What the Heck Happened to Surprise Billing Legislation? (Or, It’s Never Too Late for the Lobbyists to Win)

Yves here. Way too much happening, and the nuking of surprise billing bills haven’t gotten the attention they warrant. We did comment on how proposed California legislation was dispatched by what amounted to a handwave.…indicating that way too many people were already clued in to the notion that backing the bill was tantamount to crossing private equity, a career-limiting move for any pol.

By APeticola. Originally published at Health Care Renewal

With constituents pressing for something to remedy unexpected liabilities incurred from “surprise” medical bills, it was expected that surprise medical bill legislation would pass federally in December 2019 as part of an end-of-year legislation package. House and Senate committees had worked for months on consensus legislation that was ready to go, but that fell through at the last moment. What happened?

Some background on the issue: Surprise bills are something of a battleground between payers (insurers) and providers (doctors/hospitals). Insurers want to lower bills, and providers want to raise them. More and more, hardball is being played. If large groups of specialty providers remain out-of-network, they can often make a great deal more money than if they signed a contract for a number agreeable to the insurer. Patients – who can get nightmarish huge bills and be legally liable for them – are the roadkill in this tug-of-war. Private equity firms, who are now buying up group medical practices on the assumption that they can increase earnings substantially, have recently become a major player in the dynamic. Dr. Poses had a good post in September on their role and on their lobbying/advertising efforts. Private equity firms like Blackstone and KKR put a TON of money into the radio and TV ads that urged people to call their legislators to oppose “government rate-setting.”

We’re not talking chump change, here. A recent analysis showed that surprise billing charges in excess of negotiated rates amount to as much as FORTY BILLION dollars annually.

Surprise billing legislation – state and federal – to date has taken two approaches. One approach is to fix the bill with out-of-network doctors based in some way on what an in-network doctor makes. This “benchmarking” approach advantages the insurance companies and self-funded employers.

The other is to rely on arbitrators to settle the dispute about amounts between provider and insurers. Experience has shown that this is in practice highly advantageous to the provider – to hospitals and to specialty groups (and in some cases to their private equity investors). This second approach drives up already-high U.S. medical costs. This major downside, in my opinion, makes it far more in the public interest to lean toward the benchmarking type of solution, while striving for fairness.

The bipartisan consensus agreement, known as the Murray-Alexander bill after Democrat Patty Murray and Republican Lamar Alexander, was initially based on a benchmarking approach, but after compromises that were made, had room for outside arbitration for amounts over $750. The Congressional Budget Office estimated that its passage would save TWELVE BILLION dollars in insurer medical costs, enabling lowering of premiums (this does not even include out-of-pocket patient savings). But, of course, those twelve billion dollars in saved costs are also twelve billion dollars in lowered revenue to providers and their owners.

And so, this bipartisan deal was torpedoed at the last moment by another bipartisan team, Democrat Richard Neal (House Ways and Means committee chair) and Republican Kevin Brady. Everything also indicates that Senate Minority Leader Chuck Schumer – who pushed Murray to back off from her support – was instrumental in killing the deal. Nancy Pelosi, too, was an enabler, allowing Neal to kill the bill. She was heard assuring industry representatives that “we are not going to give a handout to big insurance companies.”

As journalist Jon Walker tweeted:

Disgraceful. @SpeakerPelosi is going around trying to keep your premiums sky high to pay off private equity firms and bad actor hospitals.

Everything about the spiking of the deal indicates that money talks, and loudly, with large donations having been made to Schumer’s Senate Majority PAC by the Greater New York Hospital Association and with donations too to Richard Neal from private equity.

And so the legislation is dead until and unless Schumer and Neal can get their preferred (and price-raising) approach adopted. Meantime, real people are suffering from getting huge bills they have no control over. As Elizabeth Rosenthal observed recently, practices that are both routine and legal in the medical industry are nonetheless in essence fraudulent. The business model of U.S. medicine is fraud – and a very profitable business model it is.

NOTE 1: Although a number of states have passed surprise bill legislation, it is critical to get something passed on a federal level, because most large employer-based plans are federally regulated and state laws don’t apply.

NOTE 2: Benchmarking and arbitration are not the only possible approaches. Another suggestion is to abolish the practice of separate bills from doctors for services provided in hospitals.

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