One item on voters’ short list for congressional action is addressing the growing problem of surprise medical bills.
Insured patients should be confident that if they receive care at a facility that is in their health plan’s network or have a medical emergency, they will be responsible only for their share of the plan’s negotiated rates.
But all too often, a patient receives a bill afterward from an anesthesiologist, for example, that wasn’t “in network.” The insurer says the charge isn’t its responsibility, and the patient is on the hook—often for thousands or tens of thousands of dollars.
Galen Senior Fellow Doug Badger explains that Congress tried to ban surprise bills in the “Affordable” Care Act nearly 10 years ago. It required insurers to assess only network cost-sharing rates for out-of-network emergency care. Subsequent regulations stipulated that insurers pay for emergency services at “reasonable” rates.
“But what they forgot to do was to prohibit balance billing. Oops!” Doug explains.
“Enterprising venture capital firms saw an opportunity. They began creating agencies to ‘staff’ hospital emergency departments. Doctors with those staffing agencies refused to join insurer networks. Soon, the VC firms branched out into other medical specialties (e.g., anesthesia). In-network hospitals began staffing their facilities with non-network providers.
“The joke was on patients. They paid network cost-sharing for their emergency department visit, but then got a ‘surprise bill’ from the ED physician, a bill their insurer declined to pay.”
Some surprise bills were so outrageously high that this has become a political issue, as Doug explains.
But beware of another federal “solution.” Congress has been drafting bills that would compel arbitration (among parties that never agreed to a contract) or impose federally-determined rates on non-network players—a slippery slope to widespread price controls.
But Doug and Senior Fellow Brian Blase are offering an alternative that protects consumers but with a much-less heavy-handed approach:
- To minimize the occurrence of surprise medical bills, facilities would be required to provide patients with an estimate of the full costs for scheduled procedures within two days of the request, including all fees charged by providers, whether in or out of network.
- For nonemergency and emergency services at network facilities, hospitals could not represent themselves as in-network if they permit patients to be balanced billed for services provided there. Patients would pay only their share of an in-network charge.
- For emergency services at out-of-network facilities, balance billing would not be allowed and existing federal rules on “reasonable” reimbursement would be evaluated to determine if modification is warranted.
Patients would be protected because their cost would be limited to their share of their plan’s in-network rate for that service. Because federal law already requires insurers to pay “reasonable” amounts for emergency services at non-network facilities, this new requirement would mean facilities would have to negotiate rates with physicians and other providers who are not in their networks for these services.
The new rules would protect patients, and it would be up to the hospitals, physicians, and others to figure out how to be fairly compensated.