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No Surprise: Congress Expected to Act on Surprise Bills

05/17/19

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Steve Rixen, Government Relations Director, Public Policy and Government Relations

About seven years ago, my wife was in labor preparing to give birth to our first child. Because it was a full moon, seemingly every other expectant mother in the greater Washington, D.C. area was also in labor. While the research may be out on whether a full moon induces labor, anecdotally, it sure seemed to be a factor, because when we arrived at the hospital no delivery rooms were available, so we took up a multihour residency in the maternity waiting room.

When we finally got into our room, the contractions escalated. Naturally there was also an understandable escalation in the frequency and volume of calls for an epidural. However, whether it was because of the aforementioned full moon or some other factor, an anesthesiologist was not available, with the one on duty already tied up with multiple caesarian sections. 

The hospital thankfully called in outside help to support the care needs of the night and my wife finally received the epidural. With staffing challenges and difficult-to-predict patient flow, the hospital responded brilliantly and the staff did what they could to ensure high quality care for all of its patients.

At the same time I had tinges of worry starting to pop into my head. That whole childbirth thing aside, I was beginning to grow concerned about whether the contracted anesthesiologists would be in our insurance network. I knew it was entirely possible with a non-employed physician coming in to provide care that we could be facing a surprise bill. I also knew enough to be sure there was NO WAY I was going to turn the doctor away at 1 am – my wife now exceeding 15 hours of labor – regardless of insurance network status.  

My situation was thankfully limited to mild uncertainty. We didn’t receive a surprise bill, and most importantly, my wife (and daughter!) are happy and healthy today. However, according to recent data, as many as one out of every seven patients may now be at risk of receiving a surprise bill. Their stories have been elevated recently by multiple press reports detailing the impact of surprise billing.

At least partially due to that attention, officials in Washington have taken notice – and are now moving expeditiously, and in an uncharacteristically bipartisan way, to protect patients from surprise bills. Not surprisingly, though, many of their policy solutions fail to consider the tangled web of reimbursement mechanisms, state-to-state differences, and the types of conversations that may not be reasonable to have after, let’s say, 18 hours of labor without appropriate pain relief.

Typically speaking, a surprise bill happens when a patient receives care from an out-of-network clinician at an in-network facility, or a patient receives emergency care at an out-of-network hospital. We can also add to the list a patient who goes to an emergency room for care then has their coverage denied by their insurer because it was deemed non-emergent after the fact. In many such cases, a patient may face balance billing when they are charged the difference between their full out-of-network rate, and what the insurer will pay to the hospital or physician for care.

Why it has become more prevalent these days is a more complicated question. Hospitals need to meet patient care needs at all times. While they seek to protect patients, there are many situations where staffing needs, state laws or other factors limit their ability to completely ensure clinicians that practice in that hospital are in a contracted insurer network. Insurers have also been more aggressive in negotiating with hospitals and physicians, with a focus on limiting costs through more restrictive, narrow provider networks. In addition to those elements, a growing number of physicians – particularly in emergency medicine - have joined staffing agencies that contract with hospitals to manage emergency departments and fulfill staffing needs. While they are an important option to ensure care is available, such groups are arguably incentivized not to join insurance networks.

Recently President Trump held an event in the White House where he called on Congress to act and outlined principles that should be considered. The key principle was that patients should be protected from balance billing in emergency situations and when they receive care at in-network facilities.

A week later the House Energy and Commerce Committee leaders announced a bipartisan draft bill to reduce surprise bills. Their legislation largely follows the principles outlined by the White House but goes a step further by proposing a rate-setting mechanism that would reimburse the hospital and clinician at the median, contracted, in-network rate for a service in a geographic area. Elsewhere in the House, the Ways and Means Committee is holding a hearing on the subject next week.

Finally, shortly after the House draft was introduced, a bipartisan working group in the Senate released its proposal to curb surprise bills. While the Senate bill would also protect patients from balance billing when they receive care in an emergency room or at an in-network facility, it takes a different approach from the rate-setting mechanism used in the House. Instead, under the Senate bill hospitals and physicians would be reimbursed automatically at the median in-network rate. If there was disagreement, the providers or insurers may appeal through a “baseball-style” arbitration process to determine the appropriate “commercially reasonable” rate.

The legislative process will play out in the coming months and significant questions remain. Hospitals, physicians, insurers, patient advocates, employers and others are all engaged on the issue – often with conflicting views. While there is disagreement between stakeholders and now between the House and the Senate, there is still consensus among all parties and Congress that something must be done.

As Congress tackles the issue, Vizient will work to ensure the unique challenges facing hospitals and their primary focus of ensuring their patients are cared for are prioritized throughout the debate. In the meantime hospitals may consider having conversations now about preparing for the operations, staffing and finance changes that may be needed when (not if) such legislation is adopted.

The first step I’d recommend: Consider bringing in an extra in-network anesthesiologist for those full-moon nights … just in case.

About the author. As government relations director for the Vizient office of public policy and government relations, Steve Rixen closely tracks legislative and regulatory challenges for hospitals, and helps shape advocacy strategies to effectively communicate with policymakers on behalf of Vizient and our members. He previously served as a strategic policy and communications consultant and worked as a professional staffer for U.S. Senator Byron Dorgan.

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