Understanding and navigating the health care system is more challenging for patients today than at any other time in history. The complexities and variations among and within insurance plans on issues of coverage, out-of-pocket costs, and payment for care are extraordinary. One of the most pressing examples is “surprise medical billing,” which has hit close to home for many. Such instances occur when a patient receives medical services and is unknowingly cared for by a clinician from outside of the patient’s insurance network. The predictable and understandable result is stress, anger, confusion, and despair.
Local and national policy makers are correctly focusing attention on this issue. When surprise billing occurs, patients are unfairly put in the middle of a matter that should be resolved by their health plan and provider. Corrective actions are long overdue.
Hospitals and physicians are united in their belief that patients should never receive a surprise bill and should only be responsible for what they would customarily pay for in-network care as specified by their insurance policy. In an effort to force change on behalf of our patients, the Massachusetts Medical Society and the Massachusetts Health & Hospital Association are supporting legislative efforts aimed at holding patients harmless, requiring transparency, demanding network adequacy, and insisting that information on care and coverage is easily accessible and easy to understand.
We believe the right solution should be modeled on a 2015 law adopted in New York. It has proved effective in protecting patients from surprise medical bills and has rightly taken them out of the middle of negotiations between health care providers and insurance companies. The law does so by holding patients harmless and then encouraging providers and insurers to negotiate a rate when unexpected out-of-network care happens. And, if that fails, by establishing an arbitration model that compels providers and insurers to reach resolution through an independent arbiter.
The New York model relies on “baseball-style” arbitration. If the provider and insurer cannot reach resolution on a payment amount, each side brings their “last, best offer” to the table. The arbiter picks one of the two offers and there is no middle ground. By eliminating the option of modification, it is incumbent upon each side to bring forward realistic, reasonable proposals.
In 2017, seven million people were treated in New York hospital emergency departments, and of those cases only 849 went to arbitration. The average cost of arbitration was $225 to $325 per case, paid by the losing side. Arbitration decisions have been pretty evenly split between providers and insurers, and all involved — patients, health care providers, insurers — support the law as a reasonable solution to a complex problem. The effect of the law on costs has been positive as well, with the growth of health care premiums in New York being significantly less than the national average.
A September 2019 report from New York’s Department of Financial Services found that through 2018, the arbitration approach has saved consumers over $400 million with respect to emergency services alone. The report deemed the law “a true success in bringing stakeholders together to solve the problem of excessive charges for emergency services and surprise bills.”
Despite the demonstrable success of the New York model, the insurance industry in Massachusetts is pushing for government-mandated “benchmarking” to determine rates paid to physicians. In other words, while the root cause of surprise billing is inadequate insurance networks, the insurers’ answer to this pressing problem is government rate-setting with no direct benefit to patients.
Benchmarking is inherently biased and would force clinicians to accept specific mandated rates based on often inaccurate data supplied by the insurance companies themselves. Most troubling, it would undermine patient access to care — especially in smaller communities where hospitals are struggling and access to physicians is limited. The heavy hand of government would create an unfair imbalance in the health care marketplace and insurers would have no incentive to engage physicians in building robust health care networks. The connected system of care we have all been working toward in Massachusetts would immediately become fragmented and disjointed. How do we know? It’s happening right now in California, following the recent enactment of a rate-setting approach to surprise billing.
The surprise billing issue is understandably one of great concern for our patients. We must immediately implement a solution that expands patient protections. At the same time, we must also preserve and advance patient access to health care services. The New York approach is a proven method to protect patients from surprise medical bills while ensuring their continued access to physicians and other committed caregivers. Massachusetts should follow its lead.
Dr. Maryanne C. Bombaugh is a practicing obstetrician/gynecologist and president of the Massachusetts Medical Society. Steve Walsh is president and CEO of the Massachusetts Health & Hospital Association.