By BOB HERTZ
On April 3, the Secretary of Health and Human Services, Alex Azar, announced that the federal government would pick up the tab for testing and treating all uninsured Americans for COVID-19.
Azar specifically promised that:
a) hospitals would be paid the same prices they receive for Medicare patients; and
b) hospitals which accept the funds would be barred from sending any additional bills to patients.
Did anyone notice the last detail? This is a Republican, who is promising to protect the vulnerable.
In the coming months, thousands of COVID-19 patients will be routed through a convoluted web of providers. At various points in their treatment. they will be susceptible to receiving out-of-network care — and the staggering bills that often follow.
COVID-19 patients will rarely have the luxury to choose a network hospital, or lab, or specialist. Often, they will need to be treated at any facility that is still open.
Hospitals will be forced to an all-hands-on-deck approach. Patients may have to stay for weeks, needing labor-intensive staffing and anything but a check in-check out mentality.
A patient can do everything right and still face substantial surprise bills. Take someone who fears that he may have contracted COVID-19. After self-quarantining for a week, he develops severe shortness of breath. His wife rushes him to the nearest in-network emergency room. But he’s actually seen by an out-of-network doctor — who may soon send a hefty bill for the visit. If he needs to visit an out-of-network urgent care center, emergency room, or drive-up testing site, he could face additional out-of-pocket costs. Federal law does not prohibit these providers from balance billing.
Matters get worse if his local in-network hospital is approaching capacity, and he must be sent to a hospital across town with spare beds. If the second hospital is outside his insurance network, he could potentially receive a second surprise bill. A third could come from the ambulance that transfers him — it too might not be in-network, and no one will think to check during a crisis. He could get a fourth surprise bill if his coronavirus tests are sent to an out-of-network lab. And so on.
Usually his insurer will refuse to cover the extra costs, and many of the providers will refuse to negotiate. The bills will go to collection.
Months later, after media exposure or perhaps a class-action lawsuit, his bill might be dismissed. But that will be too late for his credit score to recover, and it may cause him financial headaches for years.
Surprise bills are particularly reprehensible during this pandemic, when frightened consumers are forced to either seek health care services or risk transmitting a potentially deadly disease.
This is an issue that only Washington can fix. Some states have taken steps to protect some of their residents from surprise bills– but this is far from universal. Besides, states are prevented by law from regulating large employer self-funded health plans. If Congress doesn’t act on this, nobody can.
(However. Gov. Ned Lamont of Connecticut did recently announce a superb executive order…)
Here is what we must demand:
During an epidemic, all hospitals and all doctors have to be available without extra charges. Providers cannot be allowed to bill for more than the patient’s network fee schedule allows.
For example, if a patient’s Aetna policy pays $4,000 a day for ICU care at a network hospital, then the charge will also be $4,000 if the patient must use a different non-network facility.
Needless to say, all doctors who practice in a network facility can only bill at network rates. This will regulate the conduct of physicians—especially the ones patients don’t choose themselves. Not coincidentally, surprise bills come far more often from ER doctors, anesthesiologists, radiologists, and pathologists than from cardiologists or internists..
Support for this kind of patient protection is non-partisan. In fact, the conservative Heritage Foundation, has proposed the following laws:
- First, Congress should require healthcare providers to supply a good-faith estimate of the cost of scheduled medical care before it occurs, unless the patient declines an estimate. Providers that refuse to supply an estimate before providing care should not be able to “balance bill” afterward.
- Second, Congress should protect consumers against false and misleading information by establishing penalties for any insurer that falsely represents a facility as being in-network, and for any facility that presents itself as being in-network if doctors balance-bill for services they provide at that facility.
- Third, Congress should use existing regulations to ban balance billing for non-network emergency care.
In these limited, emergency situations, Congress should require insurers to pay, and providers to accept, reimbursement rates spelled out in existing federal regulations.
Actually, we came close to having reform last fall. As described by Daniel Block in the April-May-June issue of Washington Monthly, House and Senate committees announced a deal to at least limit surprise bills on December 8. The insurance industry endorsed it. So did consumer advocates. The White House quickly signaled support and pushed for its inclusion in a must-pass December 20 spending package.
But over the next 48 hours, hospitals and doctors’ groups came out against the proposal. In the Senate, Minority Leader Chuck Schumer reportedly signaled that he was uncomfortable pushing forward with the bill. Richard Neal and Kevin Brady, the top Democrat and Republican on the powerful House Ways and Means Committee, put out their own surprise billing proposal. It was a classic legislative maneuver designed to derail progress.
It succeeded. Congress did nothing. The December 20 deadline came and went.
Again in March, with the huge CARES Act being formed, surprise billing could have been stopped.
But the day before the CARES vote, word spread among lawmakers and lobbyists: Despite an active push, surprise billing reform language had not made it into the final version of the Act.
“Let’s be clear about what is happening,” Jon Walker of The Intercept has tweeted. “Democrats pretend they want to improve healthcare and when they have a chance they take the side of wealthy for-profit companies with the most ghoulish business practices imaginable.”
Actually, acccording to some legal scholars, we should not even need new legislation. Surprise billing is already illegal, they claim, and states’ attorneys generals could be invalidating those bills right now.
Our key motivation is that mutual assent is at the core of commercial transactions. Chargemaster and out-of-network prices, in contrast, are prices that neither patients nor payers accepted in advance nor are they prices to which payers would ever assent. Instead, the law entitles providers, as one court ruled, to “the average amount that [the provider] would have accepted as full payment from third-party payers such as private insurers and federal healthcare programs.” The law therefore entitles providers to collect no more than prevailing negotiated market prices for any OON services.
Providers have no legal authority to collect charges that exceed market prices for OON services, and thus neither patients nor payers are under any obligation to pay such chargemaster prices. Consistent efforts to enforce this interpretation of contract law would go far in addressing abuses. Moreover, judges, public law enforcement officials, and private attorneys can use this interpretation to combat abusive or harassing efforts that providers pursue to collect such charges. And, perhaps most important, payers that form narrow provider networks can be confident that they will not have to pay extortive prices if their insureds require emergency OON care.
Billing patients for prices that they did not agree to—prices that no one would ever agree to—and then demanding payment, often through collection services, is abusive.
We reviewed contract law and examined the law’s handling of cases where prices have not been specified in advance, which are the controlling authority to guide courts in disputes over surprise and out of network billing problems, and found that providers have no real legal authority to collect inflated bills, Courts are divided in their rulings on this issue, not because they disagree with our legal analysis, but because they don’t understand how medical bills really work.
We urge state attorneys general to challenge provider claims for charges on behalf of vulnerable patients. Patients and their attorneys can also challenge these claims directly, without waiting for delayed and cumbersome legislations or regulations. Courts can also support judges administratively to help them reach a reasonable and uniform definition of ’market price’ for their jurisdiction that would end these practices immediately.
For more details, see:
Battling the Chargemaster: A Simple Remedy to Balance Billing for Unavoidable Out-of-Network Care. Barak D. Richman, JD, PhD; Nick Kitzman, JD; Arnold Milstein, MD, MPH; and Kevin A. Schulman, MD
Surprise billing is generally not a problem with Medicare or Medicaid.
But for others under age 65, we need new regulations which must be non-negotiable. State health departments must be empowered to cancel overcharges, which will still occur despite regulations.
If we can establish reforms now, in a time of crisis, the new laws have a chance to be permanent when the crisis is over. For now, we must:
- Immediately ban providers from sending balance bills for out-of-network health care services related to the coronavirus.
- Require insurers to make a payment for these services on a timely basis and limit the patient’s responsibility to in-network cost-sharing or no cost-sharing to the extent that is required under other emergency provisions. In addition, plans would apply in-network deductibles and maximum out-of-pocket limits to health care services related to the coronavirus.
- Create a payment standard, based on Medicare rates, to specify the amount owed by the insurer to the out-of-network provider.
Bob Hertz is a retired insurance broker. He learned about health care from Uwe Reinhardt, Joseph White, Dr. Robert Evans, and George Halvorson a fellow Minnesotan.