Payers and providers often stand united in the face of legislative or regulatory changes to the health care system, combining their political influence to protect the interests of the industry. But the issue of surprise billing has driven a wedge between powerful stakeholders that is only growing more acrimonious as negotiations ensue, leaving hospitals and insurers denigrating each other’s proposals as they try to shape pending legislation.
Although few are optimistic that a gridlocked Congress can deliver the comprehensive health reform voters are seeking, curbing the charges levied on patients who unknowingly receive care from out-of-network providers has been singled out as a priority of the Trump administration and lawmakers in both chambers. A bipartisan team of senators under the leadership of Sen. Bill Cassidy (R-La.) solicited input from payers and providers in the summer of 2018, in an effort to determine how to crack down on the practice of surprise billing without raising costs for either group.
But over time, hostility at the negotiating table has worsened ahead of the expected bill release before the end of the month, both sides say. As hospital and physician groups push Congress to use the opportunity to address inadequate networks and high-deductible health plans, insurers are wielding a powerful weapon to steer policymakers from shifting accountability toward insurers: the threat of rising insurance costs.
“If we lose this debate and the doctors win, everyone needs to gird their loins to pay higher premiums,” said James Gelfand, senior vice president of health policy at the ERISA Industry Committee, ERISA Industry Committee, which represents health plans for major employers.
Surprise bills emerge from a complex ecosystem of payment arrangements between hospital systems, facilities, physicians and insurers, but at the core, they reflect the gap between what the provider charges and what the health plan is willing to pay. Though doctors, hospitals and insurers concur that the burden of that conflict should not fall on the patient, fundamental disagreements on the underlying cause of surprise bills have stalled progress toward a solution -- and rather than coming together to fight for patients, the industry groups have turned around to fight each other.
On the provider side, doctors and hospitals see surprise bills as emblematic of structural flaws in insurance policies, such as high deductibles and narrow networks.
Molly Smith, vice president of coverage at the American Hospital Association, said AHA hospitals report that surprise bills occur most often in scenarios where an individual receives care at an in-network facility, most likely with an in-network primary provider, only to learn when the bill arrives that one of the consulting physicians -- perhaps a pathologist, radiologist or anesthesiologist -- was out-of-network. The patient is then on the hook for the balance bill, or the difference between the in- and out-of-network rates for that service.
Smith emphasized the AHA has no objection to prohibiting balance billing but questioned whether this addresses inadequate networks, which it sees as the root issue.
“What we’ve been talking about primarily is, ‘What do you do to protect patients once the surprise bill has occurred?’” she said. “There does not seem to be sufficient focus on preventing them upfront. That comes back to the adequacy of networks.”
Smith said surprise bills are largely a consequence of the narrow networks that have resulted from insufficient state and federal oversight. “You can have a health plan that has in-network facilities but doesn’t have practicing anesthesiologists at those facilities,” she noted. “How in the world did that meet network adequacy requirements?”
Physicians in the emergency room, where most surprise bills originate, point to high-deductible plans as another issue on the payer side. Laura Wooster, associate executive director at the American College of Emergency Physicians, said the majority of surprise bills arise when patients’ costly ER services still fall short of their deductibles.
The Kaiser Family Foundation found private plan deductibles rose 4.5 percent from 2017 to 2018. And while deductibles more than doubled from 2008 to 2018, wages rose only 26 percent over that period.
Wooster suggested pressuring payers to lower deductibles and proposed a model with an independent dispute resolution mechanism, or arbitration, to take the patient out of the middle of payment disputes, citing New York as an example of a state that has taken this route.
But binding arbitration finds staunch opposition from those on the insurance side. Ilyse Schuman, senior vice president of health policy at the American Benefits Council, an advocacy group for employer-sponsored benefit plans, said solutions like arbitration enshrine the “current market failure” that allows physicians to opt out of staying in-network to maximize profit.
The council, America's Health Insurance Plans and the ERISA Industry Committee all warned that if lawmakers ban patients from receiving surprise bills but shift the cost to payers, health plans will raise everyone’s premiums to offset these new costs. In New York, binding arbitration has been heralded as a success that did not raise health care costs for consumers -- though lawmakers and stakeholders jointly acknowledge it treats a symptom, not the illness.
Gelfand said he suspects the forthcoming congressional legislation will include binding arbitration -- a solution he described as “rearranging the deck chairs on the Titanic.” If that is the case, he said, Cassidy can expect the ERISA Industry Committee and other groups representing employers and insurers to oppose that measure.
Alongside rising premiums and out-of-pocket expenses for everyone, insurers argue arbitration would not address current mechanisms that allow providers to engage in price-gouging. Adam Beck, health policy expert at AHIP, and Gelfand pointed to the consequences of provider consolidation, explaining that when venture capital firms purchase emergency departments and separate them from hospitals, medical specialists in these free-standing ERs have the liberty to charge out-of-network rates.
Wooster warned that insurers’ solutions -- such as capping payments to physicians -- could cause physical access issues and have particularly dire consequences for rural hospitals. But because the threat of raising premiums has a “much more immediate” impact, providers suspect it is turning legislators onto a different approach.
A spokesperson for Cassidy on March 15 did not confirm whether the bill will include arbitration but said the senator is crafting a “Goldilocks” solution, acknowledging the competing interests of stakeholders and the risk of creating market instability.
Despite shared commitment to protecting patients, the communication between the stakeholders has grown combative as the senators' working group finalizes its legislation. Gelfand said providers deflecting to issues like high deductibles and network adequacy issues are “lying” -- that surprise bills are caused by “absolutely indefensible” activity from doctors, especially in emergency rooms, who strategically stay out-of-network to obtain higher rates.
But Wooster reported that when doctors try and go in-network, they are often blocked by insurers themselves.
Health plans set higher deductibles for out-of-network emergency care. Consequently, payers are disincentivized from bringing doctors in-network because when policyholders see out-of-network doctors, health plans are responsible for a lower share of the bill.
If they wanted to, Wooster said, insurers could fix the very problem they blame for surprise bills.
A coalition of 17 employers and insurers, including AHIP and American Benefits Council, sent a letter to Congress on Monday endorsing government-set reimbursement rates for physicians -- a proposal those in hospital sector warn could exacerbate existing problems of noncomprehensive networks.
For his part, Gelfand said the insurers his organization represents “are bullish” on their chances for a win: “If you are invested in these equity-owned emergency care staffing firms, sell.”
Clarification: This story has been updated to clarify that the "working group" refers to the bipartisan team of senators.