Industry, analysts clash over scope of balance billing legislation

The healthcare policy and industry worlds are poised for a clash over the forthcoming bill to end all surprise medical bills.

The tension over the expected legislation lies in its potential scope as a catch-all for widespread frustration over healthcare costs.

All this was in evidence Wednesday as a coalition of hospitals led by the American Hospital Association outlined for congressional leaders the overarching principles they want policymakers to keep in mind. They included a warning that they don't want Congress to foray into their negotiating relationships with insurers.

"Policymakers here have a broader agenda, and we're happy to talk with anyone about broader issues of health reform—but to take the surprise billing issue and to use that as an excuse for broad payment reform we think is inappropriate," said Chip Kahn, CEO of Federation of American Hospitals that represents for-profit hospitals. "Frankly it's using surprise billing like a Trojan horse."

Hospitals want the legislation to keep it simple: Take the patient out of the middle and leave the rest to hospitals and insurers to work out.

"Once the patient is protected, government doesn't need to get involved," said Molly Smith, vice president for coverage and state issues at the American Hospital Association.

The effort on surprise medical bills started last fall with a discussion draft of bipartisan legislation led by Sen. Bill Cassidy (R-La.) that would cap out-of-network charges to a regional average. Sen. Maggie Hassan (D-N.H.) followed with a separate proposal that pitched arbitration as a way to resolve out-of-network disputes between insurers and providers. President Donald Trump weighed in earlier this year, vowing to end the practice.

It's unclear when the legislation, which is still in the works as Senate health committee staff meet with patient groups and the spectrum of interested industry parties, will be introduced.

But with Trump on board, policy experts and patient advocates are watching closely for all it could entail. And their hopes are, unsurprisingly, for a more ambitious proposal than what industry wants.

Also Wednesday, seven analysts from the non-partisan think tank Brookings Institution released a paper focused on state-based solutions to surprise bills that shows how deep policymakers could go, through this single piece of legislation, on overall pricing reform.

"It became more clear how inflated the prices we're paying for these services are today," said Loren Adler, a co-author of the study under the USC-Brookings Schaeffer Initiative for Health Policy.

The analysis flagged particularly exorbitant charges: One in five anesthesiologists bill at more than 11 times the Medicare rate, the authors found. One in five radiologists bill at more than eight times the Medicare rate for diagnostic CT scans.

For Adler, these charges draw the legislative debate over surprise medical bills into the broader debate over cost because, he said, ancillary physicians can use out-of-network billing as a way to contract higher rates that ultimately raises premiums for everyone.

"We're probably talking about a few percentage points of insurance premiums here, which is pretty substantial when you're talking about budgetary impact," he said.

The Brookings paper highlighted two policy recommendations for states that are also floating on the federal level.

The first would cap out-of-network charges to a percentage of relevant Medicare rates—which gets at the idea of rate-setting hospitals deeply oppose. The other involves contract regulation that hits at the core of hospital networks. Under this policy states, using their licensing authority, would ban independent billing by high-cost ancillary physicians like emergency doctors and anesthesiologists. This would ultimately yield bundled pay models for commercial insurers.

Unsurprisingly, there's a huge gulf between the analyst view and the industry view of this proposed regulation.

"Not only is that a terrible idea, I don't know how operationally it would work," said Kahn, adding that it undermines the system of voluntary medical staff including physicians.

"You can't own your medical staff in that way," he said. "I think it's a very problematic."

Smith of the AHA was more cautious, noting that hospitals are still looking into potential implications and would need to see legislative specifics before drawing conclusions. But she said Medicare's models show that bundled payments aren't simple.

"There's enough experience in Medicare to suggest that while it could be done, it's not a flip-the-switch situation," she said. "It's not just as easy as saying, 'Hospitals can handle that.' A lot goes into defining a bundle—there's the legal issues, the contracting issues, liability issues."

Meanwhile proponents of the policy think it could have broad appeal for Republican and Democratic lawmakers precisely because it hits at the root of the payment structure without straying into rate-setting, which can make conservatives queasy.

"It's the thing that most closely mimics a normal market," Benedic Ippolito, a research fellow at the American Enterprise Institute, told Modern Healthcare.

Ippolito advocated for this policy in a Real Clear Policy op-ed he co-authored with Georgetown University law professor David Hyman. They wrote that since most hospitals have eliminated the problem of surprise bills, contract regulation is a way to force the rest to follow suit.

"A relatively small number of hospitals have allowed these bad-apple providers to get away with sending surprise medical bills—and we should make those hospitals fix the problem they have created," they wrote.

With pressure from both sides, it's up to Congress to decide how far they want to go with their proposal. That remains to be seen.

"The one thing that has just been concerning to me in a lot of this discussion is, we keep coming to really complicated solutions," Smith said. "Can we simply ban balance billing? Why do we have to overcomplicate this?"