Op-Ed: Surprise Billing — A More Nuanced Consideration

Recent publications have described the issue of surprise billing and lamented the inability of Congress to pass legislation dealing with this problem. Highly respected physicians have given their support to proposals by the House Energy and Commerce (E&C) and the Senate Health, Education, Labor and Pensions (HELP) committees as balanced efforts and called for physician support. In this article, I review various proposals aimed at addressing the problem and point out potential consequences unrelated to surprise billing.

Briefly, surprise billing occurs when a patient with private health insurance receives unexpected care from a provider that is not in their plan’s network. As a result of the provider being out-of-network (OON), the patient may be liable for significantly greater costs than they anticipated.

There is little debate that this is a problem and that it requires a legislative fix. Many states have taken up the call. Nonetheless, since the Employee Retirement Income Security Act (ERISA) plans make up a large fraction of the private health insurance market and are under federal jurisdiction, a national legislative solution is required.

Multiple House committees have their own proposals. In addition to E&C, the House Ways and Means and Education and Labor committees put forth their own bills. The House E&C and Senate HELP committees cooperated on a bicameral proposal.

Interestingly, nearly one third of the Senate co-sponsored a different bill from a HELP committee member: Sen. Bill Cassidy (R-LA), a physician, helped direct a long-running, bipartisan working group that culminated in the STOP (Stopping The Outrageous Practice of) Surprise Medical Bills Act of 2019. Prior writing has compared several of the proposals.

The joint proposal from the House E&C and Senate HELP committees has been presented as a balanced, bipartisan effort. Although it does have bipartisan support, the proposal may result in some fraction of physicians and hospitals being paid less since it reins in outlier high payments.

The proposal’s payment standard for OON care is the median in-network rate. Though this may appear fair, such an arrangement is disadvantageous to providers. For medical practices, there are benefits to being in network. Thus, a medical group will pay a premium in the form of a discount to be in network. The median in-network rate is a discounted rate. Groups that are reimbursed for OON care they provide would be paid this discounted rate, though they would be without the advantages of being in network.

More importantly, if the previous median in-network rate becomes the new OON payment standard, that would also become the new payment ceiling for in-network care. Providers that wish to remain in network would have to accept a rate below the previous median in-network rate, since there is a discount to be in network. The Congressional Budget Office analysis of the Senate HELP bill noted this, indicating that the majority (more than 80%) of cost savings come from reducing in-network reimbursement rates.

Additionally, since third party arbitration is useful to preserve balance and good faith negotiations between insurers and providers, it is worthwhile to dissect how arbitration is included in the joint E&C/HELP proposal.

The threshold to reach arbitration is $750 per claim, based on the median in-network rate. This is a high threshold. Less than 1% of my own radiology practice’s claims would reach this threshold. The proposal did not allow for batching of like claims. For example, while my group has few $750 claims, we have many that are around $7.50.

A reasonable approach would allow for batching of like claims. Not only did the proposal not include this option, it specifically disallowed it. It specified that a group could bring only one type of claim to arbitration every 90 days. This approach renders arbitration meaningless, and is one reason many provider groups have advocated against this proposal.

The Department of Health and Humans Services has stated that budget neutrality is a priority for any solution. The initial HELP bill would actually save around $25 billion over 10 years, with the E&C bill saving slightly less. These bills, favored by insurance companies, are based exclusively (HELP) or primarily (E&C) on benchmarking payments.

On the other end of the spectrum is the House Ways and Means bill, which is based on arbitration, and favored by many provider organizations. That bill, the Consumer Protections Against Surprise Medical Bills Act of 2020, would still save about $18 billion over 10 years.

What about patients? That is also complex. There is universal agreement that patients should be held financially harmless for unanticipated OON care. What is less obvious is how the various solutions could inadvertently impact care. If insurance companies are able to significantly reduce provider reimbursement, some of that corporate savings would get passed along to consumers in the form of lower premiums.

On the other hand, medical practices that experience a meaningful reduction in revenue will be forced to make difficult choices, especially those in challenging markets. Additionally, if payments are standardized, it may become difficult for provider groups to justify the expense of quality improvement projects.

The bottom line is that the lower the payment rate, the more money is saved. But that comes with a catch: less access to care and reduced services. There is no free lunch.

What about the narrative that corporate practices have contributed to the problem? The evidence suggests there is truth to this; some organizations seem to have taken a go-out-of-network strategy. With that said, insurance companies are not blameless and their activities contribute to the problem. Stuck in the middle are patients.

How should we end surprise billing? While the HELP/E&C proposal would indeed curb surprise billing, it would also negatively impact provider groups when they are struggling. As a result of COVID-19, many physician practices are experiencing record declines in revenue (while some insurance companies are posting record profits).

A more reasonable approach genuinely balances provider and payer concerns and protects good faith negotiations. If median in-network is utilized as a payment standard, as the insurance companies wish, then have meaningful arbitration as an option, as providers request.

The key point is “meaningful” arbitration. If arbitration is inaccessible, it is of no value. It is reasonable to have a threshold to access arbitration to avoid petty use of the system, but allow for batching of like claims. Arbitration guidance should include factors such as previously contracted rate, so that insurers are not incentivized to terminate contracts and push providers and patients out-of-network.

The guidance should also reward groups that differentiate themselves by investing in projects that improve patient care and value. A recent letter to Congress from the American Medical Association signed by over 100 medical societies emphasizes many of these points. While such legislation would not save as much money as the HELP/E&C proposal, it would nonetheless result in cost saving (when budget neutrality is sufficient) while simultaneously ending surprise billing.

Surprise billing is the result of our complex healthcare system. To end it will take a willingness to understand the nuances of the problem and the unintended consequences of various actions to remedy it, as well as an appetite for compromise. As physicians, our duty is to patients and the preservation of services to care for them.

While surprise billing is not simple, there is a path forward that protects patients and providers. I hope we take it.

Richard E. Heller, III, MD, MBA, is vice president of clinical services and national director of Pediatric Radiology at Radiology Partners in the Chicago area.

Last Updated August 31, 2020