[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:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 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:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 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:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 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:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [Additional submissions by Mr. Morelle follow:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [Additional submissions by Mr. Scott follow:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [Additional submission by Mr. Walberg follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [Questions submitted for the record and their responses follow:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [Whereupon, at 12:28 p.m., the subcommittee was adjourned.] [all]