Calling surprise billing a clear example of a "market failure," a collection of experts testifying on Capitol Hill on Tuesday told lawmakers to focus on solutions that would address the role of health providers and insurers—not further burden patients.
“The key is to avoid placing the onus on the consumer to protest a surprise bill," testified Jack Hoadley, a research professor emeritus at the Georgetown University Health Policy Institute to a House Committee on Education and Labor subcommittee.
He was laying out a number of examples of how states have tried to address surprise, or balance, billing where hospitals or providers charge patients the difference between what the hospital and the insurer think their care was worth for out-of-network patients.
However, as the experts testified, patients often receive surprise bills at in-network hospitals because they receive care from an out-of-network provider. "The existence of surprise bills and their large sums represents a market failure," said Christen Young, a USC-Brookings Schaefer Initiative On Health Policy fellow at The Brookings Institution. Typically, physicians join networks because patients would be unwilling to bear out-of-network costs.
"But for types of physicians that patients do not choose, this logic doesn’t apply," Young said. "Emergency physicians and anesthesiologists receive a flow of patients based on individuals electing care at the hospital which they practice. That volume will be the same regardless of whether the physician is in or out of network. It allows them to bill any rate they choose."
For example, she said, while research has shown physicians' out-of-network costs are about twice as much as Medicare, anesthesiologists' out-of-network charges are more than five times the average Medicare payment.
A Brookings Institution report found about 20% of emergency department visits and 10% of elective inpatient stays involve at least one out of network provider and about 50% of ambulance rides are out of network.
Frederick Isasi, Executive Director of Families USA pointed to an example hundreds of liens place on Denver-area homes by physicians due to non-payment of surprise medical bills. In one of those cases, a woman who needed an emergency appendectomy was careful to select an in-network hospital but was hit with a $5,000 bill from the out-of-network surgeon who performed the procedure.
That patient fought the charges in court and lost and was ordered to pay the bill plus interest. There is a lien on her home and her wages are being garnished as she prepares to go on maternity leave for the birth of her child, Isasi said.
"Hospital doctors and insurers are washing their hands of patients' interest," Isasi said. "This is inexcusable behavior on the part of hospitals, doctors and health insurers. They each know or should know patients have no real way of understanding the financial trap they just walked into. They should bear the responsibility."
Both insurers and provider groups have separately banded together to support federal efforts to address surprise bills but also to release their own guiding principals for the conversation in recent months.
On Tuesday, the Association of Health Insurance Plans (AHIP) submitted a letter to the subcommittee against supporting patient protections but also pushing against a federal standard for payments to out-of-network doctors. In a joint letter to committee leaders, the AHA, Federation of America’s Hospitals and American Medical Association said that “bundled payments are not appropriate for emergency care and have not been sufficiently tested for widespread adoption for other types of care."
They also oppose proposals to specify a national reimbursement rate for out-of-network services, saying it would “create a disincentive for insurers to maintain adequate provider networks” and fail to account for individual market factors.
Watch what experts had to say about surprise billing in the video below.