Lawmakers who think they are protecting patients from surprise medical bills may wind up leading them into a minefield of higher premiums, greater cost-sharing, and more restrictive provider networks, the study warns.
“Instead of choosing among competing ‘patient protections’ proffered by representatives of industries that benefit from surprise bills, Congress should pursue broader reforms that promote choice and competition, minimize government interference and regulation, and ensure a level playing field between market actors by allowing patients to take more control of their medical care,” the study recommends.
Origin of Surprise Bills
The study, “How Congress Should Deal with Surprise Medical Bills for Patients,” was written by Doug Badger, a visiting fellow in domestic policy studies at The Heritage Foundation’s Institute for Family, Community, and Opportunity.
Most private-sector health insurance distinguishes between network and non-network providers, creating incentives for policyholders to visit physicians and facilities within the plan’s network. Charges, beyond the deductible, arising from treatment obtained within a network are generally predictable.
Surprise billing can occur when a patient is treated by a physician, often in a hospital setting, who is not in the network and expects to be paid in full for the service rendered. Another common source of surprise occurs when patients undergo procedures in an emergency room with providers not in their network and later receive a bill from that facility.
Such charges can be steep and often arrive unexpectedly, and consumer complaints have triggered a backlash at the state and federal level.
Seven states have enacted laws regulating surprise billing, and 22 others are considering following suit. President Donald Trump has called for an end to the practice, and Congress is mulling draft legislation. The Senate Committee for Health, Education, Labor, and Pensions and the House Energy and Commerce Committee are considering bipartisan bills intended to address the issue.
Badger says Congress is heading down the wrong path because there is little data to help policymakers to make informed decisions.
“The data that do exist suggest that the problem of surprise medical bills is most prevalent in circumstances where Congress tried to prevent them: out-of-network emergency department (ED) claims,” Badger writes.
Poorly Understood Problem
A provision of the 2010 Affordable Care Act (ACA, also known as Obamacare) aims to protect patients from surprise medical bills for treatment at non-network EDs by mandating use of the same cost-sharing ratios as for in-network providers.
Studies suggest the provision has had the opposite effect. One such study found half of all U.S. hospitals issued surprise bills less than 2 percent of the time, whereas 15 percent did so 80 percent of the time.
“This suggests that a potentially small number of providers are disproportionately responsible for surprise billing for ED services and they may have devised practices that enable them to shift the costs imposed by the emergency care mandate Congress enacted in 2010 to patients,” the study states.
“Adopting a sweeping and unprecedented set of new federal mandates to address poorly understood problems that appear to have arisen from current federal mandates is likely to produce bad policy that will have similarly unintended adverse consequences for patients,” Badger states.
Badger says he’s concerned Congress has learned little from its failed effort to rein in surprise billing in the ACA.
“The problem of surprise medical bills in one whose nature and extend is still emerging,” writes Badger. “The practice benefits various segments of the health care industry at the expense of patients.”
Two ideas making the rounds on Capitol Hill are of particular concern to Badger. One would require insurers and non-network providers to submit their billing disputes for binding arbitration, and the other, known as contract matching, would require insurers, hospitals, and non-network providers to enter into contractual arrangements to set non-network fees.
Modeled on the binding-arbitration process used to settle contract disputes in Major League Baseball, arbitration for surprise billing involves creating an independent dispute resolution (IDR) process to reach settlements between insurers and providers.
A May 2019 bipartisan draft bill would have the federal government certify the process is free of “conflicts of interest.” Such determinations are inherently subjective, and the requirement that the IDR entity select the “more reasonable offer” is given with little guidance as to what constitutes reasonableness, the study states.
“Although better than nothing, these methods are labor-intensive, and special interests often lobby to influence the standard fees,” said Devon Herrick, a health care economist and advisor to The Heartland Institute, which publishes Health Care News. “Too often, fees set by arbitration are based on standards that are artificial due to manipulation by the industry being regulated.”
Under contract matching, insurers would have to assure policy holders that all providers in a network facility will accept negotiated rates.
This process is less undesirable than other alternatives, but it authorizes the government to compel parties into a contractual relationship, which could place excessive power in the hands of the biggest players, Badger says.
“Be wary of solutions offered by industries that helped create the surprise-billing problem,” Badger writes.
Bonner R. Cohen, Ph.D.,([email protected])is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT).
Doug Badger, “How Congress Should Deal with Surprise Medical Bills for Patients,” The Heritage Foundation, June 25, 2019: https://heartland.org/publications-resources/publications/how-congress-should-deal-with-surprise-medical-bills-for-patients