Union Opposes Rate-Setting to Solve Surprise Medical Billing | Citizens Against Government Waste

Union Opposes Rate-Setting to Solve Surprise Medical Billing

The WasteWatcher

An issue that continues to bubble under the surface of the coronavirus pandemic is how to prevent surprise medical billing.  It was a top issue in Congress in the early fall of 2019 and was being pushed hard to be solved by both sides of the political aisle until January 2020 when the coronavirus showed up in the United States.  While COVID-19 continues to dominate everything, solving surprise medical billing still pops up.  Proponents of a House and Senate bipartisan compromise have been desperately trying to get their legislation included in every emergency spending bill that has been considered, but fortunately they have been unsuccessful.

“Fortunately” is the correct description since the two most prominent “solutions” are either rate-setting or government-mandated arbitration.  Rate-setting is simply a price control that will cause shortages.  The other popular solution, independent dispute resolution or arbitration, is simply a price control delayed because the arbitrator will base the provider’s payment on local rates that would also disrupt the market.

Surprise billing occurs when a patient receives care at one of their insurance in-network facilities, like a hospital.  The patient could unknowingly get care from a provider that works at the facility but is not in the insurance network and will send a balance, or surprise bill, weeks after the procedure, sometimes costing thousands of dollars.

On April 22, one of the largest unions in the country, The International Union of Operating Engineers, sent a letter to House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.).  The union represents more than 400,000 employees that operate a wide variety of equipment in different industries across the nation.  The letter asks the Democratic leaders to oppose rate-setting because such proposals “would give insurance companies outsized power to set artificially low reimbursement rates, reducing revenue that physicians and clinicians across the country depend on to keep the doors open.  This policy would likely lead to physician shortages and even facility closures in many vulnerable rural and underserved communities, just as these critical providers are desperately needed.”

While Citizens Against Government Waste (CAGW) usually does not agree with unions on most issues, we do agree that rate-setting is the wrong answer to fix surprise billing.  We agree this option would be particularly harmful in rural areas where hospitals and other healthcare facilities are already dealing with shortages of healthcare professionals.  It would also be problematic for emergency rooms, which are dealing with an unprecedented crisis.

However, CAGW disagrees with the union’s solution, independent dispute resolution.  An arbitrator is brought in to settle a payment dispute between the insurer and the out-of-network provider.  This is just delayed rate setting and raises costs.  New York is often cited as a success story because the state adopted arbitration to stop surprise billing and holds the patient harmless.  But, healthcare costs went up, not down, according to a November 5, 2019 NPR article that discussed an analysis undertaken by USC-Brookings.  The study showed that the arbitrator focuses on guidance given by the N.Y. law and generally the payment to the provider is higher. The author said, “Providers’ billed charges, or list prices, are unilaterally set, largely unmoored from market forces, and generally many times higher than in-network negotiated rates or Medicare rate.”

CAGW prefers an alternative route that would require truth in advertising and enforcement through applicable laws and regulators.  This proposal is discussed in “A Targeted Approach to Surprise Medical Billing” by Doug Badger and Brian Blase.  When an insurer advertises that a healthcare facility, like a hospital, is in their network and a hospital advertises it is within a certain insurer’s network, a patient should not receive a surprise bill, or balance bill, from an out-of-network provider that works in that facility.  Penalties would be established for both the insurer and hospital for false advertising for any medical service provided to a patient that utilized an in-network facility and got an out-of-network bill.  This would also apply to any emergency care provided at an in-work facility by an out-of-network provider. 

The likely result would be that the facility would reach an agreement or contract with the out-of-network provider and the insurer would work out an agreement with the hospital to avoid balance billing problems and the fines.

There are instances when a patient wants to use an out-of-network provider at an in-network healthcare facility and in a case like this, the patient must be given upfront information and a good faith estimate before the procedure.

When it is necessary for a patient to utilize emergency care at an out-of-network facility, a solution would be to prohibit balance billing and a reasonable reimbursement would be provided based on existing federal regulations.

While surprise billing has been suspended for some coronavirus-related care, proponents of the legislation that keeps coming up should not take advantage of the crisis to pass permanent surprise billing legislation.  CAGW agrees with the union that any legislation to solve balance billing should only be considered “once the immediate crisis of the novel coronavirus has subsided.”  Otherwise, patients and taxpayers will suffer more than they are already in this unprecedented time.

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