May 22, 2019

Surprise! Surprise! Surprise! That famous line routinely delivered by a beloved actor from a 60s sitcom is resounding once again—this time in the halls of government. A few months ago there was a serious effort on Capitol Hill to craft legislation that would put an end to so-called “surprise medical bills.” This month, President Trump added his voice to the debate, calling for quick passage of a bill that would rescue patients from catastrophic costs tied to non-participating providers. According to an April 2019 Kaiser Family Foundation survey, some 86 percent of respondents labeled the ending of such surprise bills as either “important” or a “top priority.” There is bipartisan support in the U.S. Congress for such a measure; and, with the president’s recent push, we can expect some type of federal legislation to emerge—perhaps this year.

The purpose of this article is three-fold: to review the possible parameters of a national balance billing law, to outline what groups can expect as a result, and to provide possible strategies that can be employed right now in preparation for what lies ahead.

The Shape of Things to Come

According to one media outlet, the proposed legislation may take one of the following three forms:

1. Balance Bill the Health Plan.  A limit would be set on the amount an out-of-network doctor can charge for their services.  Last year, Sen. Bill Cassidy (R-LA), a medical doctor by background, proposed a set of principles that included banning non-participating providers from billing patients directly.  Instead, such providers would be required to seek the balance of their charges from the payer.  The payer, in turn, would have to pay the higher of two amounts:  (a) the median in-network rate negotiated by health plans, or (b) 125 percent of the average amount paid to similar providers in the same geographic area.
2. Forced Arbitration.  Another proposal would require the non-participating doctor to submit to an arbitration process with the payer.  Here again, the balance would be paid by the insurance company, rather than the beneficiary.  A neutral arbiter would oversee negotiations between provider and payer, leading to “a fair price” for the service.  This concept was enacted into law in New York two years ago.  From our perspective, this approach would prove too cumbersome for high-volume practices.
3. Bundle into Hospital Charge.  This would, of course, prevent “surprise” bills from a non-participating provider, but would certainly add to the amount of the facility charge.  The specific metrics or mechanisms by which the non-participating provider’s payment would be based have yet to be detailed under this model.  Based on our experience, when hospitals are responsible for allocating payments for hospital-based physicians, they will often use Medicare rates as their guideline.  This places providers at an extreme disadvantage.  This model may also lead to the eventual employment of the anesthesia group.

Significantly, the Washington Post has reported that President Trump favors a form of legislation that would hold insurance plans and hospitals accountable, rather than group providers.  His approach includes requiring hospitals to:

“. . . tell elective-surgery patients in advance whether any of their care is to be provided by practitioners who are outside the patients’ insurance networks and—if so—to require that the patients be given written price estimates and the opportunity to consent.”

Great Expectations . . . or Not

Given the near certainty of some form of federal mandate involving this issue, practices should begin to consider the possible implications and ramifications for their bottom line.  What can you expect?  In an effort to bring clarity to this question, we have reviewed the impact similar legislation has had in one bellwether state.

In 2017, California passed a law (AB 72, effective July 1, 2107) that outlawed surprise medical bills submitted by out-of-network providers who perform services at in-network facilities.  Patients pay no more than the in-network rate.  Upon reviewing the effect this measure has had on our clients in that state, we noted the following:

• Most of our clients are contracted with the major payers, and we have determined that there has been no significant difference in the unit payment or contracted rates when comparing the months prior to AB 72 and those following its passage.
• We noted no difference with the few out-of-network groups, as well.
• The status quo, as noted above, may be about to change, however.  A couple of major carriers in the state, as well as some minor plans, have refused to consider a rate increase during recent negotiations and are instead looking to reduce rates at some point in the near future!
• This new recalcitrance on the part of some California payers to keep or increase payment rates to healthcare is directly tied to the 2017 law, according to statements we’ve received from payers.

If this is what is transpiring in California, based on AB 72, what can groups across the country expect when a federal measure is passed?  According to one national expert, we are already seeing major insurance carriers procrastinating on contract negotiations, dragging the process out in the belief that the Congress will soon pass a bill favorable to them.  Faced with such legislation, groups may have little leverage left in their contract negotiations.  If groups refuse to go with the rate set by the insurance companies—rates that may actually diminish—they would go out of network, facing the prospect of receiving rates at 125 percent of Medicare.  That, of course, is only one possible way in which this national bill may play out, but groups need to act now to prevent this worst-case scenario.

A Call to Action

Believing a national balance billing prohibition is on its way and realizing the potential impact it may have on healthcare’s ability to negotiate satisfactory payment rates, it is imperative to take steps now to appropriately prepare for the new reality.  With that in mind, we are recommending our clients consider taking the following actions:

1. If you are not contracted with the primary plans in your payer mix, contact your account executive to begin negotiations now to get in-network.  This way you can lock in rates for three years that may end up providing higher compensation than the payment received for non-participating services under a new federal balance billing law.
2. If you are already contracted but are having difficulty with the payer in terms of protracted negotiations, refusal to consider reasonable rate increases, or even the threat of reducing current rates, don’t be shy about seeking redress with your state insurance commissioner or department.  If enough provider voices are raised, bureaucrats are more likely to act.
3. We are recommending that the president of each of our client groups send a communication to their two senators and applicable representatives in the House, urging them to ensure that the final legislative product include provisions that protect the actual providers of care from being forced to accept sub-par payments for their services.

We will keep you informed as this situation develops.