Alaska's senior GOP senator, Lisa Murkowski, on Wednesday led a charge to determine how Congress could curb exorbitant out-of-network billing, as her state's attempted fix only keeps driving overall healthcare costs higher.
In 2004, Alaska issued an obscure rule meant to check excessive bills dropped on people with commercial insurance who required treatment from an out-of-network doctor. Alaska has the unenviable status of having the highest healthcare costs in a country that leads the world in healthcare costs.
But the state's rule, which dictates that insurers pay 80% of the reasonable, market rate of the treatment, didn't work quite as intended as specialty physicians ran up prices unchecked. A study released last month found that it has led to $85 million in additional healthcare spending.
The problem demands another policy fix, Murkowski said, noting that other rural states could face similar problems with too few specialists. As hospitals can't afford to employ those specialists full-time, their services usually fall out of the hospital networks. In essence, the specialists can then dictate what insurers pay.
Alaska's dilemma focused discussion at Wednesday's Senate Health, Education, Labor and Pensions Committee hearing on Tennessee GOP Sen. Lamar Alexander's goal of finding federal policies to bring down healthcare costs—a mammoth task as the industry has become the most powerful workforce in many rural communities.
But Congress could try to curb out-of-network billing practices, hearing witnesses said. Myriad states have launched efforts of their own with varying degrees of success.
In Alaska's case, tying the benchmark prices to a national average rather than the local specialists' costs could drive incentives the other way, according to Dr. Ashish Jha, who directs the Harvard Global Health Institute.
Alaska's rule "sounds reasonable, but then the impact—in this case it won't work," Jha said.
Panel witnesses urged lawmakers to consider other transparency measures beyond out-of-network billing rules, criticizing the industry because patients are largely kept in the dark when it comes to cost of care and the coverage they can expect when they go to hospitals.
But Jha also said the Federal Trade Commission and other agencies tasked with monitoring antitrust issues as the industry consolidates need congressional weight behind them.
Sen. Bill Cassidy (R-La.)—an outspoken critic of consolidation—said he wants to look into potential statutory changes to beef up their authority.
Jha encouraged lawmakers to look at ramping back the administrative burden—particularly when it comes to quality reporting—as a way to tamp down on the temptation for small independent providers to fold into larger systems who have the staff to manage billing and reporting.
"The trends are feeding into each other," Jha said. "We have to look at the administrative challenge.
That includes streamlining electronic health record systems and building up overall efficiency, Jha said, and HHS Secretary Alex Azar has also touted and pushed hard for that move.
It's unclear when the committee could start discussing potential legislation, but Alexander plans to hold more hearings on the issue and lawmakers in both chambers and on both sides of the aisle are rallying to tackle drug pricing and transparency issues.
Ongoing efforts include a measure by Cassidy, Sens. Susan Collins (R-Maine), John Barrasso (R-Wyo.), Claire McCaskill (D-Mo.) and Debbie Stabenow (D-Mich.) to ban pharmacy gag clauses.
McCaskill, who sits on the Senate Finance Committee, is also trying to tackle the surprise billing issue through a bill that focuses on insurers' air ambulance policies. A companion bill passed in the U.S. House of Representatives through the Federal Aviation Administration reauthorization, which is now waiting for floor time in the Senate.