Medicare Payment and Reimbursement

Surprise Medical Bills, Direct Primary Care Gain Senate Attention

November 29, 2018 9:22 am

Recent administrative rules aim to lower healthcare costs through increased transparency.

Nov. 28—Senators said they will push legislation to limit surprise medical bills and to support direct primary care as part of congressional efforts to control rising healthcare costs.

Sen. Maggie Hassan (D-N.H) said her recently introduced legislation would provide a national mechanism to address unexpected medical bills that patients receive when seeking care from in-network providers—also known as balance billing—because it would apply to employer-sponsored plans, over which the states have no authority. Hassan cited data showing that one in five emergency department patients getting care at in-network hospitals receives medical bills from out-of-network providers.

Called the No More Surprise Medical Bills Act, the bill would create a “binding arbitration” process to determine the appropriate provider payment rate in surprise out-of-network scenarios.

“It’s something we hear about from our constituents all of the time,” Hassan said at a Nov. 28 Senate hearing on healthcare cost control efforts.

The Hassan bill, which is cosponsored by Sen. Jeanne Shaheen (D-N.H.), goes beyond the approach of  separate bipartisan legislation, which would prescribe a minimum payment rate from insurer to provider.

The bipartisan bill, which is in draft form, is called the Protecting Patients from Surprise Medical Bills Act. Other provisions in the bill would limit patient cost-sharing to the amount the patient would owe to an in-network provider and prohibit providers from engaging in balance billing.

Dow Constantine, executive of King County, Wash., said states like his have begun to enact legislation restricting surprise medical bills but urged federal legislation to address the issue nationally.

“This will only become a greater challenge,” Constantine said at the hearing of the Senate Health, Education, Labor and Pensions (HELP) Committee.

Sen. Bill Cassidy (R-La.), the lead sponsor of the draft legislation, questioned at the hearing why hospitals were not doing more to bring non-employed physicians who practice in their institutions—such as emergency care physicians and radiologists—into the same insurance networks in which the hospital participates.

Cheryl DeMars, president and CEO of The Alliance, a Madison, Wis.-based not-for-profit healthcare purchasing cooperative owned by 240 self‐funded employers, said her member organizations work with their network hospitals to bring such physicians in-network or to negotiate with them on a “one-off basis.”

Sen. Lamar Alexander (R-Tenn.), chairman of the HELP Committee, said he was interested in helping to advance the Cassidy legislation.

Initiatives in Primary Care

Cassidy said the issue of higher-than-expected medical bills also is affecting more patients in practices that have been purchased by hospitals or health systems, with care at those practices then subject to hospital outpatient payment rates instead of physician payment rates.

One step Cassidy suggested to stem rising costs at physician practices is to promote direct primary care (DPC). He is writing bipartisan legislation to require the IRS to allow consumers to use health savings account (HSA) or health reimbursement account (HRA) funds to purchase such care on a pre-tax basis. IRS rules barring HSA funds from being used in tax-free purchases of lower-cost DPC coverage is a key obstacle to the proliferation of such arrangements, Lee Gross, MD, founder of Epiphany Health Direct Primary Care in North Port, Fla., testified.

Use of HSA and HRA funds is generally limited to high-deductible health plans (HDHPs). DPC arrangements usually are paired with catastrophic insurance coverage to cover care that is needed beyond primary services.

“That’s sort of the point of the high-deductible health plans—that you can afford access to the routine care and then you have your health plans as your safety net,” Gross said. “But when you prohibit the HSA use with the high-deductible health plan, it sort of defeats the purpose of the high-deductible health plan.”

Gross said DPC practices do not provide only primary care but also allow patients to make bundled payments—for low-cost cash prices—to cover the entire episode of an elective procedure involving allied specialists.

“When you align the incentives both of the patient and the physician—in terms of her health, as well as the financial incentives—is when you get the best outcomes,” Cassidy said.

The DPC approach to using bundles for specialty procedures provides patients with a total charge, in advance, that includes all tests, provider care, and facility fees.

“What this program allows us to do is to enter value into the conversation because if you don’t know what things cost, then you can’t have the conversation,” Gross said. “In many cases, the cash price is half of what they would have to pay out of pocket with insurance.”

Cassidy said the DPC approach highlights a pervasive issue in health care: Physicians often have no knowledge of the costs of the treatments they prescribe, which affects their patients financially and healthcare costs in total.

“And yet, in your practice, it is mandatory to know in order to give guidance,” Cassidy said to Gross.

Drug Prices

The senators also expressed interest in a new initiative of about 5,00 hospitals to launch a generic drug development firm, called Civica Rx. The company aims to alleviate generic drug shortages and reduce rising prices for such medications. The initiative, which still awaits initial Food and Drug Administration drug approvals, plans an early focus on 14 generic drugs, which it will produce or contract with others to produce, said Jonathan Perlin, MD, PhD, president of clinical services and chief medical officer of HCA Healthcare, which is one of the health systems that launched Civica.

“In many instances, prices for generic drugs used in hospitals can be reduced to a fraction of their current costs,” said Perlin. “This can save patients and the healthcare systems that care for them hundreds of millions of dollars each year.”

Administration Actions

The Trump administration recently has launched price transparency efforts to help control healthcare costs, including a new online tool that allows consumers to compare Medicare payments and copayments for certain procedures that are performed in both hospital outpatient departments and ambulatory surgical centers.

The Procedure Price Lookup tool, launched by the Centers for Medicare & Medicaid Services (CMS), displays national averages for the amount Medicare pays the hospital or ambulatory surgical center and for the copayment that a beneficiary with no Medicare supplemental insurance would pay the provider.

“Working with their clinicians, the Procedure Price Lookup will help patients with Medicare consider potential cost differences when choosing where to have a medical procedure that best meets their needs,” said Seema Verma, administrator of CMS.

Additionally, the recently issued 2020 Medicare Advantage and Part D Drug Pricing proposed rule would require Part D plans to increase transparency and provide enrollees and physicians with a patient’s out-of-pocket cost obligations for prescription drugs when a prescription is written. The rule also would implement a recently enacted statutory requirement to prohibit pharmacy gag clauses in Part D. Those insurer clauses ban pharmacies from telling customers when they can purchase a drug more cheaply by paying cash than by using their drug insurance coverage.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text1' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text2' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text3' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text4' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text5' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text6' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text7' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-leaderboard' ); } );