More States Consider Regulation to Curb Surprise Medical Bills
Following Arizona’s lead, Georgia, Texas, and Washington State are considering bans or mandated arbitration and price transparency in response to consumer complaints about surprise medical bills from out-of-network providers.
Texas Senate Bill 1264, introduced by Sen. Kelly Hancock (R-North Richland Hills), and a companion bill to be introduced by Rep. Trey Martinez Fischer(D-San Antonio), build upon an arbitration program enacted in 2009 and bolstered in 2015. The legislation would trigger mediation between the health insurance company and provider for disputed charges and prohibit bills to consumers until the pay dispute is resolved. The proposed law allows for a “baseball-style arbitration,” where an arbitrator will get to pick the either the provider’s charge or the initial payment from the health plan. The idea is get both sides to bring the most reasonable price to the table.
“Mediation works,” said Hancock during a press conference. “When it is available and used, we can confidently say that surprise bill mediation has saved Texas patients well over $30 million.”
Arizona, Washington Attempt Fix
The state of Washington is considering more sweeping regulation. The state’s House of Representatives overwhelmingly passed House Bill 1065, the “balance billing protection act,” which bans balance billing outright for insurance plans offered to public employees and self-funded group health plans electing to be subjected to the act. Balance billing is the difference between the provider’s charge and the allowed amount by an insurer. For cases not involving public employees or self-funded group health plans, the bill requires settlement action to be made in good-faith.
Arizona’s new law on surprise medical bills went into effect January 1. It sets up a procedure where patients can request dispute resolution through the state’s Department of Insurance. Unresolved disputes will enter arbitration. If an enrollee participates in an informal settlement teleconference (IST) beforehand, the law spells out what an enrollee’s liability: “By virtue of having participated in the IST, the enrollee can only be held responsible for paying the amount of the enrollee’s cost-sharing requirements (copay, coinsurance and deductible) plus any amount the health insurer paid the enrollee for the services provided by the out-of-network health care provider.”
Steven Briggs, spokesperson for the Arizona Department of Insurance says it is early to measure response. “We had received several inquiries up through February but no one has submitted a request for arbitration,” said Briggs. “We believe that is still too soon to expect a surprise bill to work its way through the billing process since the law requires the service to be received after January 1 of this year. I’m sure we will start to get some.”
Surprise medical bills and the related practice of balance billing typically occur after surgical or emergency procedures, when patients have no control over all the providers in the process. Providers who are out of a patient’s network can charge beyond what is usual and customary. Patients are financially responsible for the costs, which can reach thousands of dollars.
Devon Herrick, a health economist and advisor to The Heartland Institute, which publishes Health Care News,says informing patients of billing practices is paramount.
“Mediation is a good start, but Texas and other states need to find solutions that avoid or discourage billing disputes in the first place,” said Herrick. “One way to do that is to require greater transparency in fees and network status in order for out-of-network medical bills to be collectible.”
Kicking It Down the Road?
Georgia is trying to address surprise medical bills. House Bill 84 failed by one vote but the more sweeping Senate Bill 56 did pass in that chamber. SB 56 sets up a database of prices that insurance companies would have to pay. The bill would have to be approved in the House but passage is unlikely. Rep. Richard Smith (R)- Columbus told the Atlanta Journal Constitution, “we will have a hearing, but a hearing only.”
David Hyman, author of Overcharged: Why Americans Pay Too Much for Health Care, says these statutory attempts to address the problem by setting up an arbitration process do not answer consumers’ biggest concern, which is the high prices they are paying for care.
“What you’re doing is throwing the problem to someone else to try to figure out what the price should be, where there is no market in which you can measure the market price,” Hyman said. “It’s too hard to do price-setting. We have a long history with price-setting, and it usually doesn’t work. Often, you’re too high. Sometimes you’re too low. Bad things happen when you’re not right on the money.”
Hyman says mandated price transparency is not the answer, either.
“There is lots of health care consumption where people are not in a strong position to price-shop or price-negotiate, and being brought in on a stretcher is not a time you want to be negotiating prices,” Hyman said. “So price transparency is important, but it’s not going to solve every problem, and there are some areas where it won’t do very much.”
Addressing Billing Practices Directly
Hyman says a better approach is to hold providers responsible for their charging practices, similar to getting a car fixed when you are given a price estimate and that is what you can expect to pay.
“We should force hospitals to solve this problem by prohibiting their providers from sending out more than one bill,” Herrick said. “And the hospital has to negotiate a market price for the emergency department, for example, for the services they’re providing.”
AnneMarie Schieber (email@example.com)is the managing editor of Health Care News.