In today’s political climate, it’s rare that both parties in Washington can see eye to eye on the need to tackle a pressing problem. But leaders on both sides of the aisle, as well as President Donald Trump, are all in agreement about ending surprise medical billing.
Still, they remain stuck on the details. In Congress, competing proposals have emerged based on existing policies that already have a track record at the state level. One of those proposals, just approved by the Senate Health, Education, Labor and Pensions Committee, is modeled after AB72, a law that California passed in 2016.
Three years later, we now know that this approach has major flaws that hurt patients, give significantly more power to insurance companies and put doctors out of business. Congress should shift gears before the rest of the country learns the hard way that California’s model will backfire badly.
So what is surprise billing? It happens when a patient receives care from a doctor or facility outside of his or her insurance network. Most of the time, patients have no idea they have gone out of network until the bill shows up in the mail. And in many cases, they have no control over whether they see an out-of-network doctor.
A frequent cause of surprise billing is surgery: Patients schedule a procedure at an in-network hospital but, without their knowledge, a member of the care team is an out-of network doctor, or in some cases, an out-of-network technician conducts a medical test. Patients have no protection from surprise bills in these cases, even though they have done nothing wrong. But insurance companies refuse to pay and pass the bill directly to the patient.
In response to surprise billing, California passed a law that misdiagnosed the problem and in many ways made the state’s health care system worse for both patients and providers. Rather than protecting patients by changing the way insurers reimburse for unexpected and emergency health care treatment, the state mandated a cap on reimbursement rates. In effect, insurance companies got a legal break from having to cover unexpected bills, even though patients regularly pay high premiums every month and expect their insurance to be there when they need it.
The California law stipulates that any out-of-network provider involved with a patient’s care at an in-network facility will be paid by the insurance company at “fair market value.” The Senate HELP bill is designed similarly.
If it becomes law, insurers will pay “median in-network” rates for out-of-network care. This sounds like a good idea on its face, but in practice it gives even more power to insurers, takes leverage away from doctors, causes even greater access challenges and ultimately hurts patients.
In their quest to end surprise billing, California lawmakers removed the ability of doctors to negotiate with insurance companies for competitive reimbursement rates. The Senate HELP bill will have the same effect.
In California, insurance companies now offer a non-competitive rate to providers, who have to decide between accepting an unreasonably low offer or being paid at the non-competitive rate created by the law. Both are losing propositions, but they foreshadow the future of America’s health care system if the HELP bill becomes law.
When insurance companies pay non-competitive rates, doctors go out of business. This uncomfortable lesson in economics undermines the entire purpose of anti-surprise billing legislation.
Patients should be able to see a doctor when they need one, and they should not be blindsided by unexpected costs that they are unable to control. But patients can’t see a doctor when doctors aren’t able to continue their practice.
California is experiencing a crippling doctor shortage, with nearly every region of the state underserved when it comes to primary care physicians. The problem is particularly bad in rural and agricultural areas — just as it will be across the country if Washington decides to “fix” surprise billing by following the California model.
There’s more than one way to fix surprise billing. States such as New York have implemented successful systems that protect patients through an independent arbitration process that does not give outsized power to insurance companies. The California model, though, is less of an example and more of a warning.
Congress should pause and seriously reconsider whether the country should follow California’s lead toward more empowered insurance companies and fewer doctors, which result in lower quality of care. The country can do better.
Dr. Jeffrey Poage, MD, is the president-elect of the California Society of Anesthesiologists.
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