LGN’s Federal Government Relations Group is closely monitoring the “surprise medical bills” legislation that is moving forward in the U.S. Senate and House with bipartisan support. These healthcare bills are noteworthy for two reasons. First, the bills could affect any Minnesotan with a self-insured employer-sponsored health plan. According to the ERISA Industry Committee, there are about 181 million Americans who get health care through their employer, and about 100 million of them are in self-insured plans.
Secondly, in a polarized political atmosphere and divided government, the “surprise medical bills” legislation is unique: it is significant healthcare policy with a chance of becoming law because there are bipartisan bills moving through both chambers of Congress and President Trump is publicly supportive. Further, adding pressure to the atmospherics around the bills, President Trump issued an executive order on June 24th to compel the disclosure of prices in health care. Among other things, the executive directs the Department of Health and Human Services (HHS) to issue a rule that would require hospitals to disclose actual prices that patients and insurers would pay in an easily understandable format and also require providers and insurers to share information on patients’ out-of-pocket costs prior to getting services.
The Senate Committee on Health, Education, Labor, and Pensions (often referred to as the Senate HELP Committee) has scheduled a markup hearing on Wednesday, June 26 for the Alexander-Murray Lower Health Care Costs Act of 2019. Senator Tina Smith (D-MN) is a member of the committee.
What is surprise billing?
Surprise bills happen when an insured patient unintentionally receives care from an out-of-network provider (commonly in an emergency) or when an in-network facility has providers who are involved in the care of the patient, but are out-of-network and bill separately. These providers typically are anesthesiologists, emergency providers, pathologists, and radiologists. Usually, out-of-network services have higher cost-sharing amounts, like copays or coinsurance, than what a patient would pay for in-network services. This can also result in balance billing, when a patient receives a bill from a provider for any difference between the amount the provider charged and the payment from the patient’s insurance, even if it exceeds the patient’s cost-sharing amount.
What is Congress doing to address surprise billing?
There are currently three different bipartisan pieces of legislation seeking to limit the practice of surprise medical bills, also referred to as balance billing.
- The first is the Stopping The Outrageous Practice of (STOP) Surprise Medical Bills Act of 2019 (S. 1531), which was introduced by Sens. Bill Cassidy (R-LA) and Michael Bennet (D-CO) on May 16, 2019.
- Another is a draft bill entitled the No Surprises Act from House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) and Ranking Member Greg Walden (R-OR).
- Senate HELP Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) recently introduced the Lower Health Care Costs Act of 2019 (S. 1895), their legislative package addressing the rising costs of health care that includes a section to prohibit surprise medical bills.
All three bills mentioned above would prohibit balance billing and prevent patients from being charged more than their in-network rates in emergency situations and when they are receiving care at in-network facilities. Where these bills diverge is primarily how they would resolve billing differences between insurers and providers.
This bill approaches the policy from the eyes of the patient. Specifically, insurers and providers couldn’t charge patients more than their in-network cost-sharing amount for out-of-network emergency services, out-of-network provider’s services provided at an in-network facility, and additional services provided at an out-of-network facility post-emergency care when patients aren’t able to travel to a different facility without medical transport. Insurers and providers would also be prohibited from balance billing patients in these scenarios. It would apply to services provided in hospitals, emergency rooms, outpatient departments, and surgery centers as well as related services, such as lab and imaging services.
The in-network cost-sharing amounts would count toward the patients’ deductibles and out-of-pocket maximums for these services, and insurers and providers would be subject to civil monetary penalties for violations. Finally, insurers will automatically pay providers the median in-network rate. However, the parties can negotiate an alternative payment or initiate the independent dispute resolution process.
This bill appears to take the most simplistic approach to this issue. The bill would expand emergency services protections under current law so they apply to both hospital emergency departments, including its associated freestanding emergency rooms, and independent freestanding emergency rooms. The application of in-network cost-sharing amounts mirrors the Cassidy-Bennet bill, such as any emergency services and out-of-network providers’ care in in-network facilities, but includes an exception for certain providers to balance bill if they give patients notice and the patient gives both oral and written consent. It also includes a provision imposing civil penalties for violations, but the amount has yet to be determined. Lastly, payment disputes are resolved by requiring the insurer to pay at minimum the median in-network negotiated rate in the geographic area or a state-determined resolution for plans regulated by the state.
Provisions within this bill addressing surprise medical bills align with the other two bill proposals regarding emergency services and non-emergency care from out-of-network specialists at in-network facilities. However, two key aspects of this provision differ from the other bills.
First, for providers and facilities who violate the balance billing prohibition, there is an actual civil penalty amount – a maximum of $10,000 for each violation.
Second, the Alexander-Murray bill outlines three different options for resolving payment disputes between insurers and providers. It wouldn’t supersede state laws related to balance billing, except for self-insured (or self-funded) group health plans, which aren’t subject to state regulation.
- The first option is the in-network guarantee: insurers couldn’t contract with a facility unless the facility guarantees that each provider there will be under contract as a participating provider and for emergency services at an out-of-network hospital, the insurer and providers can negotiate the appropriate reimbursement amounts or have the amount be the median contracted rate for similar services within the same geographic region.
- The second option is an independent dispute resolution process, e.g., arbitration, through a third party for claims above $750 (anything less than this amount will be paid the median contracted rate for similar services within the same geographic region).
- The third option is the benchmark payment which is simply the insurer paying providers the median contracted rate for similar services within the same geographic region when balance billing is prohibited.
Who is and is not currently protected from surprise billing?
Individuals covered by federal healthcare programs, like Medicare and Medicaid, are largely protected from surprise medical bills.
However, federal law doesn’t prohibit balance billing in the private insurance market. About half of the states, including Minnesota, have some form of protections from surprise medical bills for patients in state regulated plans – i.e., fully-insured plans. Balance billing is already prohibited under state law in Minnesota.
Unfortunately, states have constraints to regulate surprise medical bills under the Employee Retirement Income Security Act (ERISA), which prevents them from regulating self-funded/self-insured employer health plans. These types of plans cover about 100 million Americans, so absent a federal solution, these people are exposed to balance billing despite the fact that a majority of states have enacted surprise billing laws. Thus, only Minnesotan patients with non-ERISA health insurance are protected.
Who is following these proposals?
The surprise medical bills issue is drawing the interest of all of the major stakeholders involved in this space – from patient groups, hospital associations, and physician medical groups/associations to all of the national health insurers. These groups are invested in the outcome of how these bills are drafted because these proposals would affect how much could be charged to patients or paid to providers.
What are the stakeholders’ perspectives?
All stakeholders appear to be in favor of holding patients harmless and keeping them out of payment disputes.
The insurers like benchmark payments (median contracted rate for services within the same geographic area), which is the California model. The providers, however, want an independent dispute resolution process – arbitration – to resolve payment disputes, which is the New York model. It is likely that the final legislative product will probably be somewhere in the middle.
During the Senate HELP hearing, the hospitals expressed the greatest concerns on the still-developing policy where the fear is a lower level of reimbursement for their services could be the new standard. They believe the process is moving a bit too fast on what they view is an untested experience with unintended consequences on the healthcare system as a whole.
The providers in general are apprehensive about any proposals that look like rate-setting – one step removed from government-dictated price controls.
Why is this happening now?
Addressing surprise medical bills has been one of a few areas where the stars have aligned between both parties, both chambers, and the White House. President Trump held a special Rose Garden event in May calling on Congress to protect Americans from surprise medical bills. For Democratic leadership in Congress, the issue seems to be a low hanging fruit in which their caucus can get a policy win on a topic that several of their members had introduced measures to resolve in previous Congresses.
With the affordability of healthcare continuing to rank high for voters, members of both parties want to show voters they have worked to address rising healthcare costs.
What are the next steps in Congress?
Most of the committees of jurisdiction in the House and Senate have had a legislative hearing on Surprise Medical Bills, except Senate Finance. The House Ways and Means Health Subcommittee was the first, then the House Energy and Commerce Health Subcommittee, and most recently the Senate HELP Committee.
These House and Senate committees will soon proceed to another hearing to markup one of the bills under their jurisdiction.
The Senate Committee on Health, Education, Labor, and Pensions (often referred to as the Senate HELP Committee) has scheduled a markup hearing on Wednesday, June 26 for S. 1895, the Lower Health Care Costs Act of 2019.
*Editor’s note: The American Association of Anesthesiologists announced their opposition to the Lower Health Care Costs Act of 2019 on Monday, June 24, 2019 (https://asahq.quorum.us/campaign/21083/)