. Almost one in five emergency visits resulted in at least one out-of-network charge in 2017, according to an analysis of large employer plans from the Kaiser Family Foundation.
A separate analysis of data from one large insurer published in JAMA Internal Medicine found that two in five ER visits in 2016 yielded an out-of-network bill — 10 percentage points more than in 2010. The average potential cost for patients nearly tripled, to $628.
Surprise bills can even arise when patients visit an in-network facility or provider. Take the experience of one New York woman who went to her doctor to get a sore throat checked out.
A few weeks later, the bill for her lab results came — more than $28,000. Unbeknownst to the patient, her doctor had sent her samples to an out-of-network lab for processing.
Millions of people have stories like these. So it’s no wonder that nearly 80% of Americans support legislation to stop surprise billing.
Unfortunately, the arbitration-based approach that’s gained ground in Congress will lead to higher costs for insurers and patients alike.
Arbitration is opaque. Providers can offer up high prices without fearing outside scrutiny. They also know that an arbitrator is likely to settle somewhere between an insurer’s offer and a provider’s. That gives them an incentive to price high. Indeed, under New York’s system of arbitration for surprise bills, providers received payments that were at about the 80th percentile of typical costs in the state.
Because providers can make out better under arbitration, they have less incentive to join insurance networks. Patients lose. Not only do they have fewer in-network doctors to choose from — they face higher premiums to cover insurers’ higher costs.
Lawmakers would be better served banning surprise bills in emergencies and situations where a patient is involuntarily treated by a non-network provider. Our New York patient with the sore throat did not choose the out-of-network lab; why should she be stuck with a five-figure bill?
Congress should order insurers to reimburse out-of-network providers at the median of what insurers pay other providers in the area for the same work. In cases where it’s impossible to determine that median rate, insurers could follow Medicare’s payment schedule.
This “benchmarking” approach not only ensures providers are compensated fairly — it also nudges them to join insurance networks.
California implemented benchmarking in July 2017, to great effect. Since then, surprise billing has evaporated. Between 80% and 100% of hospitals report that there has been no out-of-network billing from their physicians.
People are desperate for a solution to surprise medical bills. But the proposed fix announced late Sunday is no fix at all. Let’s hope Congress comes to its senses — and backs off this effort before it’s too late.
• Janet Trautwein is CEO of the National Association of Health Underwriters (www.nahu.org).
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