[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                       EXAMINING SURPRISE BILLING:
                        PROTECTING PATIENTS FROM
                             FINANCIAL PAIN

=======================================================================

                                 HEARING

                               BEFORE THE

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS


                         COMMITTEE ON EDUCATION
                               AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, APRIL 2, 2019

                               __________

                           Serial No. 116-14

                               __________

      Printed for the use of the Committee on Education and Labor

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: www.govinfo.gov
                                   or
              Committee address: https://edlabor.house.gov              
              
                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
36-589 PDF                  WASHINGTON : 2019                     
          
--------------------------------------------------------------------------------------              
              
              
              
                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

Susan A. Davis, California           Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona            Ranking Member
Joe Courtney, Connecticut            David P. Roe, Tennessee
Marcia L. Fudge, Ohio                Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan,      Tim Walberg, Michigan
  Northern Mariana Islands           Brett Guthrie, Kentucky
Frederica S. Wilson, Florida         Bradley Byrne, Alabama
Suzanne Bonamici, Oregon             Glenn Grothman, Wisconsin
Mark Takano, California              Elise M. Stefanik, New York
Alma S. Adams, North Carolina        Rick W. Allen, Georgia
Mark DeSaulnier, California          Francis Rooney, Florida
Donald Norcross, New Jersey          Lloyd Smucker, Pennsylvania
Pramila Jayapal, Washington          Jim Banks, Indiana
Joseph D. Morelle, New York          Mark Walker, North Carolina
Susan Wild, Pennsylvania             James Comer, Kentucky
Josh Harder, California              Ben Cline, Virginia
Lucy McBath, Georgia                 Russ Fulcher, Idaho
Kim Schrier, Washington              Van Taylor, Texas
Lauren Underwood, Illinois           Steve Watkins, Kansas
Jahana Hayes, Connecticut            Ron Wright, Texas
Donna E. Shalala, Florida            Daniel Meuser, Pennsylvania
Andy Levin, Michigan*                William R. Timmons, IV, South 
Ilhan Omar, Minnesota                    Carolina
David J. Trone, Maryland             Dusty Johnson, South Dakota
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair

                   Veronique Pluviose, Staff Director
                 Brandon Renz, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                FREDERICA S. WILSON, Florida, Chairwoman


Donald Norcross, New Jersey          Tim Walberg, Michigan
Joseph D. Morelle, New York            Ranking Member
Susan Wild, Pennsylvania             David P. Roe, Tennessee
Lucy McBath, Georgia                 Rick W. Allen, Georgia
Lauren Underwood, Illinois           Francis Rooney, Florida
Haley M. Stevens, Michigan           Jim Banks, Indiana
Joe Courtney, Connecticut            Russ Fulcher, Idaho
Marcia L. Fudge, Ohio                Van Taylor, Texas
Josh Harder, California              Steve C. Watkins, Jr., Kansas
Donna E. Shalala, Florida            Ron Wright, Texas
Andy Levin, Michigan                 Dan Meuser, Pennsylvania
Lori Trahan, Massachusetts           Dusty Johnson, South Dakota
(VACANT)
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 2, 2019....................................     1

Statement of Members:
    Walberg, Hon. Tim, Ranking Member, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     4
        Prepared statement of....................................     6
    Wilson, Hon. Frederica S., Chairwoman, Subcommittee on 
      Health, Employment, Labor, and Pensions....................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Hoadley, Dr. Jack, Ph.D., Research Professor Emeritus Health 
      Policy Institute, McCourt School of Public Policy, 
      Georgetown University......................................    62
        Prepared statement of....................................    65
    Isasi, Mr. Frederick, J.D., MPH, Executive Director, Families 
      USA........................................................    51
        Prepared statement of....................................    53
    Schuman, Ms. Ilyse, Senior Vice President, Health Policy, 
      American Benefits Council..................................    35
        Prepared statement of....................................    37
    Young, Ms. Christen Linke, J.D. Fellow, USC-Brookings 
      Schaeffer Initiative on Health Policy......................     8
        Prepared statement of....................................    10

Additional Submissions:
    Foxx, Hon. Virginia, a Representative in Congress from the 
      State of North Carolina:
        Prepared statement from the American Medical Association 
          (AMA)..................................................   101
        Prepared statement from AHIP.............................   107
        Letter dated April 2, 2019, from the American Heart 
          Association............................................   117
        Letter dated April 2, 2019, from the American Hospital 
          Association, American Medical Association, Federation 
          of American Hospitals..................................   120
    Morelle, Hon. Joseph D., a Representative in Congress from 
      the State of New York:
        Letter dated April 2, 2019, from Hanys 



    Scott, Hon. Robert C. ``Bobby'', a Representative in Congress 
      from the State of Virginia:
        Letter dated April 1, 2019 from the American College of 
          Emergency Physicians...................................   126
        Letter dated April 2, 2019...............................   133
        Prepared statement from the American Medical Association 
          (AMA)..................................................   137
        Prepared statement from American Association of Nurse 
          Anesthetists...........................................   143
        Prepared statement from American Academy of Family 
          Physicians.............................................   147
        Prepared statement from the American Hospital Association   149
        Letter dated February 20, 2019...........................   155
        Prepared statement from the College of American 
          Pathologists...........................................   157
        Letter dated April 9, 2019 from Community Catalyst.......   161
    Mr Walberg:
        Letter dated April 2, 2019...............................   166
    Questions submitted for the record by:
        Fulcher, Hon. Russ, a Representative in Congress from the 
          State of Idaho.........................................   178
        Norcross, Hon. Donald, a Representative in Congress from 
          the State of New Jersey................................   174
        Roe, Hon. David P., a Representative in Congress from the 
          State of Tennessee 


        Stevens, Hon. Haley M., a Representative in Congress from 
          the State of Michigan 



    Responses to questions submitted for the record by:
        Mr. Isasi................................................   182
        Mr. Hoadley..............................................   191
        Ms. Schuman..............................................   194
        Ms. Young................................................   201

 
  EXAMINING SURPRISE BILLING: PROTECTING PATIENTS FROM FINANCIAL PAIN

                              ----------                              


                         Tuesday, April 2, 2019

                        House of Representatives

                    Committee on Education and Labor

        Subcommittee on Health, Employment, Labor, and Pensions

                            Washington, DC.

                              ----------                              

    The subcommittee met, pursuant to notice, at 10:15 a.m., in 
room 2175, Rayburn House Office Building. Hon. Frederica S. 
Wilson [chairwoman of the committee] presiding.
    Present: Representatives Wilson, Norcross, Morelle, Wild, 
McBath, Underwood, Stevens, Courtney, Shalala, Levin, Trahan, 
Walberg, Roe, Allen, Banks, Taylor, Watkins, Wright, Meuser, 
and Johnson.
    Also present: Representatives Scott and Foxx.
    Staff present: Nekea Brown, Deputy Clerk; Ilana Brunner, 
General Counsel Health and Labor; Emma Eatman, Press Aide; 
Daniel Foster, Health and Labor Counsel; Mishawn Freeman, Staff 
Assistant; Christian Haines, General Counsel Education; 
Stephanie Lalle, Deputy Communications Director; Andre Lindsay, 
Staff Assistant; Kota Mitzutani, Staff Writer; Max Moore, 
Office Aide; Merrick Nelson, Digital Manager; Veronique 
Pluviose, Staff Director; Banyon Vassar, Deputy Director of 
Information Technology; Marty Boughton, Minority Press 
Secretary; Courtney Butcher, Minority Coalitions and Members 
Services Coordinator; Rob Green, Minority Director of Workforce 
Policy; Sarah Martin, Minority Professional Staff Member; 
Hannah Matesic, Minority Director of Operations; Kelley McNabb, 
Minority Communications Director; Alexis Murray, Minority 
Professional Staff Member; Brandon Renz, Minority Staff 
Director; Ben Ridder, Minority Legislative Assistant; Meredith 
Schellin, Minority Deputy Press Secretary and Digital Advisor; 
and Heather Wadyka, Minority Staff Assistant.
    Chairwoman WILSON. The Subcommittee on Health, Employment 
and Labor and Pensions will come to order. Welcome, everyone.
    I note that a quorum is present so I ask unanimous consent 
that Ms. Schrier of Washington and Mrs. Davis of California be 
permitted to participate in today's hearing with the 
understanding that their questions will come only after all 
members of the Subcommittee on Health, Employment, Labor and 
Pension on both sides of the aisle who are present have had an 
opportunity to question the witnesses. Without objection. So 
ordered.
    The subcommittee is meeting today in a hearing to receive 
testimony on ``Examining Surprise Billing: Protecting Patients 
from Financial Pain.''
    Pursuant to committee rule 7(c), opening statements are 
limited to the chair and the ranking member. This allows us to 
hear from our witnesses sooner and provides all members with 
adequate time to ask questions.
    I recognize myself now for the purpose of making an opening 
statement. We are here this morning to examine surprise medical 
billing, a serious issue that can disrupt if not devastate the 
lives of individuals and families.
    This is the first hearing the U.S. Congress has held on 
surprise billing, and I am proud that our subcommittee is 
taking the lead on this important issue. It is my hope that 
this will be the first of many productive, bipartisan 
conversations.
    Surprise medical bills occur when patients covered by 
health insurance are subject to higher than expected out-of-
pocket costs for care received from a provider who is outside 
of their plan's network. The victims of surprise medical 
billing often of have no control over whether their medical 
provider is in-or out-of-network.
    With one infamous case, a young San Francisco woman named 
Nina Dang suffered a severe bike accident. She was barely lucid 
when a bystander called an ambulance and took her to an 
emergency room at a nearby hospital. Before she knew it, 
doctors had done X-rays and scans and put her broken arm in a 
splint, and then sent her on her way.
    A few months later, Nina was hit with a $20,000 medical 
bill because the hospital, which she did not choose, was an 
out-of-network facility.
    But even patients who are able to take precautions to avoid 
out-of-network costs during a medical emergency are not immune 
from surprise bills.
    Scott Kohan suffered a violent attack one night in Austin, 
Texas. He woke up in an emergency room with a broken jaw, a 
throbbing headache, and staples in his head. Despite his shock 
and immense pain, Scott took out his phone and searched through 
his insurer's website to make sure he was laying in an in-
network hospital bed. When he found out it was, he proceeded 
with a necessary jaw surgery.
    Imagine Scott's frustration and devastation when he 
received a surprise medical bill for nearly $8,000. It turned 
out that the emergency room was in his insurance network, but 
the oral surgeon who worked in the ER was not.
    These stories have been documented in detail by Vox 
reporter Sarah Kliff. These are not isolated incidents. 
According to a survey, 50 percent--57 percent of consumers 
report they have received an unexpected medical bill that they 
thought would be covered by their insurance.
    A separate survey found that 7 in 10 patients who have 
received unaffordable out-of-network medical bills were unaware 
that their provider was out-of-network at the time they 
received the services. This issue requires bold action to 
protect patients from the financial pain of surprise medical 
bills.
    States have taken steps forward by enacting innovative, 
bipartisan billing laws. New York, New Hampshire, Connecticut, 
New Jersey, Maryland, Illinois, Oregon, California, and my home 
State of Florida have all adopted strong reforms that protect 
consumers.
    Importantly, all of these solutions either hold patients 
harmless against charges or prohibit the practice of billing--
of balance billing, where a patient is sent a bill for the 
difference between what insurance will pay and what the 
provider charges.
    We have also seen many States pioneering new ways to 
resolve billing disputes between providers and insurers in ways 
that, most importantly, take consumers out-of-the middle. These 
State-level solutions are promising, and witnesses today will 
be able to provide this subcommittee with details on how such 
efforts are working in States where they may be falling short.
    However, only Congress can fully close the gaps and 
loopholes that leave patients vulnerable to severe financial 
distress. Most Americans live in States that have not passed 
major reforms regarding surprise bills. And even in States that 
have enacted reforms, they are unable to regulate self-insured 
plans, which cover more than 60 percent of individuals in 
employer-sponsored coverage.
    Health care has not recently been an area of bipartisan 
consensus. Unfortunately, that has only been re-affirmed by the 
administration's actions last week to not defend in court the 
Affordable Care Act and its protections for people with pre-
existing conditions.
    But I am hopeful that this is an opportunity for us to work 
together on behalf of our constituents. Surely, we can all 
agree that a patient should not have to spend the last few 
minutes before emergency surgery researching whether everyone 
in the operating room is in-network. And Dr. Roe came over to 
me this morning and said I am so glad that you are having this 
hearing.
    I am grateful to the witnesses for their time and testimony 
here today and I look forward to working with my colleagues and 
with stakeholders as we develop a solution to the challenge of 
surprise medical billing.
    Now I want to recognize Ranking Member Walberg for the 
purpose of an opening statement. The esteemed Representative 
Walberg.
    [The statement of Chairwoman Wilson follows:]

      Prepared Statement of Hon. Frederica S. Wilson, Chairwoman, 
        Subcommittee on Health, Employment, Labor, and Pensions

    We are here this morning to examine surprise medical billing a 
serious issue that can disrupt, if not devastate, the lives of 
individuals and families.
    This is the first hearing the U.S. Congress has held on surprise 
billing, and I am proud that our subcommittee is taking the lead on 
this important issue. It is my hope that this will be the first of many 
productive, bipartisan conversations.
    Surprise medical bills occur when patients covered by health 
insurance are subject to higher than expected out-of-pocket costs for 
care received from a provider who is outside their plan's network.
    The victims of surprise medical billing often have no control over 
whether their medical provider is in-or out-of-network.
    In one infamous case, a young San Francisco woman named Nina Dang 
suffered a severe bike accident. She was barely lucid when a bystander 
called her an ambulance that took her to an emergency room at a nearby 
hospital.
    Before she knew it, doctors had done X-rays and scans and put her 
broken arm in a splint, and then sent her on her way. A few months 
later, Nina was hit with a $20,000 medical bill because the hospital 
which she did not choose was an out-of-network facility.
    But even patients who are able to take precautions to avoid out-of-
network costs during a medical emergency are not immune from surprise 
bills.
    Scott Kohan suffered a violent attack one night in Austin, Texas. 
He woke up in an emergency room with a broken jaw, a throbbing 
headache, and staples in his head. Despite his shock and immense pain, 
Scott took out his phone and searched through his insurer's website to 
make sure he was laying in an in-network hospital bed.
    When he found out it was, he proceeded with a necessary jaw 
surgery.
    Imagine Scott's frustration when he received a surprise medical 
bill for nearly $8,000. It turned out the emergency room was in his 
insurance network, but the oral surgeon who worked in that ER was not.
    These stories, which have been documented in detail by Vox reporter 
Sarah Kliff, are not isolated incidents.
    According to a recent survey, 57 percent of consumers report they 
have received an unexpected medical bill that they thought would be 
covered by their insurance. A separate survey found that seven in 10 
patients who have received unaffordable out-of-network medical bills 
were unaware that their provider was out-of-network at the time they 
received the services.
    This issue requires bold action to protect patients from the 
financial pain of surprise medical bills.
    States have taken steps forward by enacting innovative, bipartisan 
surprise billing laws. New York, New Hampshire, Connecticut, New 
Jersey, Maryland, Illinois, Oregon, California, and my home State of 
Florida have all adopted strong reforms that protect consumers.
    Importantly, all of these solutions either hold patients harmless 
against charges or prohibit the practice of balance billing, where a 
patient is sent a bill for the difference between what insurance will 
pay and what the provider charges.
    We have also seen many States pioneering new ways to resolve 
billing disputes between providers and insurers in ways that, most 
importantly, take consumers out of the middle.
    These State-level solutions are promising, and witnesses today will 
be able to provide this subcommittee with details on how such efforts 
are working in States, or where they may be falling short.
    However, only Congress can fully close the gaps and loopholes that 
leave patients vulnerable to severe financial distress.
    Most Americans live in States that have not passed major reforms 
regarding surprise bills. And even in States that have enacted reforms, 
they are unable to regulate self-insured plans, which cover more than 
60 percent of individuals in employer-sponsored coverage.
    Health care has not recently been an area of bipartisan consensus. 
Unfortunately, that has only been re-affirmed by the administration's 
actions last week to not defend in court the Affordable Care Act and 
its protections for people with pre-existing conditions.
    But I am hopeful that this is an opportunity for us to work 
together on behalf of our constituents.
    Surely, we can all agree that a patient should not have to spend 
the last few minutes before emergency surgery researching whether 
everyone in the operating room is in-network.
    I am grateful to the witnesses for their time and testimony here 
today, and I look forward to working with my colleagues and with 
stakeholders as we develop a solution to the challenge of surprise 
medical billing.
                                 ______
                                 
    Mr. WALBERG. I could get used to that, Madame Chairperson. 
Thank you. And thank you for this hearing. I think along with 
Dr. Roe and the rest of my Subcommittee members, and I think we 
concur that this is an issue we ought to be dealing with.
    And we shouldn't delay in considering options even as we 
stand on this side of the aisle also very strongly supportive 
of taking care of preexisting conditions as well. This 
certainly falls into that area.
    The high and rising cost of health care is a significant 
worry for families, workers, and employers across the country. 
Concerns about high premiums, high deductibles, and drug prices 
are known and well documented. But the issue of surprise 
billing has rapidly risen to the forefront of people's worries 
when it comes to health care.
    Surprise billing, sometimes called balance billing happens 
when a patient visits an--out-of-network care facility or even 
when they are at an--in-network care facility but are seen by a 
doctor who is not in their network.
    The story of surprise billings may go something like this. 
A worker who is having trouble breathing visits an emergency 
room at a hospital in his or her health insurance network. 
While there, they receive an x-ray of their chest and is seen 
by a doctor who is, who prescribes medicine to ease the strain 
on the lungs.
    Following the visit, he or she gets a bill--a high bill for 
the trip to the emergency room. Even though the hospital was 
technically in in-network, the doctor who saw him was not, 
leaving him to pay for the cost of treatment.
    This understandably causes frustration for individuals who 
thought they did everything correct. It can also cause a high 
degree of uncertainty and stress for workers and families as 
they try to find the money to pay for the health care service 
they believed would be handled by their insurance. According to 
a 2018 poll from the Kaiser Family Foundation, surprise medical 
bills are the leading health care concern for Americans 
surpassing concerns about high premium, high deductibles, and 
rising drug costs.
    39 percent of insured working age adults reported they had 
received a surprise medical bill in the past year from a 
doctor, hospital, or lab that they thought was covered by their 
insurance. Of the 39 percent of individuals who received 
surprise medical bills, 50 percent owed more than $500.
    The fear of an unexpected medical bill can be paralyzing 
and we don't want Americans foregoing care they need for fear 
that they will end up responsible for medical expenses that 
they can't afford.
    We need solutions that equip patients with the information 
they need to confidently seek treatment without the worry they 
will faced a huge surprise bill. About 60 percent of workers or 
110 million individuals are insured through employer-sponsored 
health care plans under the Employee Retirement Income Security 
Act, ERISA.
    Employer provided coverage is important to workers around 
the country. Employers can custom design a health care plan 
best suited to their workers needs which helps them retain 
their work force and also an important recruiting tool.
    I just had a conversation with an employer this morning, a 
major employer in Detroit, who as a result of opportunities now 
has looked for additional benefits that they can supply for 
their employees.
    A 2018 study from AHIP found that over 70 percent of 
workers are satisfied with their employer sponsored coverage.
    22 States have laws addressing surprise billing. However, 
under ERISA, self-insured employer-sponsored plans are only 
subject to Federal rules and protections and State rules and 
regulations on health insurance do not apply.
    Promoting public policy solutions that allow employers to 
continue offering high quality health coverage is good for 
employers and employees alike. That's why we are here today, to 
listen and learn from a variety of stakeholders about different 
proposals to address this serious issue.
    With this in mind, we recognize that any potential Federal 
policy solution to end the practice of surprise billing must 
preserve important ERISA protections and ensure that self-
insured plans remain subject to Federal law alone.
    Committee Republicans are committed to pursuing policies 
that lower costs, expand choice, and end surprise billing for 
insured individuals. Workers and families deserve certainty 
about their health care coverage and I look forward to 
discussing how we can provide a better way forward for the 
American people. Thank you and I yield back.
    [The statement of Mr. Walberg to follows:]

Prepared Statement of Hon. Tim Walberg, Ranking Member, Subcommittee on 
                Health, Employment, Labor, and Pensions

    Thank you for yielding.
    The high and rising cost of health care is a significant worry for 
families, workers, and employers across the country. Concerns about 
high premiums, high deductibles, and drug prices are known and well-
documented, but the issue of surprise billing has rapidly risen to the 
forefront of peoples' worries when it comes to health care.
    Surprise billing, sometimes called balance billing, happens when a 
patient visits an out-of-network care facility, or even when they are 
at an in-network facility but are seen by a doctor who is not in their 
network. The story of surprise billing may go something like this: A 
worker who's having trouble breathing visits an emergency room at a 
hospital in his health insurance network. While there, he receives an 
X-ray of his chest and is seen by a doctor who prescribes medicine to 
ease the strain on his lungs. Following the visit, he gets a bill a 
high bill for the trip to the emergency room. Even though the hospital 
was technically in-network, the doctor who saw him was not, leaving him 
to pay for the cost of the treatment.
    This understandably causes frustration for individuals who thought 
they did everything correct. It can also cause a high degree of 
uncertainty and stress for workers and families as they try to find the 
money to pay for the health care service they believed would be handled 
by their insurance.
    According to a 2018 poll from the Kaiser Family Foundation, 
surprise medical bills are the leading health care concern for 
Americans, surpassing concerns about high premiums, high deductibles, 
and rising drug costs. Thirty-nine percent of insured working-age 
adults reported they had received a surprise medical bill in the past 
year from a doctor, hospital, or lab that they thought was covered by 
their insurance. Of the 39 percent of individuals who received surprise 
medical bills, 50 percent owed more than $500.
    The fear of an unexpected medical bill can be paralyzing, and we 
don't want Americans forgoing care they need for fear that they'll end 
up responsible for a medical expense they can't afford. We need 
solutions that equip patients with the information they need to 
confidently seek treatment without the worry they'll face a huge 
surprise bill.
    About 60 percent of workers, or 110 million individuals, are 
insured through employer-sponsored health care plans under the Employee 
Retirement Income Security Act (ERISA). Employer-provided coverage is 
important to workers around the country. Employers can custom design a 
health care plan best-suited to their workers' needs, which helps them 
retain their work force and is also an important recruiting tool. A 
2018 study from AHIP found that over 70 percent of workers are 
satisfied with their employer-sponsored coverage.
    Twenty-two States have laws addressing surprise billing; however, 
under ERISA, self-insured employer-sponsored plans are only subject to 
Federal rules and protections, and State rules and regulations on 
health insurance do not apply.
    Promoting public policy solutions that allow employers to continue 
offering high-quality health coverage is good for employers and 
employees alike. That's why we're here today to listen and learn from a 
variety of stakeholders about different proposals to address this 
serious issue. With this in mind, we recognize that any potential 
Federal policy solutions to end the practice of surprise billing must 
preserve important ERISA protections and ensure that self-insured plans 
remain subject to Federal law alone.
    Committee Republicans are committed to pursuing policies that lower 
costs, expand choice, and end surprise billing for insured individuals. 
Workers and families deserve certainty about their health care 
coverage, and I look forward to discussing how we can provide a better 
way forward for the American people.
                                 ______
                                 
    Chairwoman WILSON. Without objection all other members who 
wish to insert written statements into the record may do so by 
submitting them to the committee electronically in Microsoft 
Word format by 5 o'clock p.m. on April 16, 2019. I will now 
introduce our witnesses.
    Christen Linke Young is a fellow at USC-Brookings Schaeffer 
Initiative for Health Policy. Welcome.
    Ilyse Schuman is a Senior Vice President for Health Policy 
at the American Benefits Council. Welcome.
    Frederick Isasi is the Executive Director of Families USA, 
a leading voice of health care consumers. Thank you.
    Dr. Jack Hoadley is a Research Professor Emeritus at the 
McCourt School of Public Policy at Georgetown University. 
Welcome.
    We appreciate all of the witnesses for being here today and 
look forward to your testimony. Let me remind the witnesses 
that we have read your written statements and they will appear 
in full in the hearing record.
    Pursuant to committee rule 7(d) and committee practice, 
each of you is asked to limit your oral presentation to 5 
minutes as a summary of your written statement.
    Let me also remind the witnesses that pursuant to Title 18 
of the U.S. Code Section 1001 it is illegal to knowingly and 
willfully falsify any statement representation, writing, 
document or material fact presented to Congress or otherwise 
conceal or cover up a material fact.
    Before you begin your testimony, please remember to press 
the button on the microphone in front of you so that it will 
turn on and the members can hear you. As you begin to speak, 
the light in front of you will turn green. After 4 minutes the 
light will turn yellow to signal that you have 1 minute 
remaining. When the light turns red, your 5 minutes have 
expired and we ask that you wrap it up.
    We will let the entire panel make their presentations 
before we move to member questions. When answering a question 
please remember to once again turn your microphone on. I will 
first recognize Ms. Young.

STATEMENT OF CHRISTEN LINKE YOUNG, J.D., FELLOW, USC--BROOKINGS 
     SCHAEFFER INITIATIVE ON HEALTH POLICY, THE BROOKINGS 
                          INSTITUTION

    Ms. YOUNG. Thank you. Chairwoman Wilson, Ranking Member 
Walberg, members of the subcommittee, thank you for the 
opportunity to testify today. I am Christen Linke Young, a 
Fellow with the USC-Brookings Schaeffer Initiative for Health 
Policy. My testimony today is based on research conducted with 
a number of talented coauthors and reflects my personal views.
    Surprise out-of-network bills arise when a consumer 
receives care from an out-of-network provider in situations 
that they cannot reasonably control. One common example is an 
out-of-network anesthesiologist at an in-network hospital. But 
these bills can arise for many services. Emergency department, 
pathology, and even neonatology.
    Situations like these, where a patient is treated by an 
out-of-network provider that she did not choose are common. 
Studies suggest that about 20 percent of emergency department 
visits and 10 percent of elective inpatient care stays involve 
at least one out-of-network provider, and about half of 
ambulance rides are out-of-network.
    The bills patients receive under these circumstances can be 
quite large. The existence of surprise bills and their large 
sizes reflect a market failure. For most types of physicians 
joining insurance company networks is standard because many 
patients are not willing to bear higher out-of-network costs. 
But for types of physicians that patients do not choose, this 
logic doesn't apply.
    Emergency physicians and anesthesiologists receive a flow 
of patients based on individuals electing care at the hospital 
in which they practice. And that volume will be the same 
regardless of whether the physician is in-or out-of-network. 
Because volume does not depend on prices set by providers in 
these no choice specialties, going out-of-network frees them to 
bill patients at essentially any rate they choose. And, as 
would be expected, we see that physician specialties that are 
able to bill out-of-network have extraordinarily high charges 
compared to other doctors.
    For example, for most physician types, median out-of-
network charges are about double what Medicare pays for the 
same service. But for anesthesiologists and emergency medicine 
physicians, charges are about five times greater than the 
equivalent Medicare payment.
    To be sure, many of these providers do still choose to join 
insurance networks. That may be because they find it 
distasteful to bill patients directly or they prefer the ease 
of collecting from insurers. But when they do go in-network, 
they appear to receive some of the highest in-network rates in 
the health care industry.
    Whereas the in-network payment rate across many similar 
specialties averages about 125 percent of the Medicare rate for 
the service, the available data suggests that the average in-
network rate for anesthesiologists and emergency medicine 
physicians is roughly three times the Medicare rate.
    One way to understand these very high in-network rates is 
that these physician types exploit the fact that they could 
remain out-of-network to demand very high payment rates when 
they do go in-network. Payment rates more than double what 
their peer physicians who cannot stay out-of-network receive.
    And the impact is felt broadly by consumers of health care. 
Sometimes, out-of-network care generates an eye-popping 
surprise bill that ends up in the news. But in many other 
cases, the insurer agrees to pay the very high charge, and 
this, along with high in-network rates, drives up health care 
premiums for all of us.
    Policymakers who want to solve this problem need to correct 
the market failure and create an environment where these 
providers face a more typical set of incentives. There are two 
basic ways to approach this solution.
    The first is to establish an amount that these physicians 
will be paid when they deliver care out-of-network. 
Policymakers should establish the out-of-network price for the 
service, either directly or through arbitration, prohibit 
balance billing by the provider above this amount, and require 
that the insurer treat it as in-network.
    The goal is not to establish the exactly correct payment 
rate for the service, but rather to establish conditions that 
diminish the attractiveness of the out-of-network option and 
lead these providers to go in-network or work with hospitals to 
get paid a fair rate for the service.
    While there are a number of methods that can be used to 
establish the out-of-network price, it is critical that it not 
be set at a rate that is too high, either higher than now or 
that locks in the current distorted market, since that would 
drive up costs and frustrate the basic goal of restoring a 
market for these services.
    The second approach is to get these providers out of the 
business of billing directly to patients or issuers at all. 
Instead, they would be paid by the hospital or the facility in 
which they practice.
    Hospitals would negotiate with insurers for a rate that 
includes the services and hospitals would pay the 
anesthesiologists or other facility-based providers. An 
alternative version would require that facility-based providers 
establish contracts with all insurers that are in-network for 
the facility.
    Before I close, I want to briefly highlight the work States 
are already doing. Many States have taken steps to correct the 
market failure by pursuing a diverse array of policies. But 
States are somewhat limited in their ability to act 
comprehensively by the threat of ERISA preemption and they face 
challenging border State issues. Thank you. I look forward to 
your questions.
    [The statement of Ms. Young follows:]
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    Chairwoman WILSON. Thank you, Ms. Young. We will now 
recognize Ms. Schuman.

   STATEMENT OF ILYSE SCHUMAN, SENIOR VICE PRESIDENT, HEALTH 
               POLICY, AMERICAN BENEFITS COUNCIL

    Ms. SCHUMAN. Chairwoman Wilson, Ranking Member Walberg, and 
distinguished Subcommittee members, thank you for the 
opportunity to testify on behalf of the American Benefits 
Council about the growing problem of surprise medical billing. 
The Council applauds your willingness to examine and consider 
Federal solutions to protect patients from the financial pain 
of these surprise medical bills.
    Collectively our members directly sponsor or administer 
health benefits for virtually all Americans covered by 
employer-sponsored plans. Employers are deeply concerned about 
the burden that unexpected medical bills from out-of-network 
providers place on employers and their families.
    While a number of States have sought to address this 
problem, ERISA exempts self-insured plans from State insurance 
regulations to ensure that national employers can offer uniform 
health benefits to employees residing in different States.
    Accordingly, the problem of surprise billing cannot be left 
to the States to solve. Indeed, we view the effort to protect 
patients from surprise bills within the broader context of 
efforts to lower health care costs.
    A lack of meaningful patient choice between providers who 
participate in a plans network and those who don't is the key 
component of surprise balance billing.
    In the case of emergency services provided at out-of-
network facilities and air ambulance service, the patient 
simply needs the most expeditious stabilizing care.
    Even when patients seek care at an in-network hospital from 
in-network providers, patients generally lack a role in 
choosing ancillary but necessary physician like an 
anesthesiologist. On the day of surgery, is the patient really 
going to question the network status of the anesthesiologist?
    A study comparing physician charge to Medicare payment 
ratios across specialty sheds light on the drivers of surprise 
billing. Physician excess charge was higher for specialties in 
which patients have fewer opportunities to choose a physician 
or be informed of the physician's network status. For example, 
anesthesiologists were charging more than five times as high as 
the Medicare rate.
    The ability of such specialities to set billing rates in 
this environment serves as a powerful incentive to remain out-
of-network which in turn generates surprise balance bills. 
Clearly this constitutes market failure which necessitates 
legislative or regulatory intervention.
    Health plan networks play a critical role in employer 
efforts to lower the costs and improve the quality of health 
care for employees and their families. They are the best tool 
employers have to drive better health care value.
    Despite the efforts of employers to prevent unexpected 
balance billing or help employees faced with such a bill, the 
underlying problem continues. We urge Congress to develop 
legislation addressing surprise balance billing that protects 
patients without undermining access to high quality, high value 
networks.
    One council member company with 130,000 covered lives 
estimates that without networks premiums would increase by 
approximately $8,000, a 45 percent increase.
    The council is also concerned that a requirement for 
payment by employer sponsored plans to providers in excess of 
in-network rates or by reference to build charges would 
discourage network participation and drive health care costs 
higher. Shifting the cost to payers merely masks the underlying 
problem of a distorted market.
    We also have concerns with Federal legislation mandating 
finding arbitration. It would be costly, complex, and time 
consuming for nationwide employers. If Federal legislation does 
require the use of binding arbitration, policymakers should 
include sufficient protections to guard against increasing 
health care costs.
    We offer the following recommendations for Federal 
legislation addressing the problem of surprise billing. At its 
root and at a nationally uniform manner. The message I'm 
delivering is reflected in a letter sent to you from over 30 
trade associations.
    No. 1, protect patient from surprise medical bills. No. 2, 
hospitals and physicians must provide up front information 
about out-of-network care and costs. No. 3, require certain 
reimbursement.
    To ensure equitable payment for services provided without 
discouraging network participation, Federal legislation should 
establish a cap for emergency services at an out-of-network 
facility at 125 percent of the Medicare rate which would be 
clear and facilitate competition.
    Legislation should also require all in-network providers, 
all at an--in-network facility to accept in-network rates. When 
a plan contracts with a hospital, it stands to reason that all 
essential service performed at the hospital would be included 
in the network.
    Requiring in-network facilities to bundle medical services 
for covered procedures into a single payment could also help 
the problem if structured properly. Legislation must also 
address ambulance services. The council looks forward to 
working together on a solution that cures this problem not 
merely masks its symptoms.
    [The statement of Ms. Schuman follows:]
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    Chairwoman WILSON. Thank you, Ms. Schuman.
    Ms. SCHUMAN. I am happy to answer any questions.
    Chairwoman WILSON. Thank you. We will now recognize Mr. 
Isasi.

 STATEMENT OF FREDERICK ISASI, J.D., MPH, EXECUTIVE DIRECTOR, 
                          FAMILIES USA

    Mr. ISASI. Thank you very much, Chairwoman Wilson and 
Ranking Member Walberg and members of the subcommittee. Thank 
you for the opportunity to speak with you today. I am Frederick 
Isasi, the Executive Director of Families USA. For nearly 40 
years, we have served as one of the leading national voices for 
health care consumers both in Washington, DC. and on the State 
level.
    Our mission is to ensure that every individual live to 
their greatest potential by ensuring that the best health care 
is equally accessible and affordable to all.
    Surprise out-of-network medical bills are a truly egregious 
and all too frequent example of how distorted economic 
incentives in the health care sector are overwhelming the 
interests of patients and families.
    A whopping 1 in 5 emergency department visits results in 
surprise medical bills. These bills can account--can amount to 
hundreds, thousands, and even tens-of-thousands of dollars. 
This is an utterly nonpartisan issue affecting people across 
the country in both rural and urban areas.
    Given this committee's jurisdiction, it is critical to note 
that self-insured as we have heard today self-insured ERISA 
health plans are as likely to experience surprise billing as 
fully insured and individual plans.
    So, what is most important to remember about this issue? We 
are talking about situations in which families despite 
enrolling in health insurance, paying their premiums, doing 
their homework, and trying to work within the system are being 
left with completely unanticipated and sometimes financially 
devastating health care bills.
    And this is happening in part and I want to say this really 
clearly because hospitals, doctors, and insurers are washing 
their hands of their patients' interest.
    Take for example one significant driver of this problem. 
The movement of hospitals to offload staffing requirements for 
their emergency departments to third party management 
companies. These hospitals very often make no requirements of 
these companies to ensure the staffing of the ED fit within the 
insurance networks that the hospitals have agreed to.
    As a result, a patient who does their homework ahead of 
time and rightly thinks they're going to an in-network hospital 
receives services from an out-of-network physician and a 
surprise medical bill follows.
    Let me give you one real world example. Nicole Briggs from 
Morrison, Colorado outside of Denver. Nicole woke up in the 
middle of the night with intense stomach pain. She went to a 
free-standing ER. She was told she needed an emergency 
appendectomy. She went to her local hospital.
    She did her due diligence. Confirmed repeatedly that the 
hospital and its providers were in-network. However, months 
later she received a surprise bill from the surgeon who ended 
up was out-of-network. The bill to Nicole was $5,000.
    Nicole tried to work it out with her insurance company but 
within 2 years a collection agency representing the surgeon 
took her to court and won the full amount, including interest. 
As a result, a lien was placed on her home and the collection 
agency garnished her wages each month.
    This came right before Nicole was about to deliver a baby 
and go on maternity leave.
    And by the way, this investigation found that there were 
over 170 liens placed on people's homes in the Denver area by 
emergency department physicians. And this is just one example.
    Consumers are exposed to surprise medical bills in other 
ways. Often as we have heard ground and air ambulances are out-
of-network and many ancillary services like anesthesiology, 
laboratory services, imaging services can be out-of-network 
despite the fact the facility and the physician that is 
supervising are all in-network.
    This is inexcusable behavior on the part of hospitals, 
doctors, and health insurers. They each know or should know 
that patients have no real way of understanding the financial 
trap they have just walked into.
    In these surprise bill instances, it is the providers and 
insurers, not the patients who should bear the burden of 
settling on a fair payment.
    Nicole and millions of families around this Nation need you 
to act. There are--they are paying their premiums trying to do 
their due diligence and to operate within the system, but the 
current system is leaving them financially vulnerable and 
destabilized.
    To put the needs of families first, we built a coalition 
and developed 5 key principles for legislative action by 
Congress to address surprise medical bills.
    The first, and we have heard this from, I think from the 
whole panel so far. Providers should be prohibited from billing 
for surprise out-of-network services and these protections 
should trigger automatically without consumers having to jump 
over hurdles.
    Second, it should prevent surprise out-of-network payments 
from increasing health insurance premiums. That's really 
important. Consumers care about their premiums too.
    Third, legislation should apply protections to all 
commercial health insurance plans, including ERISA plans that 
this committee has jurisdiction over.
    Fourth, protection should apply to all care settings and 
care types where families can receive out-of-network bills due 
to no fault of their own.
    And finally, we are very supportive of increased 
transparency in the health care sector. We fight for it all the 
time. But we underscore in this instance increased transparency 
cannot be the only or main strategy to deal with this problem.
    So we are grateful for being able to testify to the 
subcommittee. I would be very happy to talk about these 
principles more or answer any questions.
    [The statement of Mr. Isasi follows:]
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    Chairwoman WILSON. Thank you, Mr. Isasi. We will now 
recognize Dr. Hoadley.

  PROFESSOR JACK HOADLEY, PH.D., RESEARCH PROFESSOR EMERITUS, 
GEORGETOWN UNIVERSITY, HEALTH POLICY INSTITUTE, MCCOURT SCHOOL 
                        OF PUBLIC POLICY

    Dr. HOADLEY. Thank you, Chairwoman Wilson, Ranking Member 
Walberg, and members of the subcommittee. I do appreciate the 
opportunity to share my perspectives about surprise medical 
bills.
    I'm Jack Hoadley on the research faculty at Georgetown 
University and I'm going to draw today on a 50-State study of 
State laws and regulatory activity that I have conducted along 
with my colleagues at Georgetown. We have also taken a more in-
depth look at some of these particular State protections. As 
you have heard already today, patients often receive surprise 
medical bills when they have reason to assume they are being 
treated by network providers or when they have no real ability 
to select a network provider.
    Many Americans are worried that they may confront a 
surprise bill of this type and it happens all too often. And 
you have heard the examples already.
    Our research shows that to date, 25 States have acted to 
protect consumers from surprise bills in at least some 
circumstances. Nine of these 25 meet our standards as offering 
what we consider to be comprehensive protection.
    For protections to be comprehensive, we look to No. 1, 
whether they apply in both emergency situations, and in-network 
hospital settings such as electing an in-network surgeon but 
being treated by another clinician who is out-of-network. 
Second, that these laws apply to both HMOs, PPOs and all other 
types of insurance.
    Third, that the laws address both insurers by requiring 
them to hold consumers harmless from balance bills and 
providers by barring them from sending balance bills.
    And fourth, that the laws adopt some kind of a payment 
standard, either a rule to determine payment from insurer to 
provider or an arbitration process to resolve payment disputes.
    Although these four conditions don't guarantee complete 
protection for consumers, they combine to protect consumers in 
most emergency in-network hospital settings that the States can 
address. But as you have already heard, State protections are 
limited by Federal law and ERISA which exempts State from State 
regulations, self-insured employers sponsored plans. Although 
many of the State laws have been in effect only a short time, 
we can learn some key lesson from the State experiences.
    First, it is critical to consider whether consumers are 
protected regardless of the type of provider. Some State laws 
limit their protections to hospital-based physicians such as 
anesthesiologists or emergency department physicians. But 
consumers may also face surprise bills when treated by other 
specialists who are called in for their particular health needs 
such as a neonatologist, a cardiologist or a 
gastroenterologist.
    And some State laws do not offer protections when services 
are delivered in out-of-network hospitals but only cover 
situations where you're in the in-network hospital but are 
treated by an out-of-network provider.
    In addition, most State laws have not addressed ground 
ambulance transportation and States are prevented by the 
Federal Airline Deregulation Act from addressing air ambulance 
providers. So those are also gaps.
    Second, some State laws apply only to HMO enrollees and not 
to PPO enrollees and this limits the scope of consumers 
protected, but of course the larger gap as I have already 
mentioned is the ERISA plans.
    New Jersey and New York have explored voluntary approaches 
for ERISA plans but it is too early to tell if these will have 
any impact and they are only voluntary steps.
    Third, some States have considered making protections 
contingent on whether consumers receive a disclosure about the 
possibility of surprise bills, and although disclosure is 
helpful for consumers, making protection contingent on those 
disclosures seems inadequate given the challenge that consumers 
already face in understanding the many disclosures they see in 
a medical encounter.
    In going to the medical system, you get a whole clipboard 
full of pieces of paper you are supposed to read and sign and 
this is just one more of those it doesn't really help.
    Fourth, determining how to set a payment rate for the 
services delivered by a non-network provider may be the most 
challenging issue as we have already heard some comments on. 
Some States set a payment standard for what the insurer must 
pay, but States differ in whether to base a standard on 
Medicare rates, on average network rates, or on provider 
charges. And there are advantages and disadvantages to each of 
these. For example, basing payment on provider changes will 
tend to dive up costs.
    Other States have elected an arbitration process to 
determine the reasonable reimbursement for a particular case. 
Arbitration is typically designed in a way that encourages 
providers and insurers to reach a voluntary agreement and leave 
the arbitration as a last resort.
    And the last lesson is the challenge of enforcement. States 
have more ability to regulate insurers than providers and that 
can be an issue. But the key is to avoid placing the onus on 
the consumer to protest a surprise bill.
    Although States are making progress in protecting consumers 
from surprise medical bills, they are looking to the Federal 
Government to address the self-insured ERISA arrangements they 
cannot regulate. Federal legislation would also help consumers 
in the many State that have not yet acted.
    In addition, State officials have noted that a Federal law 
could help when a State resident receives care across the board 
or in another State.
    But questions remain on what role States should continue to 
play if there is a Federal law. For example, does that Federal 
law defer to existing State laws or leave a role for States to 
adapt rules to local market environments?
    The key unifying principle for States has been that 
consumers should not be liable for surprise medical bills in 
these circumstances we are talking about. Protecting consumers 
in these situations will offer them some relief from worry 
about health costs. Thank you.
    [The statement of Dr. Hoadley follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairwoman WILSON. Thank you. Thank you, Dr. Hoadley. We 
will now proceed to member questions. Under committee rule 8(a) 
we will now question witnesses under the 5-minute rule. I will 
now yield myself 5 minutes. First of all, let me thank you for 
the very interesting testimony.
    When we talk about surprise billing, it seems that a 
fundamental problem facing consumers is that they often have no 
way of knowing whether their provider is in the plan's network. 
And it is unclear to me who has the burden of making sure that 
the consumers have the information they need in order to make 
an informed decision.
    So I'm going to ask Mr. Isasi under current law, who is 
responsible for making sure that a doctor or hospital is in-
network? Is it the doctor, the insurance company, or the 
patient themselves?
    Mr. ISASI. Chairwoman Wilson, thank you for the question. 
To be very clear, it is the patient themselves that has a 
responsibility and these negotiations are very complex. These 
are some of the most important and intense negotiations in the 
health care sector between a payer and a provider. There is 
absolutely no visibility for a consumer to understand what is 
going on there.
    And so the notion that a consumer wouldn't walk into an 
emergency department and know for example that their doctor was 
out-of-network, because that hospital could not reach agreement 
on an in-network provider for the ED, is absurd. Right. There 
is no way they would ever know that.
    And similarly, if you walk in and you receive surgery and 
it turns out your anesthesiologist isn't in-network, there is 
no way for the consumer to know that.
    And I would, I would like to say there is some discussion 
about transparency and creating, you know, sort of provider 
directories. We have tried to do that in many instances and 
what we know is that right now the health care sector has no 
real way to provide real actual insight to consumers about who 
is in-network, who is out-of-network.
    I would posit probably everybody in this room has tried at 
some point to figure out if a doctor is in-network or out-of-
network and as we know that system doesn't work.
    So this idea that consumers can do research and find out 
what has happened behind the scenes in these very intensive 
negotiations is absurd and it doesn't work.
    Chairwoman WILSON. Okay. Let me followup. The burden in 
non-emergency situations is also significant. Would any of the 
witnesses like to comment on this issue and elective 
procedures?
    Do patients always know the name of all of the doctors who 
could potentially be sending them a bill later? Anyone.
    Ms. SCHUMAN. I would be happy to talk about that. And the 
answer again is no. And there is no obligation on the part of 
those providers to provide that kind of notice to a patient 
about the kind of care they are going to be getting, whose it 
from and whether they are in-network or out-of-network and what 
the cost associated with that is.
    Therefore I do think that rules requiring some disclosure 
up front at the time of scheduling when you can actually make a 
difference would be helpful. But as the other witnesses pointed 
out here, increased notice and transparency is only part of the 
problem.
    Chairwoman WILSON. But even if a patient is able to 
determine the name of every doctor that will see them, I worry 
that not all of the information they are given about the 
network is accurate.
    Dr. Hoadley, or Mr. Isasi, would you comment on the 
accuracy of provider directories? What happens if a consumer 
relies in good faith on accurate, on inaccurate information 
about their plan's network. The changes.
    Dr. HOADLEY. Yes, that's a really good point. You know, 
directory, provider directories can be notoriously inaccurate. 
One of the things that even if they are accurate, that I have 
seen in my own family is you may be enrolled in Blue Cross. You 
ask your physician are they in the--participating in Blue 
Cross? They say yes. But it turns out Blue Cross has a variety 
of different networks. This would be true of any insurance 
company.
    And so, you know, you may be in this one particular flavor 
of the Blue Cross plan and your provider may not participate in 
that particular network. So it's a very complex issue and some 
of the States have tried to link protections for balance 
billing with some of the issues around adequate networks and 
adequate provider directors.
    Chairwoman WILSON. Okay. Ms. Young, why is it important for 
providing an appropriate Federal payment standard, whether by 
establishing a benchmark or creating a dispute resolution 
process? Why is that necessary to address this problem of 
surprise billing?
    Ms. YOUNG. Absolutely. So as my co-panelists have talked 
about, notice isn't enough here. Even if a consumer had perfect 
information which is not a reasonable expectation, but even if 
they did have perfect information, they can't do anything with 
that information. They can't go across town to get their 
anesthesia and then come back to the hospital.
    There, even with perfect information, they may be treated 
by out-of-network providers and so we need to set a standard 
that limits how much providers can be paid in these out-of-
network scenarios that makes it sort of less attractive for 
providers to remain out-of-network. And so instead, they are 
subject to more normal market conditions.
    Chairwoman WILSON. Thank you so much. I now recognize 
Ranking Member Walberg for his round of questions.
    Mr. WALBERG. Thank you, Madame Chairwoman, and thank you to 
the panel for being here. Ms. Schuman, we have had this hearing 
specifically because of the rise, at least the ability to see 
the number of surprise billings that have taken place, the 
balance billings that are going on and the escalation there and 
the problems.
    What factors could you suggest that have led to the rise in 
occurrence of these surprise billings and do you think the 
trend will continue if action isn't taken?
    Ms. SCHUMAN. Well, thank you for the question. And all of 
these cases of surprise billing have a common theme. The 
patient lacks a meaningful role in choosing between a provider 
who is in the network or outside of the network. And the 
provider is not bound by competitive market forces to join or 
not join that network.
    So the real problem fueling surprise billing is that for 
example hospital-based specialists like anesthesiologists, or 
radiologists, or emergency physicians don't have to lower their 
prices to draw patients. They can charge higher rates and the 
patients will still come.
    So with these automatic referral of patients, the typical 
price-volume tradeoff for joining a network does not apply. 
Again, this is a fundamental market failure that I believe will 
only worsen if action is not taken to restore competition and 
choice.
    Mr. WALBERG. We have talked about already in the initial 
questioning about transparency, adequacy of information just 
isn't there. Even if it were, are patients and their loved ones 
capable of navigating these types of decisions about their 
health care under difficult circumstances.
    Ms. SCHUMAN. Well, I think any one of us who have been in 
this situation either ourselves or with our family members know 
how challenging that is. And patients and loved ones should not 
be put in the position or expected in a stressful emergency 
circumstance to be able to understand and navigate all the 
complexities of our health care system.
    In these instances, our laws should go beyond just the mere 
notice of a provider's network status to protect individuals 
against costly surprises when they are in no position to direct 
their care themselves.
    Mr. WALBERG. List a few mechanisms or approaches for 
patients, I guess we could say rate payers, insurance rate 
payers as well to protect themselves against that surprise 
billing experience.
    Ms. SCHUMAN. Well, I laid out some of the recommendations. 
And to reiterate, I think it has to start again with protection 
of the patients and a ban on the practice.
    But beyond that, we really do need to address this in a 
uniform way to make sure that we capture the 60 percent of 
ERISA self-funded plans and also one that is directed at the 
root of the problem which I just described.
    And so therefore we need to remove those incentives that 
encourage these--out-of-network providers to stay out-of-
network while at the same time ensure that they are equitably 
compensated for our services.
    So in the case of an out-of-network hospital or facility, 
performing emergency services, I suggest that a Medicare rate 
of 125 percent it's clear and a way to restore competition and 
negotiation with respect to that out-of-network facility for 
emergency services.
    For--in-network hospitals, when a plan has contracted with 
that in-network hospital, all of the providers practicing at 
that hospital should be paid no more than an in-network rate.
    When you buy a car, you assume that the steering wheel and 
the tires are going to be attached. And I think it is somewhat 
similar to that.
    I think there has also been a discussion about a bundled 
payment model whereby the hospital submits one single bill. And 
that might have some merit. Again but if there is appropriate 
safeguards on there to prevent against price escalation or 
undermining employer plan networks which are the greatest tool 
that employers have to both reduce the cost of health care and 
increase the quality.
    Mr. WALBERG. Just for the--I'm going to run out of time so 
I won't do this to you.
    Chairwoman WILSON. Go ahead.
    Mr. WALBERG. If you could just briefly discuss the price 
difference between--in-network rates and--out-of-network rates.
    Ms. SCHUMAN. Sure. Happy to. And I think what we have seen 
is--in-network rates or--out-of-network rates more than two or 
three times--in-network rates depending upon again certain 
specialties.
    And I think we have also seen a trend, a recent report 
about the fact that gap is growing and that it's alarming. It's 
not a comparison to cost and it's not in comparison to 
networks.
    And I think as that trend continues and that gap continues 
to grow, we want to address the situation in a way that narrows 
that gap, not only makes it wider.
    Mr. WALBERG. Thank you. And thanks for the grace period.
    Chairwoman WILSON. Thank you.
    Mr. WALBERG. I yield back.
    Chairwoman WILSON. We will now hear from the distinguished 
chairman of the Education and Labor Committee, Mr. Scott. 
Welcome.
    Mr. SCOTT. Thank you. Thank you, Madam Chair. Ms. Young, 
Section 1311(e)(3) of the Affordable Care Act helped improve 
transparency by requiring plans to provide public and timely 
disclosure of certain information. Why is this section 
important and what is the status of the implementation?
    Ms. YOUNG. Thank you for the question. I think as we have 
talked about transparency, it is important, it is not a 
comprehensive solution to this problem. But it is important to 
give consumers information about their health care services.
    The Federal Department of Health and Human Services has 
taken some steps to require disclosure of basic information 
about health plan information for qualified health plans under 
1311(e) of the Affordable Care Act so those rules have been in 
place for a couple of years and I think we have those sort of 
first year data has become publicly available just over the 
last 6 months or so.
    Mr. SCOTT. How useful is that information and is the 
Department of Labor doing its job under the provisions of the 
act?
    Ms. YOUNG. So we don't think the information in--under 
section 1311(e) is particularly useful for consumers that are 
trying to navigate the out-of-network situation, though it does 
provide us some insight about what is going on in health plan 
networks and I think researchers would certainly welcome that 
transparency.
    For the Department of Labor, so there is a parallel 
requirement on that group health plans make information 
available. My understanding is that the Department of Labor 
proposed some standards about updating sort of the tax form 
that ERISA plans file to include better information about 
health plans but that those policies have not been implemented 
and are not in effect.
    Mr. SCOTT. And we have had a lot of back and forth about 
what doctors can charge. Why doesn't normal contract law apply? 
That a doctor can't charge what he or she wants? When you go 
into the hospital and receive the services, you have under 
contract law agreed to pay a reasonable fee, not whatever the 
doctor thinks he can get out of you.
    Why isn't what they accept under Medicare, what other 
physicians similarly situated accept? Why isn't there some more 
reasonable calculation of what a physician is owed? Not just 
what he wants, two, three, four five times what Medicare pays? 
I mean, it's a contract law.
    Ms. YOUNG. Yes, so this is a, I think an interesting area 
of the law. Right now when patients are seen out-of-network, 
the providers are sending them balance bills at a rate that as 
you suggest, the provider has sort of largely made up. It's not 
determined by market forces.
    There are some legal scholars who have been advancing this 
idea that there is no contract between the patient and the 
anesthesiologists in this circumstance and so as a result, 
the--there hasn't been a meeting of the minds and so we fall 
back on background contract law principles that would limit how 
much the anesthesiologist gets paid.
    And there have been a couple of cases across the country 
that try to test this theory. I'm not an expert in these cases. 
I don't think any of them have been successful yet, but it is 
an interesting area of legal inquiry.
    Mr. SCOTT. I don't know who this should be aimed at, but 
there is another surprise bill when you go in for a screening 
and which is supposed to be free under the Affordable Care Act 
and they do some little procedure in the middle of it.
    It converts the whole thing into a treatment which is not 
free under the Affordable Care Act. Is that not a surprise in 
addition to the other surprises we are getting?
    Ms. YOUNG. So I can talk a little bit about that issue. As 
you noted, it's not the same problem as the surprise balance 
billing that we have been talking about but consumers who are 
receiving free preventive care under the Affordable Care Act 
may--an example is a colonoscopy where the individual sort of 
starts with a screening colonoscopy and ends up getting a 
biopsy or a polyp removal.
    Mr. SCOTT. And then you have to pay for the whole thing.
    Ms. YOUNG. And that can generate charges. My 
understanding--
    Mr. SCOTT. What about what kind of charge are we talking 
about?
    Ms. YOUNG. It will depend on the procedure, but it can be 
fairly expensive or, I mean, it's an invasive outpatient 
procedure so it can be expensive.
    The Department of Labor, HHS and Treasury have issued 
guidance that tries to limit that practice for colonoscopies 
performed in employer coverage, but my understanding is this is 
still a problem in the Medicare context.
    Mr. SCOTT. Anybody else want to comment on that?
    Dr. HOADLEY. I would simply note that, you know, it's an 
example of a broader issue that is what we are talking about 
here which is a lot of situations you go in for one particular 
procedure, you are doing an elective procedure but something 
else arises.
    So you might be going in for your knee replacement but 
something happens while you are in the middle of that surgery. 
And your heart is not doing the right thing so they bring in a 
consulting cardiologist. And that could turn out to be one of 
these out-of-network situations.
    So, you know, health care is not so predictable. We can't 
assume that simply because you went in to do X, a screening 
colonoscopy, a knee replacement, that isn't going to trigger 
some other problem and then that's part of what we are I think 
trying to address in these issues.
    Chairwoman WILSON. Thank you, Mr. Scott. Dr. Roe.
    Mr. ROE. I thank the Chair and I want to thank the Chair 
for having this very important hearing and all the members for 
being here.
    And, Dr. Hoadley, I note, I was reading your what is a 
surprise medical bill that is any bill sent by a medical 
provider to a patient for an amount larger than expected.
    I think all the bills I ever sent to patients thought they 
were larger than they expected. So probably applies to 
everything.
    I really appreciate you being here and, Ms. Schuman, you 
make a point about a car. The difference in health care though 
is you go down to your car dealer and you buy a car. He doesn't 
have you sent you out without a car unless you pay for it. 
There is a law passed and as it should have been in 1986 called 
MTALA. You are very familiar with it and we have to cover 
anyone who comes into an emergency room and sees a Medicare 
patient as we should.
    I'm an obstetrician by training and I have done that many, 
many times before. And so what happens to us in, on the 
provider side is that we have to provide those services as we 
should, regardless of your ability to pay. So we have that 
restriction on us as we should in the hospital.
    I have been negotiated out of health care networks. Our 
group which was a large group so there are no innocents in this 
when you look at the insurers, the hospitals, the providers. 
Everybody is culpable here.
    And I could not agree more about transparency. I have had a 
surprise bill after a surgery I had a year and a half ago so 
I'm very much aware of that and I could negotiate it because I 
knew the nuances of this. Many people cannot. It is 
complicated.
    And even, Dr. Hoadley, as you said, even having--I have 
been--had my name in-networks that I wasn't in. That you use 
and many of those unscrupulous networks will use that to get 
people to sign up because this doctor, my doctor is in there 
when you are really not. And you get surprised bills.
    So another couple things I want to mention is that we have 
to look at when you look at Medicare for instance as a 
benchmark, and most of us don't have a problem with that except 
if you look at the Medicare Wage Index.
    Where I live in rural Tennessee, we have the lowest--second 
lowest Medicare Wage Index in the United States. We get .73 
cents for what someone else gets $1 for. Now in California for 
instance they have a very, very generous Medicare Wage Index.
    So we have to, we pay our providers less and we can keep 
less than 10 percent of the nurses that we actually train in 
our area because we can't pay them enough. So when you 
benchmark off Medicare, you are just again where we live you're 
discriminating against us. And so we need to work that out and 
it is a very unfair system that needs to be fixed.
    And one other buzz I have got up my--a burr up my saddle is 
in Medicare if I saw an elderly patient that had a very limited 
income and I wanted to waive her copay, it is illegal for me to 
do that. And yet in California it is illegal for a doctor to 
balance bill. You have got two very--it's a dichotomy.
    So how do we do all this and put this together where it is 
fair to the patients and it is also fair to the providers? And 
one other thing and anybody can comment on this. We have one 
hospital system where I live now. They've merged so there is no 
competition. There is one.
    And when you have a bundle payment where that goes just to 
the hospital what leverage does a provider have to be treated 
fairly?
    Ms. SCHUMAN. Can I just comment on that and thank you so 
much for saying that. I think that we all stakeholders have to 
be part of this solution without a doubt. And you know, and I 
think that, you know, to that point, I think it is very 
important that all stakeholders again are part of the solution. 
And we are looking at this in the broader context of the effort 
to increase transparency and lower health care costs.
    And I think one of the big drivers behind rising health 
care costs is that lack of competition that you talked about. 
So we really do have a unique opportunity to try to address the 
root of this problem and the lack of competition that is 
driving it more.
    Mr. ROE. And to the Chairman's point a minute ago, let me 
tell you how frustrating it is as a provider. I am doing a 
procedure, let's say a colonoscopy on a patient. And you're 
doing a Medicare patient and you see the polyp that is there. 
If you take it out that's a second bill. I mean, are you going 
to stop and bring that patient back? I think that's awful to 
have a patient go through all of that again.
    And so as I said there are no innocents here. I really 
appreciate just the start of having this discussion. We need to 
stop surprise billing, no question about that and do it fairly 
for everyone. I yield back.
    Chairwoman WILSON. Thank you, Dr. Roe. And now Ms. Wild 
from Pennsylvania.
    Ms. WILD. Thank you, Madam Chairwoman. Thank you all for 
being here. I am somewhat gratified by the fact that it seems 
that we have bipartisan consensus that surprise billing really 
is a genuine problem and that patients are the ones who really 
are the losers in this system.
    I am, you know, I am struck by the fact that we all seem to 
be wanting a solution to this problem. But the solutions that 
I'm hearing don't really sound very workable in the context of 
our present medical system. And that's, you know, that's where 
I really struggle to understand how we are going to fix this.
    Ms. Schuman made the comment that all stakeholders have to 
be a part of this and I agree with you. The problem is the 
ultimate stakeholder is the patient. And the patient has no 
part in this in terms of negotiation or even understanding the 
complexity of the insurance market and who may be in-network or 
out-of-network.
    I will tell you as somebody with a post-graduate degree who 
has worked in as a lawyer in the insurance field for many, many 
years, I never understand a hospital bill without calling and 
seeking answers. And that's somebody--coming from somebody 
who's educated, literate, and knows the field and I still have 
a tremendous problem with it.
    Ms. Schuman, you also used the phrase and I think what you 
said was that we need more competition in choice. Was that your 
statement?
    Ms. SCHUMAN. Yes, that was.
    Ms. WILD. And what does that mean?
    Ms. SCHUMAN. What that means I think that what Dr. Roe was 
talking about the fact that there was only one hospital in town 
and when you only have one hospital in town its sort of 
difficult to negotiate.
    And I think that again was what I was getting to both 
specifically with respect to having more than one hospital in 
an area but also more specifically when we are talking about 
surprise billing and the fact that some of these specialties 
have this free flow of patients that are coming to them without 
having to compete on prices and quality to attract them.
    Ms. WILD. I'm sorry, I have just never found that 
competition causes any sort of clarity when it comes to medical 
charges. If I develop a relationship with a physician, I 
continue to go see that physician because I have a level of 
comfort with him or her, if I--it--I happen to be in a district 
with two excellent regional medical centers. There is plenty of 
competition in my district but that hasn't done anything to 
drive the prices down.
    And I guess my question to you is isn't the real problem 
that we have turned over our medical system to private market 
forces?
    Ms. SCHUMAN. Well, I think that indeed those private market 
forces are the best lever to drive health care value, drive 
down costs and increase quality. And that's why I cited an 
example of an employer member of ours, one of our member 
companies who networks because of networks basically they're 
saving their employees and their families 45 percent than 
without networks.
    So I think that networks and the high-value, high-quality 
lower-cost networks are the key to innovation and to be able to 
get better value, better cost, and better quality.
    Ms. WILD. But using your reasoning, a patient in New York 
City which has a wealth of hospitals and physicians and 
insurance plans, should result in no patients having surprise 
billing.
    And yet I am quite certain that there are plenty of New 
Yorkers who have surprise billing every single day. So, I come 
back to my question of, you know, I am really not convinced 
that private market forces and competition in choice is the 
solution here.
    Ms. SCHUMAN. Well, I think I also said that there is a 
fundamental market failure right now. And I think that that's 
what we are looking for, some sort of national response to this 
that restores those fundamental--so the market can work because 
when the market can work it works best. But there needs to be 
assistance and intervention to make that market work.
    Ms. WILD. Well, I, you know, Mr. Roe used the expression 
there are no innocents here and I would agree with him except 
to say that I think the patients are the innocents. And so, 
there is an innocent party here.
    Mr. Isasi, you seem to want to say something so please.
    Mr. ISASI. I was going to say I think there are so many 
observations that we would agree with, but in particular, 
you're saying, you know, what is the workable solution here? 
What--I can't see the constructive, what--how do we move the 
ball forward? And what I would say is there is a concept here 
which is what does in-network mean? Right.
    When you sit down with your husband or your partner and 
decide what kind of insurance do we want for our kids? Right? 
We want to make sure that they can go to the ED if they're 
playing soccer they get hurt, all those sorts of things.
    The question is when you make that decision and you say oh 
look this hospital is in-network. Right. But what does that 
mean? If you can go to that hospital and all the services 
they're providing are out-of-network, right?
    And I think as you've said and as we have heard from other 
folks, the patient is not the person who should be responsible 
for that. It's the folks who are negotiating. It's the 
hospital, it's the docs and the payers that should bear that 
responsibility.
    So, let's start by clarifying what does in-network mean so 
that we have some way of making educated decisions about the 
insurance that we are purchasing and putting our trust in.
    Chairwoman WILSON. Thank you. Thank you so much. And now we 
will hear from Mr. Meuser.
    Mr. MEUSER. Thank you, Madam Chair, for holding this 
hearing and for allowing members and staff to learn more about 
the issues of surprise billing and thank you certainly to our 
witnesses for sharing your expertise. I have and I would 
venture to guess many of my colleagues if not all have heard 
stories from distraught constituents about what is very 
appropriately named surprise billing where they go for an 
emergency visit or often, a scheduled planned medical procedure 
or surgery which goes according to plan and then receives a 
surprise bill often in the tens of thousands of dollars.
    So, Ms. Schuman, lets walk through a scenario please. And I 
have heard from individuals have experienced similar scenarios 
firsthand. At the advice of a doctor, an individual schedules a 
surgery and confirms that the hospital is--in-network. The 
surgery is scheduled 8 weeks in advance and the individual 
assumes that there will be no issues with undergoing surgery in 
an--in-network hospital.
    Only after the surgery does the individual learn that the 
surgeon was out-of-network. The primary surgeon mind you and 
receives a bill for $25,000. Had the individual known the 
surgeon was out-of-network, they would have very likely found 
an--in-network surgeon. Doesn't that sound reasonable?
    Ms. SCHUMAN. Absolutely.
    Mr. MEUSER. Okay.
    Ms. SCHUMAN. And I think that that--I think that exactly 
the situation with the patient is doing their homework, they're 
doing their research. How are they to expect that some of those 
other services would be out-of-network?
    Mr. MEUSER. Okay. Well, what would the patient--what do you 
recommend that the patient do differently? Ask further 
questions?
    Ms. SCHUMAN. Well, I think in this kind of situation, the 
patient did everything that they could be doing. And the 
problem is not the patient. The problem is not the consumer. 
The problem is that the consumer didn't have knowledge and 
didn't have a choice.
    And again, in some situations even when they have knowledge 
upfront and they are informed of that, they still may not have 
choices. So, I think it's knowledge and choice that the 
consumer needs.
    Mr. MEUSER. Choice would be understandable. Knowledge not 
so much. What about the hospital? Do you feel they have any 
responsibility here in this scenario?
    Ms. SCHUMAN. Absolutely. Hospitals play a critical role in 
this. When you go to a hospital, again, they have the ones, 
they have the leverage, they have the ability to negotiate with 
those physicians that are practicing in their hospital.
    Getting back to something from my testimony, it stands to 
reason that when you contract with a hospital all of those 
essential services that are performed in the hospital under 
that roof like anesthesiology or radiologists, would be in-
network. How can you go to a hospital? How can you have surgery 
without anesthesiology or a hospital operate without 
radiologists?
    Mr. MEUSER. So you also feel the surgeon in that scenario 
would have responsibility or would it be the hospital?
    Ms. SCHUMAN. Absolutely. And I think getting back to this 
point, everyone has a stake in this. All of the stakeholders 
have a role to play.
    Mr. MEUSER. Okay. So what would you offer that could be 
done during that 8 week period leading up to the surgery to 
help assure that the patient would not receive a surprise bill?
    Ms. SCHUMAN. Well, I think we have to look at this in a 
comprehensive way. And I think again we had talked about 
transparency, upfront disclosure. So at the time of scheduling, 
not when they get into the emergency--not when they get into 
the surgery room, to be able to make a decision based upon 
their action.
    But even that alone is not enough. And I think what we have 
to talk about is getting behind the reason why the patients 
might not have a meaningful choice or might not even know. And 
that's why I think a Federal standard, a Federal solution that 
does not discourage these out-of-network specialists to stay 
out-of-network and generate these surprise bills in the first 
place is the core of the solution.
    Mr. MEUSER. Okay, thank you. Madam Chair, I yield back the 
remainder of my time.
    Chairwoman WILSON. Thank you, Mr. Meuser. And now McBath? 
Okay. Ms. McBath. Welcome.
    Ms. MCBATH. Thank you, Madam Chairman, Chairwoman, excuse 
me, for holding this important hearing today. And I have been 
hearing about surprise medical bills from constituents in my 
district and from many stories in the news and like I'm sure 
that we all have.
    The recent statistics have been alarming to say the least. 
I will tell you I'm a two-time breast cancer survivor. I have 
had many surgeries in my time and I can tell you the number of 
times that I was surprised myself by these surprise bills that 
came in unexpectedly.
    A recent Kaiser Health survey showed that two-thirds of 
American are very worried or somewhat worried that they or a 
family member will receive a surprise medical bill.
    In another survey, we see that 57 percent of American 
adults have been surprised by a medical bill for something that 
they expected to be covered by their health insurance.
    Now I have here a whole number of individuals just within 
Georgia alone, and I'm sure there will be millions more that 
represent just these very things that have happened, these 
surprise bills.
    These Americans, they are our friends, they are our 
neighbors and our family members. And I brought these stories 
from individuals in my district who have been affected by these 
surprise bills.
    There is Michelle from Alpharetta and then also there is 
Tom from John's Creek, Elaine from Roswell and countless 
others. And like other Americans across the country, they were 
taken by surprise by a medical bill.
    These men and women are worried about the financial impact 
that these bills have on themselves and their families. Some 
are able to get their bills reduced but most aren't and most 
aren't that lucky.
    Now for me these stories make it clear that we have got to 
do something at the Federal level to address the financial 
impacts and emotional distress these surprise medical bills 
have on patients.
    Mr. Isasi, I would like to ask you and thank you for your 
testimony. As Sarah Kliff of Vox and others have extensively 
documented, surprise medical bills lead to devastating 
consequences for consumers throughout our country. Now I really 
like evidence and data and could you talk about what data 
exists that could help us here in this room and in Congress 
understand just how large these expenses can be for consumers?
    Mr. ISASI. Absolutely. So, as we have heard today there are 
a few facts. One, almost a fifth of all emergency department 
visits involve surprise bills. Right. So, for all of us, you 
know, as I was saying earlier, if your kid gets hurt playing 
soccer and you go to an ED, there is a really good chance you 
are going to get a surprise bill.
    As you mentioned, we know that right now almost half of 
Americans' health care costs are top of mind and they are--they 
report they cannot meet basic, their basic health care needs 
with--because the costs are too high.
    They won't go see a doctor, they won't get their meds, 
because they can't afford it and a third of people in this 
country right now are saying that their basic needs of life, 
their rent, their heat, their food, they cannot pay for those 
things because of health care costs.
    So, this question of surprise billing is falling into much 
largest context which is that American families are overwhelmed 
by health care costs. And surprise bills are just that moment 
where despite trying everything, paying your premiums, checking 
to see if you're in-network, right, you find out now I owe 
$5,000, $10,000.
    And what we know as we have heard is those bills typically 
are about three times more than they would be paying in-network 
but they can be tens of thousands of dollars more. Because as 
we have heard, there isn't a structured contract between that 
patient and that doctor. And therefore, they can charge 
whatever they can get away with. Right. So, I would say that to 
your question one of the most important concepts here is and we 
have heard this and I actually in a previous life saw this 
happening, right.
    The negotiations between an insurer, a hospital, and a 
physician group are some of the most intense and sophisticated 
negotiations occurring in markets in this country. And the 
notion that you or I as a patient, as a person in need of 
health care services has to be able to track all of that and 
then be responsible because my hospital could not negotiate an 
in-network contract with an ED doctor so now I'm going to get 
stuck with the bill.
    Is the tail wagging the dog? Right. That hospital should 
have the responsibility of saying if I am an in-network 
provider for you, you can come to my ED and not get stuck with 
a hospital bill that is three times larger and my cost-sharing 
is much larger, right. That is the tail wagging the dog.
    Ms. MCBATH. Thank you. So how prepared are Americans for 
these unexpected expenses and could you speak on the impact 
that these expenses also have on individuals' overall 
wellbeing?
    Mr. ISASI. You bet. Absolutely. And as I noticed in my 
testimony that right now what we know is that more people are 
scared of hospital bills and health care bills than getting 
sick. I mean, that's where we are as a Nation.
    So we are--there is more harm right now happening in this 
country in some way psychologically around the cost of health 
care than actually being scared about their health. Okay. And 
in terms of the--what was the, I'm sorry, I missed the first 
part of your question.
    Ms. MCBATH. Oh, I was just saying how prepared are 
Americans for these unexpected.
    Mr. ISASI. Oh. Well, this is another thing we know is that 
almost half of Americans, they don't--they have less than $400 
in savings, right. And so, a surprise medical bill for $2,000 
means I'm going to have to miss my car payment, miss my 
mortgage payment. I'm going to have to take out of my 
retirement account. Right.
    These are--when people pay for health insurance, what they 
are trying to pay for is financial security. To know I am doing 
my part, I am paying into a system, now I get sick and now that 
system takes care of me and makes sure that I don't lose 
everything I worked for in my whole life because I got sick.
    Ms. MCBATH. Right.
    Mr. ISASI. And what we know is a surprise medical bill is 
a, can be a devastating blow on a family that is trying to live 
that life and be self-actualized.
    Chairwoman WILSON. Thank you. Thank you. And now, Mr. 
Allen. Thank you.
    Mr. ALLEN. Thank you, Chairwoman and thank you, panel for 
giving us some insight onto just how magnified this problem is 
and of course, you know, I hear from constituents that surprise 
medical billing has become a significant concern for Georgia 
families.
    You know, the problem is this whole process of health care 
is so complex that you have a, if you are--out-of-network, or 
in-network, you know, deductibles, and, you know, is your 
doctor in-network? I mean, you were supposed to be able to keep 
your doctor, it's just a total mess. And it needs to be fixed 
sooner than later.
    But you know, 2/3 of Americans say they are somewhat 
worried about being able to afford their own family members 
unexpected medical bills and as we said, these surprises, how 
does a family deal with it?
    Ms. Schuman, 22 States have passed legislation on surprise 
billing. What are the different models that States have enacted 
and are there any lessons learned from their approach to this 
problem?
    Ms. SCHUMAN. Thank you. Yes, a number of States have acted 
to address surprise billing in a number of circumstances, some 
of which we have discussed here ranging from purely protecting 
the patient to requiring for example binding arbitration 
between the payer and provider to resolve that dispute.
    Or in some cases California for example requiring setting a 
reimbursement that's the greater of 125 percent of Medicare or 
the average in-network rate. There are some lessons to be 
learned from that, but they are limited. They're limited by 
time and scope.
    By time, because for example the California law just became 
effective at the beginning of this year so we really don't know 
the impact it's having.
    But I think more critically they're limited in terms of 
scope because they don't cover ERISA self-funded plans 60 
percent of employer sponsored coverage. So we don't necessarily 
know if those some lessons would apply on a national level.
    And I do want to say just with respect to Texas, there 
could be some important lessons there with respect to a binding 
arbitration or dispute resolution process. In terms of a 
backlog of cases in the Texas system to try to address this 
through managed through dispute resolution.
    They have changed the law but again, I think we need to be 
careful of that if we are thinking about employing that on a 
nationwide level.
    Mr. ALLEN. Well, certainly we need to look at these models 
and see what we need to do at the Federal level because health 
and the other problem is healthcare costs are just accelerating 
like nobody has ever seen in the country.
    We have heard a lot about the role of patients and 
providers and employers and finding a solution through surprise 
billing. Should hospitals also have a role in addressing 
surprise billing? In other words, should the hospital know that 
hey, you know, you are going to get a bill from, you know, this 
group or that group? I mean, it looks like full disclosure 
should be on the agenda here.
    Ms. SCHUMAN. Absolutely. Hospitals play a critical role in 
this. The hospitals are the one with these hospital-based 
physicians. Often times those specialties that are integral to 
being able to operate that hospital and treat patients are not 
employed by the hospital. They're not in that hospital network.
    And that leverage, that relationship between the hospital 
and the physicians that are practicing at that hospital is key 
and I think fundamental to addressing this problem in a way 
that works.
    Mr. ALLEN. We have got about a minute. Many of the patients 
that receive surprise bills are covered through employer 
sponsored plans. What are employers doing and of course, you 
know, the business community is trying their best to address 
this accelerating cost of health care.
    What are they doing to provide more information and 
transparency for their employees to help avoid these 
situations?
    Ms. SCHUMAN. Well, thank you so much for that question. And 
this is a deep concern for employers. And council member 
companies are taking steps to limit the incidents of surprise 
billing in the first place, through for example enhanced 
communications to their employees about the potential for 
balance bills. And also, provide assistance to their employees 
who do receive a balance bill in the form of contracting with 
other entities to try to negotiate that down or providing some 
sort of legal defense funds. But despite these efforts of 
employer, the problems still persist.
    Mr. ALLEN. Yes. Well, thank you so much and I yield back
    Chairwoman WILSON. Thank you. Ms. Underwood.
    Ms. UNDERWOOD. Thank you, Madam Chair.
    Chairwoman WILSON. You're welcome.
    Ms. UNDERWOOD. Thank you for holding this really important 
hearing today and I would like to thank our panelists for being 
here and for your really comprehensive written testimony. I 
have enjoyed reading through your comments.
    Like many of us, people in my community in Illinois have 
experienced surprise billing and I frequently hear from 
constituents about their struggles to afford health care even 
health care more broadly when I'm home.
    And so according to the Health Care Cost Institute, in my 
home State of Illinois, about 15 percent of in-network hospital 
admissions resulted in at least one out-of-network claim in 
2016. And so, my questions are for you, Dr. Hoadley.
    I'm proud that Illinois has taken a leading role in 
addressing this issue by enacting consumer protections that you 
have described as comprehensive in your research. Given your 
expertise on these State approaches, I was interested in 
getting your perspective on how effectively Illinois has 
addressed this issue.
    So first, what are some of the strengths of the Illinois 
law in terms of its scope and protections for consumers?
    Dr. HOADLEY. Well, certainly one of the strengths of its 
law is that it does apply to a broad variety of circumstances. 
They regulate both the HMO environment, the PPO environments 
regardless to the type of insurance.
    They address both situations that arise in emergencies as 
well as those that arise in more elective procedures as we have 
heard talked about, some of the circumstances where you go in 
to get a particular elective surgical procedure but might 
encounter an out-of-network anesthesiologist. So, Illinois does 
have a good law in place.
    Ms. UNDERWOOD. Great. And so how does the Illinois law 
resolve disputes between the providers and insurers?
    Dr. HOADLEY. So, what they really look to is to try to get 
the provider and the insurer to negotiate a private amount. 
There is a dispute resolution option in Illinois. When we last 
talked to the folks in Illinois, they said that had not 
actually been invoked. So, it was there perhaps as a backup, a 
backstop but for the most part things got resolved privately.
    They did have some concern when we talked to the Illinois 
officials that there may be instances where consumers get bills 
sent to them, aren't aware that they don't need to pay them, so 
don't start the process. And that goes to this sort of point of 
how do you really make sure it's not the consumers 
responsibility to figure out that oh, I don't--by law I don't 
actually have to pay this bill. Now what do I do to make sure 
that happens? If you don't know that, that doesn't really help 
you.
    And so, what some other States like California has done is 
to include a provision that says the provider really can't send 
a bill and if they do end up sending a bill and the consumer 
pays it, there is an obligation on that provider to refund the 
amount that was paid back to the consumer. And that's something 
we haven't seen in some of the other States.
    Ms. UNDERWOOD. That is interesting, thank you. As we look 
to develop this comprehensive Federal solution, what lessons do 
you think we can learn from how Illinois has tackled the issue?
    Dr. HOADLEY. So certainly, you know, trying to do something 
that is comprehensive is an important part. I think one thing 
that is also a somewhat of a limitation in the Illinois law is 
that in the non-emergency situations, it limits the protections 
to a certain specified list of provider types.
    So, you know, it does cover the emergency room doctor, the 
most common ones that come up. The anesthesiologists, the 
radiologists and so forth. But it doesn't necessarily address 
an issue of when there is a consulting cardiologist that's 
called into your case or where maybe an orthopedist is called 
in because you came in with some situation that involved a bone 
injury.
    And so, you know, one of the things that other States have 
done is to make sure that the law applies comprehensive to all 
types of providers rather than specifying the list of the ones. 
And yes, they do list the ones that are most commonly come up. 
But that doesn't mean it necessarily works in your particular 
case.
    Ms. UNDERWOOD. Thank you. Speaking of the providers, I was 
reading in Christen Linke Young's testimony about the 
neonatologists and some specific surprise bills that often 
arise upon the likely early birth of a child and some 
unexpected out-of-network claims. I just was wondering if you 
wanted to expand a little bit on that.
    Ms. YOUNG. Absolutely. Thank you for the question. So, we 
have talked a lot about the, this issue from the patient's 
perspective which I think is extremely important. But it is 
also helpful to think about the issue from the perspective of 
one of these providers.
    Once a provider like an anesthesiologist or a neonatologist 
is in the hospital practicing, they will receive a flow of 
patients regardless of whether or not they join insurance 
company networks and regardless of what price they set.
    So, for that neonatologist, once they're in the hospital, 
they're going to be the neonatologist taking care of those 
babies and they have a very limited incentive to join insurance 
company networks and accept a negotiated contract rate from an 
insurance company.
    It's the same dynamic that all of these provider types 
face. And the key to a solution is to get rid of that set of 
incentives and instead encourage those folks to come back in-
network or work with hospitals for their payment.
    Ms. UNDERWOOD. Well, I would like to thank you all so 
much--
    Chairwoman WILSON. Thank you.
    Ms. UNDERWOOD [continuing]. for your expertise and I yield 
back my time.
    Chairwoman WILSON. Thank you Ms. Underwood. Now Dr. Foxx, 
our distinguished ranking member of the Education and Labor 
Committee.
    Ms. FOXX. Thank you.
    Chairwoman WILSON. For 5 minutes.
    Ms. FOXX. Thank you, Madam Chairman, and thank you for 
organizing this hearing and I want to thank all of our 
witnesses for being here today. They've been very, very 
informative.
    Ms. Schuman, I know that surprise billing impacts patients 
on a personal level. On a larger scale, how often do patients 
receive surprise bills? Do we have information on that?
    Ms. SCHUMAN. Sure. Kaiser Family Foundation of medical debt 
found that among individuals who faced--out-of-network bills 
that they could not afford, nearly seven in 10 of those didn't 
even know the provider was--out-of-network at the time they 
received care hence the survive--the surprise. Another analysis 
of medical bills from large employer plans found that nearly 
one in five inpatient admissions included a claim from an out-
of-network provider that could result in a surprise bill.
    Even when enrollees choose in-network facilities, 15 
percent of inpatient admissions include a bill from an out-of-
network provider such as an anesthesiologist.
    Ms. FOXX. So does the percentage change based on whether 
the patient is receiving emergency care? Do we have information 
about that?
    Ms. SCHUMAN. Yes. And for inpatient admissions that include 
an emergency claim, they're much more likely, 27 percent to 
include a claim from an--out-of-network provider that 
admissions without an emergency room claim 15 percent. That's 
the case whether or not employees, enrollees use an in-network 
or--out-of-network facility.
    Ms. FOXX. All right. What about when ambulances are 
provided.
    Ms. SCHUMAN. Well, for ambulance services, the figures are 
even more alarming for patients in the most dire of 
circumstances.
    As Ms. Young's testimony notes, among people with employer 
sponsored health plans, 51 percent of all ambulance cases 
involved out-of-network ambulances. And according to a recent 
GAO analysis of air ambulance transports of privately insured 
patients, 69 percent were out-of-network.
    Ms. FOXX. Okay. So let's talk a little bit about what 
happens after a patient receives a surprise bill. What--are 
patients able to successfully negotiate down the amount? 
Professor Hoadley alluded to this in his comments recently but 
are they able to negotiate down the amount or are they forced 
to pay the entire bill?
    Ms. SCHUMAN. Well, generally a patient does not have much 
recourse after he or she receives a balance bill. And that's 
because State laws generally hold individuals liable for the 
cost of goods and services received not just with consumer's 
goods but for medical care as well.
    And to that end, providers generally have individuals sign 
a contract prior to service indicating that they agree to be 
responsible for all billed charges. And it's these contracts 
and the related State laws the providers use as the basis for 
balance billings.
    Now in some instances, employers do try to protect their 
patients from receiving or otherwise having to pay these 
balance bills by negotiating with the--out-of-network provider 
but these employer actions themselves are not without costs 
because employers that voluntarily try to protect their 
employees from balance bills have increased plan costs because 
in most cases they end up having to pay more to settle the 
balance bill and this gets reflected into higher premiums for 
all consumers.
    Ms. FOXX. Lets pursue that a little bit more. Determining 
whether providers are in or--out-of-network can be confusing 
and obviously it sounds like for plan providers as well as 
patients.
    So what influences a provider's decision to participate or 
not participate in insurance network and are there incentives 
or tradeoffs for participating?
    Ms. SCHUMAN. This is the key question. And the incentive 
for providers to participate in the network is to have access 
to a volume of plan enrollees whose plans are trying to drive 
patients to a high value network.
    The tradeoff for a lower--in-network reimbursement rate is 
a provider is going to more than make up for that in volume. 
But for some of these hospital based specialists that we have 
been talking about, they have inelastic demand. The patients 
are going to come to them anyway so that incentive is not there 
and the market is therefore supported and surprise medical 
bills ensure.
    Chairwoman WILSON. Thank you.
    Ms. FOXX. Thank you, Madam Chairman, I yield back.
    Chairwoman WILSON. Thank you, Dr. Foxx. Mr. Courtney.
    Mr. COURTNEY. Thank you, Madam Chairwoman, and thank you 
for your leadership on this issue which is definitely sweeping 
the country. It is partly because of some great reporting.
    Sarah Kliff from Vox has done a great service in terms of a 
series of articles on this as well as National Public Radio. 
Congressman Doggett from Texas has a bill that's pending in 
Congress that again would take the patient out of the cross 
fire.
    And as we have heard, a number of States have actually 
moved forward with legislation like the State of Connecticut 
which in 2016 passed a bill on a bipartisan basis by the way 
that again at least focused on the question of emergency room 
billing which again took the patient out, set up a standard in 
terms of reimbursement and also limited the out-of-pocket loss 
that would be credited against people both for out-of-network 
bills in terms of their overall deductibles.
    You know, again, this committee which has jurisdiction over 
ERISA is exactly where this issue belongs. As I think we have 
heard, the Employment Retirement Income Security Act preempts 
State regulations. So, the fact that Connecticut or Illinois or 
other States have done good work in terms of moving forward, 
again, there is a huge number of employment-based plans that 
again are unaffected by this.
    And again, I think it's just so important to foot-stomp 
that and I guess I would just ask Ms. Schuman again that again 
ERISA really has to be dealt with if we are going to really 
have a comprehensive solution for America's patients, is that 
correct?
    Ms. SCHUMAN. That's exactly right. For the self-funded 
plans at 60 percent of employer-based plans that are not 
subject to these State laws like in Connecticut or other 
States, we have to have a Federal solution that addresses ERISA 
so that we deal with this problem in a uniform, nationwide way.
    Mr. COURTNEY. And when we passed patient protections with 
the Affordable Care Act in 2009, again it was this committee 
that really crafted the language regarding preexisting 
conditions, lifetime limits, essential benefits which again 
removed the ERISA preemption and again set a standard that was 
universal in terms of all health plans.
    So again, I think it's unfortunately the President has 
declared war again on the Affordable Care Act but again, our 
mission is just to keep again using the best information 
possible because health care is such a dynamic issue and this 
surprise billing issue obviously has really popped up that 
really escaped the Affordable Care Act's scope of patient 
protections.
    So, again, I would like to ask Professor Hoadley about the 
Connecticut law which again as far as emergency rooms, used a 
different approach than the negotiated process of resolving 
some of these bills and again, established a standard which 
would appear at least in some respects to have the salutary 
effect of having a pretty sort of standard process that can be 
dealt with--can be implemented in a timely fashion versus a 
negotiated arbitrated. I am just sort of wondering if you could 
kind of tease out the pluses and the minuses from those two 
approaches.
    Dr. HOADLEY. Yes, there are definitely pluses and minuses 
to the two approaches and, you know, we haven't had enough time 
on a lot of the laws like Connecticut's and New Jersey's to 
really gain a longer, richer experience to draw from.
    But we can look at some of the differences, I mean, what 
the payment standard that Connecticut and other States use. One 
of its advantages is that it sets a clear number. It's there 
for everybody to see. There is sort of no ambiguity. Now if you 
don't like the number that it sets, or you think the number 
that it sets has consequences so States will vary between using 
a Medicare-based rate, a rate based on network charges or 
sorry, network allowed amounts or a standard based on charges.
    And it makes a lot of difference which of those because the 
numbers involved are quite different. In any of those cases, 
it's a percentage of that standard so, I mean, it's not 
necessarily at the Medicare level. It might be as others have 
suggested 125 percent of Medicare.
    The advantage of the arbitration process is it allows the 
individual circumstances of a particular case to be dealt with. 
Most States that have used an arbitration process have set it 
up in a way that really views it as something as kind of a last 
resort. Not something that is going to be used on case after 
case.
    And so a combination of when they do adjudicate cases and 
make a decision, those amounts become a part of public 
information and so they can be a lesson to others. But simply 
the fact that there is a potential way to solve a number if you 
can't get to a resolution actually does create the incentive 
for the parties to get together and resolve it on their own.
    They want to avoid the cost of going through that process. 
So there really are some merits and disadvantages on both of 
those approaches.
    Mr. COURTNEY. Hopefully we will move swiftly and make a 
choice because again, this is an issue that can't wait. With 
that I yield back, Madam Chairwoman.
    Chairwoman WILSON. Thank you, Mr. Courtney. Mr. Taylor?
    Mr. TAYLOR. Thank you, Madam Chair. And I will just, you 
know, particularly for the chairwoman that, you know, I 
consistently voted in the State legislature to address this 
particular issue on a bipartisan basis in my time in Texas. And 
it certainly is an issue that we as State legislatures in Texas 
saw as a problem and addressed of course, you know, most 
Americans, you know, over half of Americans are on ERISA plans. 
So we are talking about the big plan, right.
    This is really where the show is from a policy point of 
view. And so one of the questions I had, Ms. Schuman, is just 
what is--and let me just reiterate. It is so important that we 
solve this problem. This is a real problem and it is affecting 
people every single day. And I hope that we craft a bipartisan 
solution in this committee because only a bipartisan solution 
can actually go be signed by the President--can be passed the 
Senate and go be signed by the President.
    Otherwise, we are just sending another messaging bill which 
will have no impact and not really solve the problem. So I 
would rather have something that is going to go all the way to 
the President's desk than something that is going to not get 
anything done.
    But, Ms. Schuman, in your mind, looking at the State 
solutions, I know we have had some discussion about different 
State solutions. What have they done that in your mind is a 
model for us that you think could be supported by Republicans 
and Democrats, get through the Senate and be signed by the 
President?
    Ms. SCHUMAN. Well, thank you so much and I think there are 
some lessons to be learned and maybe drawing from different 
States and taking pieces of different State legislation.
    The California State legislation that we have talked about 
does include a component of capping reimbursement at 125 
percent of Medicare or the--in-network rate as a way to again 
cap reimbursement so as not to undermine network participation. 
Other States that have adopted an arbitration model--
    Mr. TAYLOR. So you're--that's an acceptable solution for 
you? 125 percent?
    Ms. SCHUMAN. Well, I think--
    Mr. TAYLOR. Because your original testimony I thought you 
were saying we shouldn't set prices but it sounds like you 
are--
    Ms. SCHUMAN. Well--
    Mr. TAYLOR [continuing]. saying set prices.
    Ms. SCHUMAN. I think there is two--I think our 
recommendation is twofold and deals with a situation of an--
out-of-network emergency service facility for emergency 
services different than for an in-network hospital.
    Mr. TAYLOR. Okay.
    Ms. SCHUMAN. For emergency services at an--out-of-network 
facility, that means a hospital didn't even contract with the 
plan emergency services, that's what I would suggest that 
capping it at 125 percent of Medicare is a reasonable way of 
approaching that and to foster some sort of equitable 
competition.
    With respect to an--in-network hospital, that--in-network 
hospital should ensure that providers practicing at that 
hospital would pay an--in-network rate.
    So the Medicare reimbursement structure is only with that I 
recommended is only with respect to the--out-of-network 
emergency. Otherwise, you go to a hospital, an--in-network 
hospital,--in-network rate, contracted rate. And that would 
remove the disincentive for these specialties, these hospital-
based specialties not to join the network.
    Mr. TAYLOR. Have you seen the legislative support for those 
two solutions in other States on a bipartisan basis the way 
that we been able to do it--we have not approached it the way 
that you are suggesting. But what we did in Texas was 
bipartisan. I mean--
    Ms. SCHUMAN. Yes.
    Mr. TAYLOR [continuing]. everybody voted for it. It was or 
pretty much everybody voted for it. So it was something that we 
can all agree on. And again, I want to solve this problem here.
    Ms. SCHUMAN. Yes.
    Mr. TAYLOR. At this level. So my question to you is that 
something that you have seen yes, there is a lot of bipartisan 
support for or did that get kind of caught up in a lot of 
partisan politics?
    Ms. SCHUMAN. We are crafting solutions right here. We are 
looking at the problem. We are looking at States like Texas, 
California, no one has come up yet with a comprehensive 
solution that gets it right and gets it right for everyone and 
I think that is what this committee has an opportunity to do.
    Mr. TAYLOR. Okay. And, Madam Chair, I will just reiterate, 
you know, I voted for every effort in Texas to try to address 
this issue because this is a real issue as you point out. I 
think we all know this is a real issue and I just want to 
entreat you as the chair of this subcommittee that you reach 
out and let's get something done on a bipartisan basis so that 
it can go through the Senate and be signed into law by the 
President and we can address some of this problem.
    I know we are not going to probably get a perfect solution 
if it is a bipartisan solution unlike I am sure you could draft 
a perfect solution over on your side. But the problem is a 
perfect solution that doesn't go anywhere is of no help to the 
people that we are trying to help.
    So I am with you and I look forward to working with you on 
this. With that I yield back.
    Chairwoman WILSON. You got a deal. You have got a deal. All 
right. Thank you, Mr. Taylor. And now, Dr. Shalala.
    Ms. SHALALA. Yes, thank you very much, Madam Chair. I have 
always been interested in building on when States have taken on 
an issue building on their experience and it looks to me like 
it is the payment standard and the dispute resolution standard 
that differ between the States.
    Some of the other elements there seems to be consensus on, 
so it sounds like this committee has to focus on those two 
things. And I am with Mr. Taylor. If we can figure out how to 
get a compromise somehow but here is my question because you 
have been answering questions about individual States. Has 
there really been a decrease in the number of out-of-network 
bills since States have adapted, particularly the comprehensive 
States?
    Have these--I haven't seen the answer to the question on 
whether it is actually worked, particularly in the 
comprehensive States. I think Texas is sort of a moderate, 
somewhere in between, but I am particularly interested in the 
comprehensive States.
    My own State, Florida, which is for the most part 
represented by my colleagues on the other side, has had a 
comprehensive approach. California has had a comprehensive 
approach. So, could you talk a little about how effective these 
approaches have been?
    Dr. HOADLEY. Yes, I can talk about that. It's a really good 
question. One of the challenges we have is that a lot of these 
have only been in effect a relatively short time and it is 
noteworthy that many of these solutions, I think really all of 
the States have done this in a very bipartisan way. And have 
brought together--and the ones that have been most successful 
is when they have really brought both parties and all the 
different stakeholders to the table.
    Now there has been some look at the track in New York 
because it is one of the ones that has been in effect a few 
years now and I think we are finding, I have colleagues at 
Georgetown that are taking a closer look at sort of what's 
worked and what hasn't in New York and they'll have that report 
done soon.
    But what I understand they're finding so far is a general 
degree of satisfaction. That stakeholders across the spectrum 
do think that things have worked out pretty well and there is 
some research evidence that there has been no particular 
inflationary effect coming out of the process they've used in 
New York and so that's an encouraging sign.
    You know, Florida has had a different approach in for a few 
years and then they revised the approach just a couple of years 
ago. I have not heard any particular feedback yet from Florida 
on how well that's played out. California's is relatively new. 
New Jersey is quite new and so that's the--that's really the 
challenge in trying to learn the lessons.
    But I think the overall impression at least qualitatively, 
when we interview stakeholders and insurance department 
officials and others that are involved in this is that they 
feel like the solutions they've had have been pretty successful 
and then they go back and make adjustments where they find gaps 
and maybe that's a little easier to do in a State legislative 
context than it is in Federal legislation, but they have been 
able to go back in many of these States and make adjustment and 
try to improve their law.
    Ms. SHALALA. But it sounds to me like we have to learn from 
the adjustments.
    Dr. HOADLEY. Yes.
    Ms. SHALALA. As we are crafting national legislation. I 
have one other quick question and that's about air ambulances. 
I live in Florida. Air ambulances are often out-of-network. And 
I think the GAO recently said that 69 percent of the air 
ambulances were out-of-network. Have any of you thought about 
that in particular? Yes, Ms. Young.
    Ms. YOUNG. Yes. So, as you know, this is an acute problem 
in the air ambulance context for exactly the same reason it's a 
problem in the other areas of the market that we have been 
talking about.
    Because there is no incentive for these providers to go in-
network because when somebody needs an air ambulance, they're 
going to be picked up by a particular air ambulance and a 
patient just doesn't have a choice about the network status. 
So, the solution here is the same as we have been talking about 
for all other provider types.
    You need to sort of create conditions that diminish the 
attractiveness of remaining out-of-network and encourage these 
folks to come in-network at a reasonable price or to otherwise 
sort of get paid an appropriate amount, so by setting a payment 
standard or otherwise establishing a mechanism by which these 
folks can get paid an appropriate amount.
    The other complication with air ambulances which I think is 
important for this committee to consider is that States are 
generally preempted from regulating air ambulance conduct and 
so it's a place where in particular you need Federal activity. 
The one other thought that I think is important as we think 
about evaluating State solutions is and what States have done 
so far is not just whether or not the State law has decreased 
surprise bills or out-of-network bills but also what effect it 
has had on overall health care costs. Because you can have a 
law that sort of makes a lot of people happy by paying more 
money to these specialties and we also need to be considering 
the effect we are having on premiums and overall spending.
    Ms. SHALALA. Thank you.
    Chairwoman WILSON. Thank you, Ms. Young.
    Ms. SHALALA. I yield back.
    Chairwoman WILSON. Thank you, Dr. Shalala. Mr. Banks.
    Mr. BANKS. Thank you, Madam Chair. Consolidation of the 
health care sector is something that we need to consider when 
looking at some of the high hospital costs faced by our 
constituents. A number of government policies discourage a 
thriving and competitive hospital market including lack of site 
neutral payments at the Federal level and certificate of need 
regulations at the State level.
    While I agree that surprise billing is a problem that we 
need to address, it is important that we not pursue policies 
that encourage even more consolidation in the hospital market 
which countless studies have shown drives prices up to 
unaffordable levels.
    Ms. Schuman, your testimony mentions bundled payments as a 
possible remedy for surprise billing. First, can you explain to 
the committee how bundled payments would look different from 
the system that we currently have?
    Ms. SCHUMAN. Sure. You'd get one payment from the hospital 
for all of the services that were provided at that hospital. So 
instead of getting one bill from an--in-network facility and 
the anesthesiologist that was out-of-network and you get a 
different bill from their practice and the radiologist that did 
an MRI on you and they're out-of-network. You get a different 
bill from them. A balance bill by the way that oh, it was a 
surprise, you didn't know about.
    The idea of a bundled service is its one stop shopping at 
an--in-network hospital, an in-network facility. So they make 
sure that when they contract with the plan you're contracting 
for a bundled of service, that continuum of care that the 
patient is going to receiving.
    And I do think that there is some promise in looking at 
that and it certainly does bring hospitals into the equation 
and they're a necessary partner. But we do have to have some 
guardrails around there to make sure that doesn't further 
escalate and increase costs and just become a bundled payment 
of a much higher billed charges. And that it's also indeed a 
final payment, not a starting point.
    Mr. BANKS. I have another question to followup with it you 
had a quick--
    Mr. ISASI. I was just going to say, Congressman, it's such 
an important question you are asking which are the unintended 
consequences in trying to solve this problem. And this idea 
that by trying to get providers to coordinate and work in 
networks, you can create consolidation and then you can really 
damage competition and price goes up. And it's a very valid 
concern.
    In this instance, however, we are dealing with these, what 
folks refer to as auto-referrals or inelastic demand where 
these providers' are--this isn't a situation in which you have 
two competitive providers who are operating. And then you are 
bringing them together and you're killing competition.
    It's an instance where you have these providers who are 
protected from competition because they get these auto-
referrals, right. And it could be because when I come in for a 
service in this facility the lab service goes here and there is 
no competition, right.
    So, I think it is a really important question. We are doing 
a lot of thinking about that at Families. It's a central part 
of a focus of our work in the coming year, but in this 
instance, because you are in this auto-referral environment 
with inelastic demand, it's actually the opposite problem. 
These guys never compete because they can just count on this 
volume no matter what.
    Mr. BANKS. And thank you for that. Let me move on really 
quick. Because Medicare pays hospital owned outpatient 
departments more than independent practices, hospitals have a 
strong incentive to purchase outpatient departments in clinics. 
Not only does this results in higher copays and out-of-pocket 
expenses for patients, it pushes overall costs higher through 
increased consolidation.
    Ms. Schuman and Mrs. Young, or the other of you who want to 
weigh in on this too if we have time left, is it fair to worry 
that a bundled services model of payment could encourage even 
more vertical consolidation in the hospital market and further 
drive up costs just like the lack of site neutral payments? Ms. 
Young?
    Ms. YOUNG. Sure, I can start. So I think that in this 
arena, these are already providers that are sort of by 
definition practicing in the hospital. Your anesthesiologists, 
your radiologists, they are already delivering the services in 
the context of a hospital inpatient stay or an emergency 
department visit. So, I think there is less reason to be 
worried about it in this context of others.
    I would also add that these provider groups and hospitals 
typically have, already have sort of linked financial 
relationships so there is--you're not creating a new dynamic or 
a new set of incentives here.
    Mr. BANKS. Ms. Schuman, I got 20 seconds left.
    Ms. SCHUMAN. Yes, so I would just reiterate those same 
comments and want to do--and also the importance and advocacy 
for site neutral payment reform as a way to remove some of the 
disincentives to a lack of competition and consolidation. And 
as I said before, I think the bundled payment model could have 
some promise here but we need to include the appropriate 
guardrails.
    Mr. BANKS. I wish I had my--
    Chairwoman WILSON. Thank you.
    Mr. BANKS [continuing]. more time for the rest of you but 
my time has expired.
    Chairwoman WILSON. Thank you, Mr. Banks. Mr. Morelle.
    Mr. MORELLE. Thank you, Madam Chair, for holding this very 
important hearing. I just want to note that during my time in 
the New York State Assembly tackling the issue of surprise 
billing was priority for me when I serve as chair of the 
insurance committee. And then as majority leader, I am very 
proud that our work culminated in the bipartisan passage of New 
York's groundbreaking out-of-network consumer protection law.
    And I just want to take a moment or two to just describe 
what we did and then to get some feedback from the panel. This 
law took effect in 2015, so it has been on the books now for 
several years.
    And the law created transparency and a simple system for 
resolving out-of-network medical bills which we believe makes 
life easier for every New Yorker that would otherwise be hit 
with costly bills that would devastate their families.
    In addition--and this was really important to us as we were 
drafting--that the law did not in my view create a perverse 
incentive for people, providers to move out-of-network because 
they would get a benefit financially from doing so, and we 
avoided that.
    In New York, hospitals, clinics, physicians, provide 
patients with public information regarding standard charges for 
medical services and insurance plan participation, and the law 
allows patients to be smart consumers of medical care, reducing 
the possibility of the first place of being hit with an out-of-
network charge.
    But even more importantly, the law provides a mechanism for 
providers and insurers to come together to resolve out-of-
network charges without stress or additional costs to the 
patient.
    In cases where patients received emergency services at an 
out-of-network facility, the patient is held harmless paying 
the same exact copay or deductible as they would as an in-
network emergency department.
    And even patients without insurance or those with non-State 
regulated health insurance are eligible to file a dispute for 
an emergency services bill so those self-insured and other 
plans covered by ERISA not regulated by the State.
    In addition to surprise emergency room bills, New York 
patients are protected when a non-emergency provider sends them 
an unexpected bill and rather than being forced to cover out-
of-network costs from their own pocket, patients do an 
assignment of benefit to their provider who then has to 
negotiate a reimbursement amount with their health plan. So 
again, the consumer is taken out of it.
    In the rare cases that negotiation is unsuccessful, an 
independent arbitrator is able to make the determination to set 
a reimbursement rate within 30 days.
    I think it says a lot that in most cases arbitration is not 
necessary. I heard yesterday, and I have got to verify this, 
but roughly 800 arbitrations out of 7 million claims 
information. Instead insurers and providers can reach an 
acceptable deal without the consumer having to pay any--devote 
any more time, money or any more headaches.
    The law has helped settle about 2,000 billing disputes and 
protecting those New Yorkers from potential harmful medical 
debt.
    To my colleague, Ms. Shalala, I just want to note my data 
shows that out-of-network bills in New York has declined 34 
percent since the law took effect in January or I think January 
2015.
    In addition, prices charged by in-network emergency room 
doctors have dropped by 9 percent. So, it is rare but in New 
York and I have talked within the last several days in advance 
of this hearing to insurance plans, consumers, and health care 
providers and they all agree that the system has changed for 
the better and frankly there is not much that those three 
groups necessarily agree on.
    So to any of our panelists and I apologize, that was sort 
of a long intro to this, but I would be curious as to your 
observation of New York's law which has been in place now three 
plus years and whether or not there are things that New York 
has done that could be done better in your view and what 
barriers there would be to putting those protections at the 
Federal level? And I would ask each of you to quickly just--
    Ms. YOUNG. So, I'll be quick. I think the strengths of the 
New York law are that it is very comprehensive and it's clear 
to stakeholders what the process looks like.
    The potential reason for concern is that I think that 
because the New York law gives guidance to arbiters that's 
based on charges for services, it has the potential to be 
inflationary over time. It is a concern that a lot of observers 
have about how the New York law may evolve and I would 
encourage folks to think carefully about that.
    Mr. MORELLE. And the direction we use is that 80 percent of 
the usual and customary charge is determined by the Fair Health 
Plan.
    Ms. YOUNG. Right. So, it is 80 percent of charges. The 
problem with charges is they're not market-determined. So, it's 
a bit like saying sort of, you know, the 80th percentile of 
your wish list to Santa. Over time there is no constraint on 
what you ask Santa for, so it can be inflationary over time in 
ways that we should think carefully about.
    Mr. MORELLE. Got you. Any others?
    Ms. SCHUMAN. Yes, I want to just raise that same sentiment 
and the concern that an arbitration model that in any way uses 
a reference to billed charges is just going to billed in those 
same perverse incentives that we're trying to address.
    Mr. MORELLE. I do note--
    Chairwoman WILSON. Thank you.
    Mr. MORELLE [continuing]. the end response.
    Chairwoman WILSON. Thank you.
    Mr. MORELLE. I'm sorry. Let me just do this, Madam Chair. I 
would ask unanimous consent to submit the following letter from 
the Heath Association of New York State which highlights the 
success of comprehensive legislation in New York to eliminate 
surprise billings and the benefits it's created for New 
Yorkers.
    Chairwoman WILSON. Without objection.
    Mr. MORELLE. Thank you.
    Chairwoman WILSON. Thank you so much, Mr. Morelle. Mr. 
Watkins.
    Mr. WATKINS. Thank you, Madam Chairwoman. Nobody likes 
going home, opening the envelope and finding a surprise medical 
bill. Lack of network and cost transparency seems to be a 
problem. As Congress members, where should we start looking to 
find a solution to this? Are there State law or State law 
models that we could adapt at the national level? Ms. Schuman?
    Ms. SCHUMAN. Sure. Sure, happy to talk about that. and I 
think your--we can look to the State models as examples. As we 
talked about before, they have limited application in the sense 
that they don't include ERISA plans so that's a large swath of 
people that aren't going to be protected by State laws.
    So and also some of them are rather new. So we don't really 
know what their application over time is and just the 
discussion we were just having for example with respect to New 
York and the arbitration model there, I think we can, we need 
to guard against any sort of structure in an arbitration model 
that would use billed rates as direction to the arbitrator. 
Because that would I think just fuel and further incentivize 
out-of-network providers to stay out-of-network and raise their 
bill charges.
    So we have got certainly lessons that we look to the States 
but recognizing again that to get at the problem and its root 
and in a uniform matter we need Congress to act.
    Mr. WATKINS. Thank you, Ms. Schuman. Mrs. Chairwoman, I 
yield my time.
    Chairwoman WILSON. Ms. Trahan.
    Ms. TRAHAN. Thank you, Madam Chairwoman. Thank you all for 
your testimony today, it has been very helpful.
    My father was an ironworker before he was diagnosed with 
multiple sclerosis. MS as you all know is an unpredictable and 
disabling disease of the central nervous system. And for those 
living with a chronic and progressive disease like MS, surprise 
billing adds undue stress and financial uncertainty.
    For instance, an individual living with MS might go to an 
in work facility--an in-network facility but be seen by an out-
of-network neurologist.
    So, Ms. Young, we all have heard stories from family 
members and from our constituents who have received surprise 
medical bills even after carefully researching their provider 
networks. How can we best protect these individuals who suffer 
from chronic diseases like MS from surprise medical bills in 
all settings of care, including those non-emergency situations?
    Ms. YOUNG. Thanks for that question. So, there are two key 
principles in designing a solution. The first is to take 
patients out of the middle as we have talked about. It's 
essential that patients not be responsible for these balance 
bills and not have the burden placed on them to navigate the 
system.
    And the second principle in designing a solution is to 
create a system that doesn't drive up overall health care 
spending. And with the group of scholars at the Brookings 
Institution, we have recommended two potential policy 
solutions.
    One we call billing regulation. It's something that we have 
talked a lot about this morning where we would use policy to 
set a cap on what providers can get paid out-of-network. Again, 
our goal here isn't to determine the ultimately correct 
commercial payment rate, it's just to end the lucrative out-of-
network billing option and instead restore sort of a more 
normal set of market incentives for these folks. So that's one 
option.
    And that's what we see in all States or the vast majority 
of States that have tackled this problem. They use a model that 
looks like that.
    The other potential approach is something that we have 
called contracting regulation, you have heard from others under 
the name of bundling but the idea is simply to get this group 
of providers out-of-the business of billing patients directly 
at all. That's a big step, it's a big change from the way these 
services are billed today but it does have analogs in other 
parts of our health care system. It is how nurses and nursing 
services are paid and billed today. So, I think it is an area 
worthy of exploration.
    Ms. TRAHAN. Great, thank you. Thank you for that. Mr. 
Isasi, I--the workplace is a single, is the single largest 
source of health coverage in the United States. According to 
the Kaiser Family Foundation about 152 million Americans, which 
is about half of our non-elderly population, are enrolled in 
employer-sponsor health insurance.
    So, I think it is critical for us to highlight how surprise 
billing impacts employer-sponsored insurance specifically. How 
common are surprise bills among enrollees in employer-sponsored 
plans?
    Mr. ISASI. Yes. Well, what we know is the research is very 
clear. They are as common in employer-sponsored coverage as 
they are in insured or individual plans. There is no 
difference. It happens just as often.
    Ms. TRAHAN. So same--no difference between individual and 
group market?
    Mr. ISASI. Exactly. Exactly.
    Ms. TRAHAN. How should the committee proceed then in order 
to fully protect workers in terms--from your view?
    Mr. ISASI. Yes. Well, I think the principles we are 
hearing, there's such broad agreement on the panel and amongst 
all the members. This is really clear. As we talked about 
earlier, this is a situation in which the tail is wagging the 
dog, right.
    When you enroll in health insurance and your hospital says 
this is our network, you get to go to that hospital and get 
services and be in-network. Right. You don't get to be 
surprised because your hospital decided, you know what, we are 
not going to negotiate with the ER docs, they will be out-of-
network. Or we are not going to negotiate for laboratory 
services, right.
    So, this principle that the entity that should bear the 
risk of building the network and paying for it and making sure 
those services are part of the contract is the hospital, the 
payer and the provider. Not the consumer. So, the consumer is 
taken out-of-the equation is a really important one.
    The second one is the idea that transparency is not nearly 
enough. We all know this, we know this from our experience, we 
know this from the research that the health care sector cannot 
provide real, actual information to consumers at point of 
service about what their network looks like, what their costs 
are. There is lots and lots of data about this.
    And so you can't put the onus on the consumer to just 
simply figure out what the price is or whether or not they are 
in-network.
    I think the third is this idea that patients--this is not 
just about emergency services. Right. It's about ancillary 
services that can occur without your even knowing. So, if you 
go get surgery, your surgeon is in-network, your hospital is 
in-network, but your anesthesiologist is not. That can't happen 
either.
    Ms. TRAHAN. Well, great.
    Chairwoman WILSON. Thank you.
    Ms. TRAHAN. Thank you so much. I yield back.
    Chairwoman WILSON. Thank you, ma'am. There are no more 
members here. Anyone else--questions? Wow. Okay.
    I want to remind my colleagues that pursuant to committee 
practice, materials for submission for the hearing record must 
be submitted to the committee clerk within 14 days following 
the last day of the hearing. Preferably in Microsoft Word 
format.
    The materials submitted must address the subject matter of 
the hearing. Only a member of the committee or an invited 
witness may submit materials for inclusion in the hearing 
record. Documents are limited to 50 pages each. Documents 
longer than 50 pages will be incorporated into the record via 
an internet link that you must provide to the committee clerk 
within the required timeframe. But please recognize that years 
from now that link may no longer work.
    Again, I want to thank the witnesses for their 
participation today. Thank you so, so much. This was fabulous. 
What we have heard is very valuable.
    Members of the committee may have some additional questions 
for you and we ask the witnesses to please respond to those 
questions in writing. The hearing record will be held open for 
14 days in order to receive those response. And I will 
guarantee you, you will have lots of questions. Everyone seemed 
to have run out of time.
    I remind my colleagues that pursuant to committee practice, 
witness questions for the hearing record must be submitted to 
the majority committee staff or committee clerk within 7 days. 
The questions submitted must address the subject matter of the 
hearing.
    I am now going to ask the ranking member, our distinguished 
Mr. Walberg for his closing statement.
    Mr. WALBERG. Thank you, Madam Chairwoman, and thank you for 
leading this hearing today. It is something that I think a lot 
of us have looked forward to as we have begun to hear more and 
more of the problem and it is not just my situation. Or yours. 
It's running rampant at this point in time.
    It's impacting our employees, its impacting our employers. 
It's impacting our health care providers, our insurance 
industry.
    But I think what came out today to me most importantly was 
that No. 1 concern we need to address and I think in unanimity 
here on this panel as well. We believe it is the patient. The 
patient who has the need at the moment, seeking the care from 
probably the best health care opportunity in the world, and yet 
some of the highest costs that continue to be there because a 
system is literally confused if not broken. And so as I have 
listened today, Madam Chairwoman, I think we can come to an 
agreement and I think the fact that we have people here on this 
panel, this committee, who have done yeoman effort in their own 
States to come up with solutions, I think we have had a head 
start in understanding some of the pitfalls we can stay away 
from.
    Some of the benefits we can go directly toward and 
ultimately a solution that will indeed be a compromise, but a 
compromise that is a long way ahead of where it could have been 
had we not had the expertise or the experience involved.
    In the end, with a society that is not only intent on 
having health care available, and we do our effort, our 
research to find our physician that is in-network, our hospital 
that is in-network and we think we have it all done for 
ourselves. We need to make sure that is the case.
    But I think also let's not forget the fact that we are a 
mobile society. We travel all over. And one of my passions, 
indeed maybe my only advice--only vice that I will admit to, 
other than fly fishing is motorcycling.
    When I travel around the country on my motorcycle, if 
something perchance would happen, I want to make sure I am 
taken to a hospital, hopefully not by a helicopter but 
hopefully not by even an ambulance, but if I am, that I am 
cared for.
    And ultimately in this great country, I am not put into a 
situation that's financially impossible as a result of taking 
the care that is good care but in a place that happens to be 
out-of-network.
    So I am, I commit myself for working with you, Madam 
Chairwoman, and appreciate your efforts on this behalf and 
hopefully we will come to a conclusion sooner rather than 
later. I yield back.
    Chairwoman WILSON. Thank you, Mr. Walberg. We are going to 
work toward that goal together. Yes. Okay. I now recognize 
myself for the purpose of making my closing statement.
    Again and again I would like to thank the witnesses for 
providing their testimony today. This has been fabulous. This 
hearing is the first step in what I hope can be a bipartisan 
conversation as we work to develop a solution to the challenge 
of surprise medical billing.
    As the committee of jurisdiction over employer-sponsored 
health coverage, we have a crucial role to play in developing 
comprehensive legislation to address this problem. Our 
witnesses' testimony will prove invaluable as we move forward. 
We heard from Ms. Young about the prevalence and impact of 
surprise bills as well as some potential ideas for solutions to 
this problem.
    We heard from Ms. Schuman about the perspective of large 
employers regarding surprise bills.
    We heard from Mr. Isasi about the devastating impact these 
bills have on consumers, as well as some key principles that 
should guide us as we look forward toward reform.
    And we heard from Dr. Hoadley about the innovative 
solutions that States have taken to protect consumers from 
surprise bills.
    As our witnesses have made it clear, it is up to Congress 
to move forward to comprehensively address this issue on behalf 
of our constituents.
    I look forward to continuing this process in the weeks and 
months ahead.
    I thank my colleagues for an informative and productive 
discussion, and I yield back my time.
    If there is no further business, without objection, the 
committee stands adjourned. Thank you.
    [Additional submissions by Mrs. Foxx follow:]
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    [Additional submissions by Mr. Morelle follow:]
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    [Additional submissions by Mr. Scott follow:]
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    [Additional submission by Mr. Walberg follows:]
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    [Questions submitted for the record and their responses 
follow:]
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    [Whereupon, at 12:28 p.m., the subcommittee was adjourned.]

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