Federal health officials are trying to reignite the debate over surprise medical bills.
In a report issued earlier this summer, the Department of Health and Human Services urged Congress to do something about surprise bills, saying the practice represents a market failure that cannot be corrected on its own. The department declined, however, to define what that “something” could be.
Two competing approaches have been languishing in Congress. One would give insurers a leg up; the other would favor providers.
Congress should instead implement a solution that privileges the interests of patients. Such a fix would give people accurate pricing and coverage information before they receive care—and hold insurers and providers accountable if that information is inaccurate.
Surprise bills arise when patients unknowingly receive treatment from a healthcare provider who is not in their insurance network. The provider then bills the patient for the balance beyond what his or her insurance policy is obligated to pay.
For example, a patient might go to an in-network hospital for elective surgery. But if the in-network anesthesiologist is out sick that day and an out-of-network doctor fills in, then the patient could get stuck with a surprise bill.
Patients also face such bills in emergencies, when they don’t have the luxury of selecting an in-network provider. About 16 percent of all patients treated in an emergency room arrive by ambulance. More than half of ambulance rides result in out-of-network bills, according to a study published in Health Affairs.
Surprise bills can cost patients dearly. The average is a little over $600. But they can reach five or six figures, in some cases. Just last year, a Montana man was billed over half a million dollars for 14 weeks of dialysis. After suffering an ATV accident in 2018, a Texas man was hit with a surprise bill of more than $44,000 for an air ambulance trip between hospitals.
Unfortunately, the chief proposals Congress is considering to address surprise bills miss the mark.
The House Ways and Means Committee has proposed settling out-of-network billing disputes with an arbitration system. If a patient received care outside his or her network, the provider and insurer would each suggest payment rates to a third-party arbiter, who would determine a binding payment amount.
But the arbitration process is opaque, expensive, and wasteful. Patients—the ones paying the bills—do not get a seat at the table. Further, arbitration is, well, arbitrary. There’s no guarantee arbitrators will rule consistently. And the extra layers of red tape have a high price tag. The Congressional Budget Office estimates that arbitration will add $1 billion in administrative costs to our healthcare system.
The House Energy and Commerce Committee has proposed requiring insurance companies to reimburse out-of-network providers at the median in-network rate for a particular service in a given geographical area.
This benchmarking gives insurers the upper hand over providers. Insurers could insist on low reimbursement rates for providers, secure in the knowledge that the most they would have to pay would be the median in-network rate. The result could be narrow provider networks, which could make it harder for patients to access care.
There’s a better way to fix surprise billing.
For starters, Congress can ban the practice for emergency care. Patients can’t research in-network facilities from the back of an ambulance. It doesn’t make sense to punish them for that.
For non-emergency procedures, Congress should require insurers and healthcare providers to accurately disclose network information up front. If a facility employs physicians who send balance bills to patients, then an insurer should not be allowed to list that facility as in-network—nor should that facility be permitted to represent itself as in-network. Insurers and providers who run afoul of this “in-network guarantee” should be fined.
This kind of transparency can prevent the most egregious episodes of surprise billing—without yielding the negative consequences of arbitration or benchmarking.
The Department of Health and Human Services is right to call on Congress to eliminate surprise billing. Now, lawmakers must ensure their approach prioritizes the interests of patients.