Loren Adler of the Brookings Institute has good reason to be happy; he and his team and colleagues have been working on the surprise billing problem for years now. And they have Congressional action.
(1/17)
Today’s surprise billing fix is a huge win for consumers!
As of 1/1/2022, it will be illegal nationwide for an out-of-network provider to surprise bill a patient for more than their standard in-network cost-sharing obligations.
THREAD based on the final language https://t.co/82h6YfCklF
— Loren Adler (@LorenAdler) December 21, 2020
Surprise billing occurs due to market failure. Clinicians who are not able to be chosen and therefore do not face the normal steering tools an insurer can use such as increased cost sharing and network designation, may choose not to sign in-network contracts and perform all of their services out of network (OON). These clinicians are effectively “invisible” to the patient. Once the PEAR (Pathology, Emergency, Anesthesiology, Radiology) service is performed, the clinician bills the insurer and the patient for full charges that can be more vivid than most fantasies. And if the PEAR provider wants to sign an in-network contract, they can wield a very credible threat of balance billing to get a higher rate.
The balance billing ban relies on a two step process. The first step is that an out of network PEAR clinician bills the insurer and the insurer pays something. If the clinician is happy with the amount, the process ends. If the clinician is unhappy, there is an arbitration procedure which can consider local contracted rates, history of rates in the commercial market but not Medicare or Medicaid rates. The arbitration process produces a number and then everyone goes back at it again in the future.
This bill primarily benefits people insured through private insurance. Medicare, Medicare Advantage, and Medicaid don’t have a balance billing problem as there are administratively set rates that remove the business case for surprise billing.
On first thought, I think this is mostly going to be a transfer of costs from individuals who are insured but receive OON emergency services and air ambulance transports who are currently bearing most of the costs of unanticipated, unplanned OON use to the insurers. And when I say “insurers”, I really mean all premium payers. I expect premiums to increase a little bit and out of pocket cost sharing for outliers to decrease notably. On first glance, I’m having a hard time seeing how PEAR providers will be taking significant pay cuts as the arbiter is not allowed to look at benchmarks based on administrative set rates. Instead median in-network rates will be a big component of the decision-making process.
(1/17)
Today’s surprise billing fix is a huge win for consumers!
As of 1/1/2022, it will be illegal nationwide for an out-of-network provider to surprise bill a patient for more than their standard in-network cost-sharing obligations.
THREAD based on the final language https://t.co/82h6YfCklF
— Loren Adler (@LorenAdler) December 21, 2020
If we think that current in-network rates are a partial reflection of increased leverage that has enabled rent collection by PEAR providers, I can see the most extortionate and aggressive surprise billers lose money but PEAR providers as a class should do pretty well for themselves.
From a consumer standpoint, not worrying about a surprise bill is quite valuable, but we’ll be paying for that in the form of generally higher premiums, I think.
WaterGirl
David, does this mean that’s a bill that has been passed by the House and the Senate and has received the president’s signature?
Is it part of the COVID relief bill? Or something else?
David Anderson
@WaterGirl: this is in the 5500 page bill that is both the COVID relief and the general appropriations bill.
WaterGirl
@David Anderson: Then they should be very very quiet about this until that bill has been signed. I’m sure the powers that be on the Republican side had no idea that was in there.
WaterGirl
@WaterGirl: Ah. I did not know what Corona-bus was, but now I can see what you meant. thanks
OzarkHillbilly
Putting an end to free market hostage taking. Good news.
Anonymous At Work
As a lawyer, I make my money on “friction” in the system. Arbitration has less “friction” than a full court case. However, it still has significant time and energy costs associated with it. For big fish in small ponds, this “friction” will lead them to comply, or be buried. For large groups, they’ll have to hire and manage and work with a team that deals with arbitration claims.
Insurance companies will have personnel and departments on hand that handle this thing routinely and can scale up such departments more efficiently.
I see this bill as reversing “home field advantage” to PEARs and OON Docs. It’ll reduce leverage a bit more than you estimate and will probably persuade more than a few OON types to join networks. I can even see PEARs trying to sign price agreements with major networks just to avoid the hassle.
Barbara
“Median in-network rates” are a lot lower than billed charges, which is what these providers are normally charging. I agree, the bill makes it better but it would be even better if hospitals had to tell people when hospital based physicians are OON.
GR
Does this bill have the effect of incentivizing the process whereby unaffiliated practices at hospital are set up to take advantage of the ability to charge higher raters? Previously, it seems these practices would have to go after patients that many times would not be able to pay in full. So, maybe not worth the legal/administrative cost and reputational risk (for those who care). Now it seems there is a straightforward arbitration process set up that allows the unaffiliated practices to just obtain the higher charges from insurance companies and self-insured employers (which presumably have greater ability to pay). It seems like the regs implemented will be important.
Gin & Tonic
This may be a bit of an improvement, but this whole in-network vs out-of-network thing is bullshit of the highest order. If you are injured, possibly unconscious, you need emergency care and are in no position to negotiate even if you knew what the difference is – which I’m sure the average consumer doesn’t.
JCJ
@Barbara: the bill makes it better but it would be even better if hospitals had to tell people when hospital based physicians are OON.
Even better would be for the hospitals to require hospital based physicians to be in any and all networks that the hospital is in. That is the case where I practice. In fact, in the past we have been in some networks that the hospital wasn’t to avoid problems in case of inpatients.
Barbara
@JCJ: Yes. Agree totally. I once had a payer client that had to deal with a hospital that had an exclusive hospital based practice in a certain specialty and they would not require them to be in network. So every year the client added up what it viewed as the “extra” that was paid by all parties to this group and put it as a line item deduction in what it was willing to pay the hospital. Sometimes you have to really spell it out for the dopes in the room.
Also, the concept of radiologists, pathologists, etc. as “independent” is dated. If your work is totally hospital based, your services should just be part of the hospital’s overall services. I know those are fighting words, but that is how it really should be.
taumaturgo
Another bandaid on a dying system that is propped up by the corruption of our political system. Similar to the covidiots, we know what needs to be done, but we refuse to do it.
Omnes Omnibus
Let me guess. Burn it all to the ground.
Barbara
@Omnes Omnibus: Well, I can’t speak for him, but it does seem to me that medicine in particular clings to an archaic organizational structure so fiercely that “burn it all down” becomes an increasingly likely possibility as resistance to gradual change remains entrenched and each individual player clings to their particular prerogatives. It also means that changes are much more likely to be driven by economics rather than public interest consensus. I see that every day, never more so than with the fight over balance billing.
MattF
Pretty good NYT article on surprise billing. One infuriating thing I didn’t know was that hedge funds were involved.
Yarrow
@Barbara:
THIS! The patient has zero control over who looks at the imaging or other things. It’s utterly ridiculous that those services could be out of network when the hospital is in-network.
@Gin & Tonic: Someone I know was in a car accident. Not unconscious but pretty shaken up. The EMTs asked him what hospital he wanted to go to. He was so out of it that he didn’t know what hospitals were in-network and what hospitals were out-of-network for his insurance. Fortunately he got taken to an in-network hospital. That sort of thing is ridiculous.
Jim Bales
If I’m not mistaken, this is the whole notion of insurance in a nutshell. We make known payments that we are not likely to recoup in order to avoid a surprise bill that would be problematic to pay.
It sounds like the law forces insurance to be better insurance than it has been, with the understanding that there is no free lunch and we do pay for the improvement.
Best,
Jim
taumaturgo
@Omnes Omnibus:
Like with the covidiots, the answer is simpler and less dramatic. Wear a fucking mask but they default to freedom and liberty…to die and kill others. What is burning under the insurance middleman is our health and our pockets picked clean by a system that is all profits before care.
taumaturgo
It’s not, it is mercilessly baked into the business model that besides delivering poor results, will hound the hapless
victimpatient in order to collect the last penny it is due.Gin & Tonic
So anyway, what happened to get this through? How did Nancy Smash buy off Richie Neal?
taumaturgo
Here is a possible explanation: https://www.politico.com/news/2020/12/20/congress-surprise-billing-fix-spending-449416
Chyron HR
@taumaturgo:
If only Bernie had deployed the national guard to our hospitals to institute M4A.
Ted Doolittle
David is right — this is a definite big help to families facing surprise bills, but without any significant cost or price control in the law, the cost will be shifted onto premiums.
An American healthcare policy classic: shift costs away from the squeaky wheel, and onto premiums or other generalized costs, without doing anything to take on America’s internationally abnormal prices.
A definite step forward for families, but not for the system overall or society.
https://twitter.com/TedDoolittle2/status/1340904826356568065?s=20
Gin & Tonic
@taumaturgo: All it says is “But talks resumed again after Pelosi redoubled efforts to get Neal’s support for a fix.” Did she cut his nuts off or bribe him?
Roger Moore
@Gin & Tonic:
As I see it, one of the major purposes of a contemporary insurance company is to negotiate rates on behalf of their customers, so the existence of out-of-network providers within an otherwise in-network facility is a gross failure on the part of the insurance company. I’m sure there’s some hidden market failure behind it, like insurance companies being able to offer lower premiums by excluding those services, and legislation is the right way to solve those kinds of market failure.
taumaturgo
Do you mean Governor Sanders? As far as I know, Senators don’t have the power to deploy the National Guard, but in the age of make-belief, any assertion seems to be valid. Biden may have the power but he has already declared more than once that even if a M4A bill was passed, he would veto it. Guess who is dancing in the hallways of the Capital?
Baud
@Roger Moore:
The other purpose is to link doctors and patients. I actually don’t know how patients are allocated to doctors in countries that have comprehensive health care systems. They obviously do it. I just am unaware of the mechanics.
Roger Moore
@Baud:
The biggest purpose of insurance companies is still to offer insurance against catastrophe, but those other functions are very important.
Barbara
@Roger Moore: Wrong. It is the intentional business model of many providers to remain outside of payer networks and exploit just this kind of opportunity for arbitrage and gouging whoever ends up paying. It would go away tomorrow if all people received the same consumer protections that Medicare beneficiaries do — a maximum fee no matter who is paying.
Other steps could also be helpful, for instance, requiring anesthesiologists to get a signed consent from the consumer explaining that they are not in the network and detailing how much is going to be charged. If you make them waste their time having to get and keep track of paperwork they will likely change their view of the total economics of the transaction.
taumaturgo
Maybe squeeze them a little? If you read the article, the bill was tilted to favor the donors and lobbyist, what else is new?
Baud
@Gin & Tonic:
Por qué no los dos?
Mike S (Now with a Democratic Congressperson!)
I like this plan. It seems so simple. Can it really be so easy?
Fraud Guy
So what does this do for in-network balance billing (which we have been subject to)?
Edmund Dantes
@Fraud Guy: ummm… need more information to understand what you are saying.
in network balance billing? Not coinsurance, not deductible stuff, but your healthcare provider company actually saying here’s the extra they claimed you have to pay that insurance wouldn’t pay? And your insurance says “not our problem”?
Barbara
@Fraud Guy: Nothing. Either the billing is your cost sharing responsibility (part of your plan) or it is not (unauthorized by your plan). If it is the latter, I would write a letter to the provider and copy the plan that they don’t have the right to collect amounts that are not authorized by the plan. Your
EOCEOB from the plan is conclusive on what you should be charged by any provider.Barbara
@Barbara: Oops, make it your EOB (explanation of benefits). Every EOB has a column that says something like, “your payment responsibility is” followed by an amount. That’s what your insurer says you owe under whatever arrangement it has with the provider. Depending on the kind of plan it is and the state you live in, that bargain is enforceable by you as a third party beneficiary of the agreement between the plan and providers.
dr. bloor
@Fraud Guy: Late to reply to this, but that’s almost certainly a violation of your doctor’s contract with the insurance company. I can’t recall having seen/known about an agreement that allowed an in-network doc to balance bill.
If for some reason your doc has permission to do that, or if you’re receiving specific services not covered by your insurance contract, it should have been made plain up front in your HIPAA/treatment consent paperwork.
Ang
@Barbara: Yes, getting familiar with your EOB layout and checking whenever you receive one is a really good idea. I had a case last year on a dental procedure where what the EOB showed as max allowed was a few hundred dollars less than I was being billed from the provider. Called the dental office up and it was corrected immediately. Accident or “accident”? Either way I saved a good bit.
Mathguy
@MattF: They never let an opportunity to rape and pillage pass them by.
Bob Hertz
Doctors who have charged wildly inflated prices should have been drummed out of the profession, or at least lost their medical license for a time.
That would have stopped inflated billing “quick as hell.”
The courts should also have refused to enforce “unconscionable contracts” in medicine.