Massachusetts Panel Prepares Physician Price-Capping Proposal

Published January 25, 2017

A Massachusetts commission that oversees health care provider prices is preparing a proposal for state lawmakers to cap reimbursement rates for out-of-network physicians who treat insured patients at in-network hospitals.

The 23-member Special Commission to Review Variation in Prices among Providers, appointed by Gov. Charlie Baker (R), is developing suggestions for regulating how out-of-network physicians bill patients, Boston Business Journal reported in November 2016. The regulations would curb so-called “surprise” out-of-network billing that occurs after an insured patient receives services by a health care provider who does not have a contract with the patient’s health insurer, potentially leaving the patient liable for thousands of dollars of services, the Journal reports.

One regulation under consideration is the state setting a default reimbursement rate insurance companies would pay to out-of-network health care providers. Another is a mandate patients not be held accountable for out-of-network charges under certain circumstances, according to the Journal.

The regulations being considered bear similarities to a California law capping the reimbursement rate insurers must pay out-of-network physicians who treat patients at in-network hospitals. The Association of American Physicians and Surgeons (AAPS) has filed suit in federal court against California, alleging the law is a violation of the California and U.S. Constitutions and will lead to a shortage of physicians willing to work in of hospitals, Health Care News reported in January 2017.

Care vs. Coercion

Surprise out-of-network billing usually results from unplanned trips to the emergency room, when patients cannot choose among doctors, facilities, or treatments, according to a 2012 study in the journal Health Services Research.

Dr. Gerard Gianoli, president of The Ear and Balance Institute in Covington, Louisiana and an AAPS member, says capping reimbursement rates would drive more doctors away from emergency rooms and limit patients’ access to health care.

“Price controls set by the government in any industry have inevitably led to shortages,” Gianoli said. “Physicians won’t simply refuse to show up in the ER, but they will reduce the number of hospitals that they have privileges, and consequently have ER responsibility for, and they may shift their work to hospitals that don’t have emergency rooms.”

All Pain, No Gain

Price controls would force out-of-network doctors to accept lower fees despite being excluded from insurer networks, Gianoli says.

“The insurance companies are supposed to provide reimbursement for out-of-network providers at a rate higher than in-network providers,” Gianoli said. “The benefit to in-network providers is, in exchange for a lower fee, they get a larger volume of patients directed to them by the insurance company.”

The push to cap reimbursements is an attempt to coerce doctors into accepting discounted rates to which they never agreed.

“The doctors who voluntarily say no to this arrangement know that they will be missing out on a large volume of patients but feel the reimbursement offered by the insurance company is too low,” Gianoli said. “This legislation is a means to force these admittedly poor deals onto these physicians who have already rejected them.”

Price Transparency vs. Obscurity

Gianoli says a fairer regulation would only require providers to inform patients of their prices before providing service.

“A simpler and much fairer means of dealing with this problem is to mandate price transparency, that all fees must be disclosed in advance of services rendered,” Gianoli said. “Only this way will patients really know in advance what their costs will be.”

Such a law could be difficult to pass, Gianoli says, as insurers would resist a transparency requirement because the obscurity of health care prices helps them avoid competition.

“The insurance companies will fight tooth-and-nail to prevent this latter piece of information from being known,” Gianoli said. “It does not benefit them. It only hurts their competitive advantage over insurance companies that have better benefits.”

Arianna Wilkerson ([email protected]) is a marketing coordinator at The Heartland Institute.

Internet Info:

Kelly A. Kyanko, Leslie A. Curry, and Susan H. Busch, Out-of-Network Physicians: How Prevalent Are Involuntary Use and Cost Transparency?” Health Services Research, June 2013.

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