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Legislation on Surprise Billing Targets Insurers

News | Pricing

Legislation on Surprise Billing Targets Insurers

Sept. 18—Following a recent survey that found the general public blames insurers for unexpected healthcare bills, high-profile draft legislation that would primarily target payers was offered this week.

The bill would take a markedly different approach from state measures, many of which cap hospital charges for out-of-network emergency care.

Sept. 18—Following a recent survey that found the general public blames insurers for unexpected healthcare bills, high-profile draft legislation that would primarily target payers was offered this week.

Sen. Bill Cassidy (R-La.) released the “Protecting Patients from Surprise Medical Bills Act,” a draft bill he is continuing to mold with a bipartisan group of senators.

Cassidy said at a Sept. 18 hearing that his primary concern is that people are going to in-network facilities and unknowingly receiving treatment from an out-of-network provider.

“They think they’re doing the right thing because they go to the hospital that is in-network,” Cassidy said.

He displayed a national map that highlighted areas where out-of-network bills are sent for as many as half of all patient emergency department visits to in-network hospitals.

Key provisions of his legislation included:

  • Requiring insurers to cover the cost of any emergency or non-emergency services provided by an out-of-network provider at an in-network facility beyond the plan’s normal cost-sharing for in-network providers
  • Barring balance bills to patients, beyond in-network cost-sharing, from providers of emergency or non-emergency care at in-network facilities
  • Limiting cost-sharing or coinsurance for emergency or non-emergency services provided by an out-of-network provider at an in-network facility to the amount of such charges from in-network providers

The legislation would limit payments to out-of-network providers that provide emergency or non-emergency services to either the amount required by state law; the average amount for the service; or the usual, customary, and reasonable rate for the service—minus out-of-pocket charges.

The average rate in that scenario would equal the median in-network amount negotiated by health plans and health insurance issuers for the service, as provided by the same or similar specialty in the geographical area.

The legislation defines the “usual, customary, and reasonable rate” as 125 percent of the average allowed amount among all private health plans and health insurance issuers for that service as performed by a similar provider in the geographical area.

Such rates would be collected in a “benchmarking database” maintained by a not-for-profit organization, which would be specified by the insurance commissioner or another state entity.

After the patient is stabilized, the healthcare facility or hospital would need to provide the patient—before performing any other services—with written notice that the patient would be receiving care from an out-of-network provider.

Different Approaches

The legislation followed increasing volumes of news reports and studies that have documented the growing challenge presented by balance billing of insured patients who are treated by out-of-network clinicians at in-network facilities.

For instance, a Kaiser Family Foundation analysis of claims by employees of large employers found that 27 percent of admissions with an emergency room claim included a claim from an out-of-network provider.

The Cassidy bill follows a measure introduced in 2017 by Rep. Michelle Lujan Grisham (D-N.M.) that would limit cost-sharing at out-of-network providers to the amount the patient’s insurer would have required for an in-network provider. The legislation would permit providers to charge higher rates only if they obtain written consent from the patient at least 72 hours in advance.

Lujan Grisham’s legislation was modeled on several state laws that previously targeted surprise billing. But the Cassidy bill would take a markedly different approach from many such bills, which cap hospital charges for out-of-network emergency care, said Chris Pope, a senior fellow at the Manhattan Institute.

“This one, they basically said, ‘Well, hospitals can continue to charge whatever they want, but insurers have to provide protections to individuals in terms of their out-of-pocket payments, which means insurers are on the hook,” Pope said. That approach “potentially gives hospitals leverage with insurers in their negotiations.”

For instance, Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, noted on Twitter that a California bill targeting surprise medical bills “does give significantly more negotiating leverage to the insurer than today's federal bill because it's based on the insurer's own average in-network rate This provides the plan significant leverage to extract payment concessions from providers.”

Insurer and provider advocates were closely watching the legislation but not yet taking any positions on it.

“This draft offers a needed starting point, and further discussion is needed to determine the right methodology and how best to address aspects of out-of-network care that are unique to emergency visits as opposed to scheduled care,” said Laura Wooster, associate executive director for public affairs for the American College of Emergency Physicians.

Cathryn Donaldson, director of communications for America’s Health Insurance Plans, said insurers are working to educate enrollees about where to go for care to avoid receiving such balance bills.

“We appreciate Congress’ leadership on this issue and we look forward to working with Senator Cassidy and others to further refine the proposals put forth in this policy, and ultimately end this practice that has harmed too many patients already,” Donaldson said.

Another big difference from state laws is that the Cassidy measure would apply to federally regulated self-insured plans, which provide the vast majority of employer-sponsored coverage.

“This legislation also delegates to the states that want the ability to delegate their own arrangements,” Pope said.

Legislative Outlook

The draft legislation is likely a starting point for negotiations that will continue into 2019, Pope said.

“To be fair, this bill should probably be seen as the beginning of the conversation rather than, ‘This is the way it is going to be,’” Pope said. “Presumably they are going to have to find a way to navigate between concerns about insurer prices and concern for hospital solvency.”

The legislation may also get tripped up over whether members of Congress can focus on the discrete issue of balance billing or whether the effort will be overtaken by the desire of some to radically overhaul the U.S. healthcare system, Pope said.

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

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