Duke University physicians coined the phrase “financial toxicity” to describe the impact of high-cost cancer drugs on patient care. “Out-of-pocket expenses … diminish quality of life and impede delivery of the highest quality care,” they wrote in 2013.
In the intervening years, financial toxicity has grown exponentially, infecting almost every aspect of contemporary medicine. It’s not just high-priced drugs, although the unbounded greed of the pharmaceutical industry is a huge part of the problem.
Balance billing—slapping patients with huge, unexpected bills for out-of-network services—is the hospital and physician sectors’ joint contribution to the financial toxicity epidemic. Legislation to curb balance billing faces tough sledding in Congress because of their opposition.
Lobbyists for providers have launched a lobbying blitz and “dark money” advertising campaign to weaken or scuttle the bipartisan bills in both chambers. The legislation would limit out-of-network charges to benchmark rates equal to average insurer prices.
Benchmark rates would lower the incentive for insurers to refuse payment for those services since they could then make payment close to their in-network rates. That’s why physician groups, especially those representing emergency room docs, anesthesiologists, pathologists and radiologists—the specialties that hospitals have increasingly outsourced—are leading the charge against the proposals.
They’ve created front groups with disingenuous names like Doctor Patient Unity and Physicians for Fair Coverage, which mask their goal of scuttling any form of price controls. Hospitals are balking because they’re using these groups’ high out-of-network charges as aspirational targets for their own negotiations.
Who represents the patients in this debate? Not the providers. Nor is it the insurers, who could still avoid paying the bills if hospitals continue to outsource critical services to physician groups that remain outside insurer networks.
Earlier this year, I called for a ban on balance billing, concluding it was up to providers and insurers to sort out their differences. I still think that’s the best solution. Alas, there don’t appear to be any backers on Capitol Hill other than the Medicare for All minority, which would eliminate co-pays and deductibles.
With financial toxicity spreading across the healthcare delivery system, I’m beginning to see the wisdom of that approach. I’ve previously advocated for value-based insurance design, a market-based solution that lets payers set graduated co-pays or deductibles to send signals to patients about what care constitutes the best value in medicine.
In a world where there are low-cost generic drugs that are equal in efficacy to expensive brand-name products, that makes sense. It also applies to situations where low-cost physical or drug therapies can achieve equal or better outcomes than high-cost operations, or where some tests and procedures are simply uncalled for—the system’s overutilization plague fostered by fee-for-service medicine.
But the insurance marketplace’s evolution in the face of rising healthcare costs has undermined the core principle on which value-based insurance design depends. Many employers have turned to high-deductible plans to reduce their exposure to ever-higher drug, hospital and physician prices. Where’s the incentive to choose a lower-cost alternative when the first $1,000 of any product or service—and most are more than that these days—is on you?
The medical disasters caused by the financial toxicity epidemic are the stuff of daily headlines: diabetics dying because they can’t afford insulin; insurance plans going broke because of a few high-cost patients; town hall meetings filled with anguished patients who can no longer afford their out-of-pocket costs.
Let’s see what Congress and the Trump administration come up with over the next few months. Drug-pricing and balance-billing reforms are up for consideration. If the lobbyists get their way, not much will change, and the table will be set for a contentious election-year debate about the future direction of healthcare.
