Insurers Ask Congress to Fix Rates to End Surprise Medical Bills

March 19, 2019 - Organizations representing major health insurers are calling on policymakers to set reimbursement rates for services from out-of-network providers to prevent surprise medical bills.

Congress should establish reimbursement rates that “will not increase premiums or impact access for consumers by basing amounts on market rates determined by reasonable, contracted amounts paid by health insurance providers to similar doctors in a geographic area or a percentage of Medicare,” the groups stated in a letter sent by America’s Health Insurance Plans (AHIP) on March 18 to House Speaker Nancy Pelosi (D-CA), Senate Majority Leader Mitch McConnell (R-KY), and other top politicians.

The letter also advised Congress to pass legislation that would prohibit providers from sending surprise medical bills when patients cannot choose their provider, require facilities to inform patients of their provider’s network status, apply the protections to all health plans, and avoid the use of the arbitration process that can keep consumers in the middle of a bill’s appeal.

Sixteen organizations signed the letter alongside AHIP, including the American Benefits Council, BlueCross BlueShield Association, National Alliance of Healthcare Purchaser Coalitions, and National Business Group on Health.

Surprise medical bills have recently been a contentious issue in the healthcare industry.

Stakeholders are concerned that surprise medical bills are exacerbating the country’ healthcare cost problem. National healthcare expenditures are slated to increase 5.5 percent annually until 2027 and account for over 19 percent of gross domestic product (GDP).

Exorbitant medical bills are the driver of high healthcare costs even for patients with comprehensive coverage, industry groups like AHIP have argued.

At least one in five American receives a surprise medical bill every year, research from the New England Journal of Medicine shows. And the bills are significantly higher than if patients had received care from a provider in their network.

A recent report from UnitedHealth Group revealed that surprise medical bills from out-of-network physicians total $6 billion annually, and out-of-network physicians are charging more for their services than in-network physicians receive as compensation. On average, in-network physicians charged 150 percent less than their out-of-network counterparts.

The charges of a surprise medical bill oftentimes have no relation to the actual cost of care or even market rates, AHIP pointed out.

“For example, out-of-network anesthesiologists bill, on average, 580 percent of the Medicare reimbursement rate,” the letter stated. “For emergency medicine physicians, the charges can be even higher, with one study finding the average bill to be 798 percent what Medicare would pay. These excessive bills distort healthcare markets, create tremendous financial hardship on families and drive up premiums for everyone enrolled in commercial coverage.”

Passing legislation that requires the government to fix reimbursement rates in circumstances that lead to surprise medical bills will help consumers manage healthcare costs and resolve the patchwork of policies that dictate surprise medical bill requirements across the country, AHIP and the co-signors explained.

However, hospitals are opposed to the government stepping in and setting reimbursement rates in the private sector. Hours after AHIP released the letter, the American Hospital Association (AHA) and the Federal of American Hospitals (FAH) called the proposal dangerous.

“Beyond protecting patients and ensuring adequate health plan provider networks, it is essential that insurers and providers of care retain the ability to negotiate appropriate payment rates,” Rick Pollack, AHA President and CEO, and Chip Kahn, FAH President and CEO, stated in an official comment.

“Not only is it a dangerous precedent for the government to start setting rates in the private sector, but it could also create unintended consequences for patients by disrupting incentives for health plans to create comprehensive networks.”

Prohibiting balance billing is the solution, the major hospital groups countered.

“Our patients come first and the hospital community has proposed a plan to protect them from surprise bills,” Pollack and Kahn stated. “Consumers, health insurers, employers, and hospitals all agree and should seek a common solution. That solution is simple: patients should not be balance billed, and they should have certainty regarding their cost-sharing obligations based on an in-network amount.”

The AHA and FAH, along with several other hospital groups, also sent a letter to policymakers on Feb. 20 outlining their methods for preventing surprise medical bills. Preserving the role of private negotiation was a top recommendation from the hospital groups in addition to ensuring patients have comprehensive provider networks and coverage education, ending balance billing, and guaranteeing patient access to emergency care.