The American Society of Anesthesiologists is accusing Blue Cross Blue Shield of North Carolina of using the upcoming ban on surprise billing as justification to "strong-arm" in-network clinicians into lower rates.
The not-for-profit payer, which counts 3.8 million individuals as members, sent letters to 54 anesthesiology, radiology, emergency department and other clinicians earlier this month, threatening to axe their contracts unless they agree to payment reductions of up to 30%. In the letter, the payer said the payment reductions were due to the No Surprises Act, which goes into effect at the start of 2022.
With the law's deadline approaching, providers are scrambling to draw attention to the independent dispute resolution process for determining a fair market rate, which they say gives insurers too much leverage. In October, CMS directed arbiters to base appropriate out-of-network prices on insurers' median contracted rate for the same service in a geographic area. The Congressional Budget Office estimates the move to market-driven prices will cut insurance premiums by up to 1%.
But providers say giving insurers the upper hand will let them drive payment rates down and force doctors out of networks and out of business, reducing patients' ability to access the care they need. In October, the ASA called on the Justice Department to investigate the high rate of contracts the nation's largest insurer was canceling early, saying that UnitedHealthcare was ending its agreements in an effort to depress the median rate paid ahead of the new law.
"I don't think when someone is overcharging, that it's going to hurt the overcharger to now have to [accept] a fair price," Health and Human Services Secretary Xavier Becerra recently told Kaiser Health News. "Those who are overcharging either have to tighten their belt and do better, or they don't last in the business."
HHS has said it will review comments on the rule, which about 150 members of Congress claim goes against congressional intent and should be amended.
ASA, which represents 54,600 anesthesia providers nationwide, believes that long-standing contracts between payers and providers should be maintained and that state and federal regulators should set network adequacy standards for insurers.
"By definition, if they're long standing, they have to have been working for both parties," said ASA President Dr. Randall Clark. "If the health plans were required to maintain an adequate network by objective measures, they would be required to negotiate in good faith with physicians."
He said the ASA does not support provider groups that go out-of-network as a business strategy.
BCBS North Carolina sent letters to the state's most expensive provider practices, which were charging the insurer's members up to 500% more than what they billed Medicare patients, a spokesperson said. The insurer said these practices represent a small percentage of thousands of contracts it has been able to negotiate with for more reasonable rates.
"Blue Cross NC is pleased Congress took steps to protect patients from unfair and costly medical bills, and we appreciate the opportunity to take patients out of the middle and negotiate directly with the most expensive for-profit providers," the spokesperson said. "We're committed to doing all we can to make healthcare more affordable for our members and more accessible to more people in North Carolina."
Patients experience a high number of surprise bills for anesthesiology, partly because they typically do not get to choose their anesthesiologists, research shows. In 2015, 12% of in-network hospital bills included surprise charges for anesthesiology services, according to a Yale University study. These providers charged more than eight times the Medicare rates for their services, the study found.
"Medicare is an arbitrary system established by CMS, it's not subject to negotiation, and has no bearing at all on the cost to deliver services in anesthesiology," ASA's Clark said. "If BCBS of North Carolina or others interpret their new power as an opportunity to drive towards Medicare rates, there is going to be severe disruption and the wholesale loss of services in numerous places that really need them."
Anesthesiology is one of many specialty groups that banked their business on remaining out-of-network and are now scrambling to change the arbitration process before the law goes into effect, said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy. The group's focus on North Carolina is no accident either, he said. BCBS North Carolina held 71% of the state market share in 2019, according to Kaiser Family Foundation.
"No Surprises got rid of an unfair business practice and brings us to more market-driven, competitive negotiations, but the healthcare market is riddled with other problems," Adler said. "Market-based healthcare prices aren't necessarily perfect."
Some providers have argued that regulators should look to the 80th percentile of charges, in accordance with New York's law banning surprise billing. An HHS report released this week found that adopting New York's arbitration style could lead to higher overall costs across the country, because providers often charged more than the negotiated rate. The No Surprises Act explicitly prohibits that style of arbitration, Adler said.
"I guess you could convince Congress to write a new law, but that seems pretty unlikely," he said. "This is, to me, a little bit of an ex post fight now that this law got passed. It's unclear exactly what they're arguing for."
As more contracts come up for review, more disputes between payers and providers will flare up, since out-of-network emergency services were largely unregulated before the surprise billing ban, said Glenn Melnick, a healthcare professor at the USC Price School of Public Policy. The threat of big out-of-network bills forced many payers to sign contracts even if providers charged exorbitant rates, he said.
Now, with this regulatory mechanism to control their risk, plans may widen their networks to allow patients to go anywhere for emergency care, he said.
"I can see this evolving to the point where the plan won't care where you go, because the plan won't be at risk for the charges anymore," Melnick said. "It has the potential to shake up the market."
