[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
EXAMINING SURPRISE BILLING:
PROTECTING PATIENTS FROM
FINANCIAL PAIN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
COMMITTEE ON EDUCATION
AND LABOR
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, APRIL 2, 2019
__________
Serial No. 116-14
__________
Printed for the use of the Committee on Education and Labor
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: www.govinfo.gov
or
Committee address: https://edlabor.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
36-589 PDF WASHINGTON : 2019
--------------------------------------------------------------------------------------
COMMITTEE ON EDUCATION AND LABOR
ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman
Susan A. Davis, California Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona Ranking Member
Joe Courtney, Connecticut David P. Roe, Tennessee
Marcia L. Fudge, Ohio Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan, Tim Walberg, Michigan
Northern Mariana Islands Brett Guthrie, Kentucky
Frederica S. Wilson, Florida Bradley Byrne, Alabama
Suzanne Bonamici, Oregon Glenn Grothman, Wisconsin
Mark Takano, California Elise M. Stefanik, New York
Alma S. Adams, North Carolina Rick W. Allen, Georgia
Mark DeSaulnier, California Francis Rooney, Florida
Donald Norcross, New Jersey Lloyd Smucker, Pennsylvania
Pramila Jayapal, Washington Jim Banks, Indiana
Joseph D. Morelle, New York Mark Walker, North Carolina
Susan Wild, Pennsylvania James Comer, Kentucky
Josh Harder, California Ben Cline, Virginia
Lucy McBath, Georgia Russ Fulcher, Idaho
Kim Schrier, Washington Van Taylor, Texas
Lauren Underwood, Illinois Steve Watkins, Kansas
Jahana Hayes, Connecticut Ron Wright, Texas
Donna E. Shalala, Florida Daniel Meuser, Pennsylvania
Andy Levin, Michigan* William R. Timmons, IV, South
Ilhan Omar, Minnesota Carolina
David J. Trone, Maryland Dusty Johnson, South Dakota
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair
Veronique Pluviose, Staff Director
Brandon Renz, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
FREDERICA S. WILSON, Florida, Chairwoman
Donald Norcross, New Jersey Tim Walberg, Michigan
Joseph D. Morelle, New York Ranking Member
Susan Wild, Pennsylvania David P. Roe, Tennessee
Lucy McBath, Georgia Rick W. Allen, Georgia
Lauren Underwood, Illinois Francis Rooney, Florida
Haley M. Stevens, Michigan Jim Banks, Indiana
Joe Courtney, Connecticut Russ Fulcher, Idaho
Marcia L. Fudge, Ohio Van Taylor, Texas
Josh Harder, California Steve C. Watkins, Jr., Kansas
Donna E. Shalala, Florida Ron Wright, Texas
Andy Levin, Michigan Dan Meuser, Pennsylvania
Lori Trahan, Massachusetts Dusty Johnson, South Dakota
(VACANT)
C O N T E N T S
----------
Page
Hearing held on April 2, 2019.................................... 1
Statement of Members:
Walberg, Hon. Tim, Ranking Member, Subcommittee on Health,
Employment, Labor, and Pensions............................ 4
Prepared statement of.................................... 6
Wilson, Hon. Frederica S., Chairwoman, Subcommittee on
Health, Employment, Labor, and Pensions.................... 1
Prepared statement of.................................... 3
Statement of Witnesses:
Hoadley, Dr. Jack, Ph.D., Research Professor Emeritus Health
Policy Institute, McCourt School of Public Policy,
Georgetown University...................................... 62
Prepared statement of.................................... 65
Isasi, Mr. Frederick, J.D., MPH, Executive Director, Families
USA........................................................ 51
Prepared statement of.................................... 53
Schuman, Ms. Ilyse, Senior Vice President, Health Policy,
American Benefits Council.................................. 35
Prepared statement of.................................... 37
Young, Ms. Christen Linke, J.D. Fellow, USC-Brookings
Schaeffer Initiative on Health Policy...................... 8
Prepared statement of.................................... 10
Additional Submissions:
Foxx, Hon. Virginia, a Representative in Congress from the
State of North Carolina:
Prepared statement from the American Medical Association
(AMA).................................................. 101
Prepared statement from AHIP............................. 107
Letter dated April 2, 2019, from the American Heart
Association............................................ 117
Letter dated April 2, 2019, from the American Hospital
Association, American Medical Association, Federation
of American Hospitals.................................. 120
Morelle, Hon. Joseph D., a Representative in Congress from
the State of New York:
Letter dated April 2, 2019, from Hanys
Scott, Hon. Robert C. ``Bobby'', a Representative in Congress
from the State of Virginia:
Letter dated April 1, 2019 from the American College of
Emergency Physicians................................... 126
Letter dated April 2, 2019............................... 133
Prepared statement from the American Medical Association
(AMA).................................................. 137
Prepared statement from American Association of Nurse
Anesthetists........................................... 143
Prepared statement from American Academy of Family
Physicians............................................. 147
Prepared statement from the American Hospital Association 149
Letter dated February 20, 2019........................... 155
Prepared statement from the College of American
Pathologists........................................... 157
Letter dated April 9, 2019 from Community Catalyst....... 161
Mr Walberg:
Letter dated April 2, 2019............................... 166
Questions submitted for the record by:
Fulcher, Hon. Russ, a Representative in Congress from the
State of Idaho......................................... 178
Norcross, Hon. Donald, a Representative in Congress from
the State of New Jersey................................ 174
Roe, Hon. David P., a Representative in Congress from the
State of Tennessee
Stevens, Hon. Haley M., a Representative in Congress from
the State of Michigan
Responses to questions submitted for the record by:
Mr. Isasi................................................ 182
Mr. Hoadley.............................................. 191
Ms. Schuman.............................................. 194
Ms. Young................................................ 201
EXAMINING SURPRISE BILLING: PROTECTING PATIENTS FROM FINANCIAL PAIN
----------
Tuesday, April 2, 2019
House of Representatives
Committee on Education and Labor
Subcommittee on Health, Employment, Labor, and Pensions
Washington, DC.
----------
The subcommittee met, pursuant to notice, at 10:15 a.m., in
room 2175, Rayburn House Office Building. Hon. Frederica S.
Wilson [chairwoman of the committee] presiding.
Present: Representatives Wilson, Norcross, Morelle, Wild,
McBath, Underwood, Stevens, Courtney, Shalala, Levin, Trahan,
Walberg, Roe, Allen, Banks, Taylor, Watkins, Wright, Meuser,
and Johnson.
Also present: Representatives Scott and Foxx.
Staff present: Nekea Brown, Deputy Clerk; Ilana Brunner,
General Counsel Health and Labor; Emma Eatman, Press Aide;
Daniel Foster, Health and Labor Counsel; Mishawn Freeman, Staff
Assistant; Christian Haines, General Counsel Education;
Stephanie Lalle, Deputy Communications Director; Andre Lindsay,
Staff Assistant; Kota Mitzutani, Staff Writer; Max Moore,
Office Aide; Merrick Nelson, Digital Manager; Veronique
Pluviose, Staff Director; Banyon Vassar, Deputy Director of
Information Technology; Marty Boughton, Minority Press
Secretary; Courtney Butcher, Minority Coalitions and Members
Services Coordinator; Rob Green, Minority Director of Workforce
Policy; Sarah Martin, Minority Professional Staff Member;
Hannah Matesic, Minority Director of Operations; Kelley McNabb,
Minority Communications Director; Alexis Murray, Minority
Professional Staff Member; Brandon Renz, Minority Staff
Director; Ben Ridder, Minority Legislative Assistant; Meredith
Schellin, Minority Deputy Press Secretary and Digital Advisor;
and Heather Wadyka, Minority Staff Assistant.
Chairwoman WILSON. The Subcommittee on Health, Employment
and Labor and Pensions will come to order. Welcome, everyone.
I note that a quorum is present so I ask unanimous consent
that Ms. Schrier of Washington and Mrs. Davis of California be
permitted to participate in today's hearing with the
understanding that their questions will come only after all
members of the Subcommittee on Health, Employment, Labor and
Pension on both sides of the aisle who are present have had an
opportunity to question the witnesses. Without objection. So
ordered.
The subcommittee is meeting today in a hearing to receive
testimony on ``Examining Surprise Billing: Protecting Patients
from Financial Pain.''
Pursuant to committee rule 7(c), opening statements are
limited to the chair and the ranking member. This allows us to
hear from our witnesses sooner and provides all members with
adequate time to ask questions.
I recognize myself now for the purpose of making an opening
statement. We are here this morning to examine surprise medical
billing, a serious issue that can disrupt if not devastate the
lives of individuals and families.
This is the first hearing the U.S. Congress has held on
surprise billing, and I am proud that our subcommittee is
taking the lead on this important issue. It is my hope that
this will be the first of many productive, bipartisan
conversations.
Surprise medical bills occur when patients covered by
health insurance are subject to higher than expected out-of-
pocket costs for care received from a provider who is outside
of their plan's network. The victims of surprise medical
billing often of have no control over whether their medical
provider is in-or out-of-network.
With one infamous case, a young San Francisco woman named
Nina Dang suffered a severe bike accident. She was barely lucid
when a bystander called an ambulance and took her to an
emergency room at a nearby hospital. Before she knew it,
doctors had done X-rays and scans and put her broken arm in a
splint, and then sent her on her way.
A few months later, Nina was hit with a $20,000 medical
bill because the hospital, which she did not choose, was an
out-of-network facility.
But even patients who are able to take precautions to avoid
out-of-network costs during a medical emergency are not immune
from surprise bills.
Scott Kohan suffered a violent attack one night in Austin,
Texas. He woke up in an emergency room with a broken jaw, a
throbbing headache, and staples in his head. Despite his shock
and immense pain, Scott took out his phone and searched through
his insurer's website to make sure he was laying in an in-
network hospital bed. When he found out it was, he proceeded
with a necessary jaw surgery.
Imagine Scott's frustration and devastation when he
received a surprise medical bill for nearly $8,000. It turned
out that the emergency room was in his insurance network, but
the oral surgeon who worked in the ER was not.
These stories have been documented in detail by Vox
reporter Sarah Kliff. These are not isolated incidents.
According to a survey, 50 percent--57 percent of consumers
report they have received an unexpected medical bill that they
thought would be covered by their insurance.
A separate survey found that 7 in 10 patients who have
received unaffordable out-of-network medical bills were unaware
that their provider was out-of-network at the time they
received the services. This issue requires bold action to
protect patients from the financial pain of surprise medical
bills.
States have taken steps forward by enacting innovative,
bipartisan billing laws. New York, New Hampshire, Connecticut,
New Jersey, Maryland, Illinois, Oregon, California, and my home
State of Florida have all adopted strong reforms that protect
consumers.
Importantly, all of these solutions either hold patients
harmless against charges or prohibit the practice of billing--
of balance billing, where a patient is sent a bill for the
difference between what insurance will pay and what the
provider charges.
We have also seen many States pioneering new ways to
resolve billing disputes between providers and insurers in ways
that, most importantly, take consumers out-of-the middle. These
State-level solutions are promising, and witnesses today will
be able to provide this subcommittee with details on how such
efforts are working in States where they may be falling short.
However, only Congress can fully close the gaps and
loopholes that leave patients vulnerable to severe financial
distress. Most Americans live in States that have not passed
major reforms regarding surprise bills. And even in States that
have enacted reforms, they are unable to regulate self-insured
plans, which cover more than 60 percent of individuals in
employer-sponsored coverage.
Health care has not recently been an area of bipartisan
consensus. Unfortunately, that has only been re-affirmed by the
administration's actions last week to not defend in court the
Affordable Care Act and its protections for people with pre-
existing conditions.
But I am hopeful that this is an opportunity for us to work
together on behalf of our constituents. Surely, we can all
agree that a patient should not have to spend the last few
minutes before emergency surgery researching whether everyone
in the operating room is in-network. And Dr. Roe came over to
me this morning and said I am so glad that you are having this
hearing.
I am grateful to the witnesses for their time and testimony
here today and I look forward to working with my colleagues and
with stakeholders as we develop a solution to the challenge of
surprise medical billing.
Now I want to recognize Ranking Member Walberg for the
purpose of an opening statement. The esteemed Representative
Walberg.
[The statement of Chairwoman Wilson follows:]
Prepared Statement of Hon. Frederica S. Wilson, Chairwoman,
Subcommittee on Health, Employment, Labor, and Pensions
We are here this morning to examine surprise medical billing a
serious issue that can disrupt, if not devastate, the lives of
individuals and families.
This is the first hearing the U.S. Congress has held on surprise
billing, and I am proud that our subcommittee is taking the lead on
this important issue. It is my hope that this will be the first of many
productive, bipartisan conversations.
Surprise medical bills occur when patients covered by health
insurance are subject to higher than expected out-of-pocket costs for
care received from a provider who is outside their plan's network.
The victims of surprise medical billing often have no control over
whether their medical provider is in-or out-of-network.
In one infamous case, a young San Francisco woman named Nina Dang
suffered a severe bike accident. She was barely lucid when a bystander
called her an ambulance that took her to an emergency room at a nearby
hospital.
Before she knew it, doctors had done X-rays and scans and put her
broken arm in a splint, and then sent her on her way. A few months
later, Nina was hit with a $20,000 medical bill because the hospital
which she did not choose was an out-of-network facility.
But even patients who are able to take precautions to avoid out-of-
network costs during a medical emergency are not immune from surprise
bills.
Scott Kohan suffered a violent attack one night in Austin, Texas.
He woke up in an emergency room with a broken jaw, a throbbing
headache, and staples in his head. Despite his shock and immense pain,
Scott took out his phone and searched through his insurer's website to
make sure he was laying in an in-network hospital bed.
When he found out it was, he proceeded with a necessary jaw
surgery.
Imagine Scott's frustration when he received a surprise medical
bill for nearly $8,000. It turned out the emergency room was in his
insurance network, but the oral surgeon who worked in that ER was not.
These stories, which have been documented in detail by Vox reporter
Sarah Kliff, are not isolated incidents.
According to a recent survey, 57 percent of consumers report they
have received an unexpected medical bill that they thought would be
covered by their insurance. A separate survey found that seven in 10
patients who have received unaffordable out-of-network medical bills
were unaware that their provider was out-of-network at the time they
received the services.
This issue requires bold action to protect patients from the
financial pain of surprise medical bills.
States have taken steps forward by enacting innovative, bipartisan
surprise billing laws. New York, New Hampshire, Connecticut, New
Jersey, Maryland, Illinois, Oregon, California, and my home State of
Florida have all adopted strong reforms that protect consumers.
Importantly, all of these solutions either hold patients harmless
against charges or prohibit the practice of balance billing, where a
patient is sent a bill for the difference between what insurance will
pay and what the provider charges.
We have also seen many States pioneering new ways to resolve
billing disputes between providers and insurers in ways that, most
importantly, take consumers out of the middle.
These State-level solutions are promising, and witnesses today will
be able to provide this subcommittee with details on how such efforts
are working in States, or where they may be falling short.
However, only Congress can fully close the gaps and loopholes that
leave patients vulnerable to severe financial distress.
Most Americans live in States that have not passed major reforms
regarding surprise bills. And even in States that have enacted reforms,
they are unable to regulate self-insured plans, which cover more than
60 percent of individuals in employer-sponsored coverage.
Health care has not recently been an area of bipartisan consensus.
Unfortunately, that has only been re-affirmed by the administration's
actions last week to not defend in court the Affordable Care Act and
its protections for people with pre-existing conditions.
But I am hopeful that this is an opportunity for us to work
together on behalf of our constituents.
Surely, we can all agree that a patient should not have to spend
the last few minutes before emergency surgery researching whether
everyone in the operating room is in-network.
I am grateful to the witnesses for their time and testimony here
today, and I look forward to working with my colleagues and with
stakeholders as we develop a solution to the challenge of surprise
medical billing.
______
Mr. WALBERG. I could get used to that, Madame Chairperson.
Thank you. And thank you for this hearing. I think along with
Dr. Roe and the rest of my Subcommittee members, and I think we
concur that this is an issue we ought to be dealing with.
And we shouldn't delay in considering options even as we
stand on this side of the aisle also very strongly supportive
of taking care of preexisting conditions as well. This
certainly falls into that area.
The high and rising cost of health care is a significant
worry for families, workers, and employers across the country.
Concerns about high premiums, high deductibles, and drug prices
are known and well documented. But the issue of surprise
billing has rapidly risen to the forefront of people's worries
when it comes to health care.
Surprise billing, sometimes called balance billing happens
when a patient visits an--out-of-network care facility or even
when they are at an--in-network care facility but are seen by a
doctor who is not in their network.
The story of surprise billings may go something like this.
A worker who is having trouble breathing visits an emergency
room at a hospital in his or her health insurance network.
While there, they receive an x-ray of their chest and is seen
by a doctor who is, who prescribes medicine to ease the strain
on the lungs.
Following the visit, he or she gets a bill--a high bill for
the trip to the emergency room. Even though the hospital was
technically in in-network, the doctor who saw him was not,
leaving him to pay for the cost of treatment.
This understandably causes frustration for individuals who
thought they did everything correct. It can also cause a high
degree of uncertainty and stress for workers and families as
they try to find the money to pay for the health care service
they believed would be handled by their insurance. According to
a 2018 poll from the Kaiser Family Foundation, surprise medical
bills are the leading health care concern for Americans
surpassing concerns about high premium, high deductibles, and
rising drug costs.
39 percent of insured working age adults reported they had
received a surprise medical bill in the past year from a
doctor, hospital, or lab that they thought was covered by their
insurance. Of the 39 percent of individuals who received
surprise medical bills, 50 percent owed more than $500.
The fear of an unexpected medical bill can be paralyzing
and we don't want Americans foregoing care they need for fear
that they will end up responsible for medical expenses that
they can't afford.
We need solutions that equip patients with the information
they need to confidently seek treatment without the worry they
will faced a huge surprise bill. About 60 percent of workers or
110 million individuals are insured through employer-sponsored
health care plans under the Employee Retirement Income Security
Act, ERISA.
Employer provided coverage is important to workers around
the country. Employers can custom design a health care plan
best suited to their workers needs which helps them retain
their work force and also an important recruiting tool.
I just had a conversation with an employer this morning, a
major employer in Detroit, who as a result of opportunities now
has looked for additional benefits that they can supply for
their employees.
A 2018 study from AHIP found that over 70 percent of
workers are satisfied with their employer sponsored coverage.
22 States have laws addressing surprise billing. However,
under ERISA, self-insured employer-sponsored plans are only
subject to Federal rules and protections and State rules and
regulations on health insurance do not apply.
Promoting public policy solutions that allow employers to
continue offering high quality health coverage is good for
employers and employees alike. That's why we are here today, to
listen and learn from a variety of stakeholders about different
proposals to address this serious issue.
With this in mind, we recognize that any potential Federal
policy solution to end the practice of surprise billing must
preserve important ERISA protections and ensure that self-
insured plans remain subject to Federal law alone.
Committee Republicans are committed to pursuing policies
that lower costs, expand choice, and end surprise billing for
insured individuals. Workers and families deserve certainty
about their health care coverage and I look forward to
discussing how we can provide a better way forward for the
American people. Thank you and I yield back.
[The statement of Mr. Walberg to follows:]
Prepared Statement of Hon. Tim Walberg, Ranking Member, Subcommittee on
Health, Employment, Labor, and Pensions
Thank you for yielding.
The high and rising cost of health care is a significant worry for
families, workers, and employers across the country. Concerns about
high premiums, high deductibles, and drug prices are known and well-
documented, but the issue of surprise billing has rapidly risen to the
forefront of peoples' worries when it comes to health care.
Surprise billing, sometimes called balance billing, happens when a
patient visits an out-of-network care facility, or even when they are
at an in-network facility but are seen by a doctor who is not in their
network. The story of surprise billing may go something like this: A
worker who's having trouble breathing visits an emergency room at a
hospital in his health insurance network. While there, he receives an
X-ray of his chest and is seen by a doctor who prescribes medicine to
ease the strain on his lungs. Following the visit, he gets a bill a
high bill for the trip to the emergency room. Even though the hospital
was technically in-network, the doctor who saw him was not, leaving him
to pay for the cost of the treatment.
This understandably causes frustration for individuals who thought
they did everything correct. It can also cause a high degree of
uncertainty and stress for workers and families as they try to find the
money to pay for the health care service they believed would be handled
by their insurance.
According to a 2018 poll from the Kaiser Family Foundation,
surprise medical bills are the leading health care concern for
Americans, surpassing concerns about high premiums, high deductibles,
and rising drug costs. Thirty-nine percent of insured working-age
adults reported they had received a surprise medical bill in the past
year from a doctor, hospital, or lab that they thought was covered by
their insurance. Of the 39 percent of individuals who received surprise
medical bills, 50 percent owed more than $500.
The fear of an unexpected medical bill can be paralyzing, and we
don't want Americans forgoing care they need for fear that they'll end
up responsible for a medical expense they can't afford. We need
solutions that equip patients with the information they need to
confidently seek treatment without the worry they'll face a huge
surprise bill.
About 60 percent of workers, or 110 million individuals, are
insured through employer-sponsored health care plans under the Employee
Retirement Income Security Act (ERISA). Employer-provided coverage is
important to workers around the country. Employers can custom design a
health care plan best-suited to their workers' needs, which helps them
retain their work force and is also an important recruiting tool. A
2018 study from AHIP found that over 70 percent of workers are
satisfied with their employer-sponsored coverage.
Twenty-two States have laws addressing surprise billing; however,
under ERISA, self-insured employer-sponsored plans are only subject to
Federal rules and protections, and State rules and regulations on
health insurance do not apply.
Promoting public policy solutions that allow employers to continue
offering high-quality health coverage is good for employers and
employees alike. That's why we're here today to listen and learn from a
variety of stakeholders about different proposals to address this
serious issue. With this in mind, we recognize that any potential
Federal policy solutions to end the practice of surprise billing must
preserve important ERISA protections and ensure that self-insured plans
remain subject to Federal law alone.
Committee Republicans are committed to pursuing policies that lower
costs, expand choice, and end surprise billing for insured individuals.
Workers and families deserve certainty about their health care
coverage, and I look forward to discussing how we can provide a better
way forward for the American people.
______
Chairwoman WILSON. Without objection all other members who
wish to insert written statements into the record may do so by
submitting them to the committee electronically in Microsoft
Word format by 5 o'clock p.m. on April 16, 2019. I will now
introduce our witnesses.
Christen Linke Young is a fellow at USC-Brookings Schaeffer
Initiative for Health Policy. Welcome.
Ilyse Schuman is a Senior Vice President for Health Policy
at the American Benefits Council. Welcome.
Frederick Isasi is the Executive Director of Families USA,
a leading voice of health care consumers. Thank you.
Dr. Jack Hoadley is a Research Professor Emeritus at the
McCourt School of Public Policy at Georgetown University.
Welcome.
We appreciate all of the witnesses for being here today and
look forward to your testimony. Let me remind the witnesses
that we have read your written statements and they will appear
in full in the hearing record.
Pursuant to committee rule 7(d) and committee practice,
each of you is asked to limit your oral presentation to 5
minutes as a summary of your written statement.
Let me also remind the witnesses that pursuant to Title 18
of the U.S. Code Section 1001 it is illegal to knowingly and
willfully falsify any statement representation, writing,
document or material fact presented to Congress or otherwise
conceal or cover up a material fact.
Before you begin your testimony, please remember to press
the button on the microphone in front of you so that it will
turn on and the members can hear you. As you begin to speak,
the light in front of you will turn green. After 4 minutes the
light will turn yellow to signal that you have 1 minute
remaining. When the light turns red, your 5 minutes have
expired and we ask that you wrap it up.
We will let the entire panel make their presentations
before we move to member questions. When answering a question
please remember to once again turn your microphone on. I will
first recognize Ms. Young.
STATEMENT OF CHRISTEN LINKE YOUNG, J.D., FELLOW, USC--BROOKINGS
SCHAEFFER INITIATIVE ON HEALTH POLICY, THE BROOKINGS
INSTITUTION
Ms. YOUNG. Thank you. Chairwoman Wilson, Ranking Member
Walberg, members of the subcommittee, thank you for the
opportunity to testify today. I am Christen Linke Young, a
Fellow with the USC-Brookings Schaeffer Initiative for Health
Policy. My testimony today is based on research conducted with
a number of talented coauthors and reflects my personal views.
Surprise out-of-network bills arise when a consumer
receives care from an out-of-network provider in situations
that they cannot reasonably control. One common example is an
out-of-network anesthesiologist at an in-network hospital. But
these bills can arise for many services. Emergency department,
pathology, and even neonatology.
Situations like these, where a patient is treated by an
out-of-network provider that she did not choose are common.
Studies suggest that about 20 percent of emergency department
visits and 10 percent of elective inpatient care stays involve
at least one out-of-network provider, and about half of
ambulance rides are out-of-network.
The bills patients receive under these circumstances can be
quite large. The existence of surprise bills and their large
sizes reflect a market failure. For most types of physicians
joining insurance company networks is standard because many
patients are not willing to bear higher out-of-network costs.
But for types of physicians that patients do not choose, this
logic doesn't apply.
Emergency physicians and anesthesiologists receive a flow
of patients based on individuals electing care at the hospital
in which they practice. And that volume will be the same
regardless of whether the physician is in-or out-of-network.
Because volume does not depend on prices set by providers in
these no choice specialties, going out-of-network frees them to
bill patients at essentially any rate they choose. And, as
would be expected, we see that physician specialties that are
able to bill out-of-network have extraordinarily high charges
compared to other doctors.
For example, for most physician types, median out-of-
network charges are about double what Medicare pays for the
same service. But for anesthesiologists and emergency medicine
physicians, charges are about five times greater than the
equivalent Medicare payment.
To be sure, many of these providers do still choose to join
insurance networks. That may be because they find it
distasteful to bill patients directly or they prefer the ease
of collecting from insurers. But when they do go in-network,
they appear to receive some of the highest in-network rates in
the health care industry.
Whereas the in-network payment rate across many similar
specialties averages about 125 percent of the Medicare rate for
the service, the available data suggests that the average in-
network rate for anesthesiologists and emergency medicine
physicians is roughly three times the Medicare rate.
One way to understand these very high in-network rates is
that these physician types exploit the fact that they could
remain out-of-network to demand very high payment rates when
they do go in-network. Payment rates more than double what
their peer physicians who cannot stay out-of-network receive.
And the impact is felt broadly by consumers of health care.
Sometimes, out-of-network care generates an eye-popping
surprise bill that ends up in the news. But in many other
cases, the insurer agrees to pay the very high charge, and
this, along with high in-network rates, drives up health care
premiums for all of us.
Policymakers who want to solve this problem need to correct
the market failure and create an environment where these
providers face a more typical set of incentives. There are two
basic ways to approach this solution.
The first is to establish an amount that these physicians
will be paid when they deliver care out-of-network.
Policymakers should establish the out-of-network price for the
service, either directly or through arbitration, prohibit
balance billing by the provider above this amount, and require
that the insurer treat it as in-network.
The goal is not to establish the exactly correct payment
rate for the service, but rather to establish conditions that
diminish the attractiveness of the out-of-network option and
lead these providers to go in-network or work with hospitals to
get paid a fair rate for the service.
While there are a number of methods that can be used to
establish the out-of-network price, it is critical that it not
be set at a rate that is too high, either higher than now or
that locks in the current distorted market, since that would
drive up costs and frustrate the basic goal of restoring a
market for these services.
The second approach is to get these providers out of the
business of billing directly to patients or issuers at all.
Instead, they would be paid by the hospital or the facility in
which they practice.
Hospitals would negotiate with insurers for a rate that
includes the services and hospitals would pay the
anesthesiologists or other facility-based providers. An
alternative version would require that facility-based providers
establish contracts with all insurers that are in-network for
the facility.
Before I close, I want to briefly highlight the work States
are already doing. Many States have taken steps to correct the
market failure by pursuing a diverse array of policies. But
States are somewhat limited in their ability to act
comprehensively by the threat of ERISA preemption and they face
challenging border State issues. Thank you. I look forward to
your questions.
[The statement of Ms. Young follows:]
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Chairwoman WILSON. Thank you, Ms. Young. We will now
recognize Ms. Schuman.
STATEMENT OF ILYSE SCHUMAN, SENIOR VICE PRESIDENT, HEALTH
POLICY, AMERICAN BENEFITS COUNCIL
Ms. SCHUMAN. Chairwoman Wilson, Ranking Member Walberg, and
distinguished Subcommittee members, thank you for the
opportunity to testify on behalf of the American Benefits
Council about the growing problem of surprise medical billing.
The Council applauds your willingness to examine and consider
Federal solutions to protect patients from the financial pain
of these surprise medical bills.
Collectively our members directly sponsor or administer
health benefits for virtually all Americans covered by
employer-sponsored plans. Employers are deeply concerned about
the burden that unexpected medical bills from out-of-network
providers place on employers and their families.
While a number of States have sought to address this
problem, ERISA exempts self-insured plans from State insurance
regulations to ensure that national employers can offer uniform
health benefits to employees residing in different States.
Accordingly, the problem of surprise billing cannot be left
to the States to solve. Indeed, we view the effort to protect
patients from surprise bills within the broader context of
efforts to lower health care costs.
A lack of meaningful patient choice between providers who
participate in a plans network and those who don't is the key
component of surprise balance billing.
In the case of emergency services provided at out-of-
network facilities and air ambulance service, the patient
simply needs the most expeditious stabilizing care.
Even when patients seek care at an in-network hospital from
in-network providers, patients generally lack a role in
choosing ancillary but necessary physician like an
anesthesiologist. On the day of surgery, is the patient really
going to question the network status of the anesthesiologist?
A study comparing physician charge to Medicare payment
ratios across specialty sheds light on the drivers of surprise
billing. Physician excess charge was higher for specialties in
which patients have fewer opportunities to choose a physician
or be informed of the physician's network status. For example,
anesthesiologists were charging more than five times as high as
the Medicare rate.
The ability of such specialities to set billing rates in
this environment serves as a powerful incentive to remain out-
of-network which in turn generates surprise balance bills.
Clearly this constitutes market failure which necessitates
legislative or regulatory intervention.
Health plan networks play a critical role in employer
efforts to lower the costs and improve the quality of health
care for employees and their families. They are the best tool
employers have to drive better health care value.
Despite the efforts of employers to prevent unexpected
balance billing or help employees faced with such a bill, the
underlying problem continues. We urge Congress to develop
legislation addressing surprise balance billing that protects
patients without undermining access to high quality, high value
networks.
One council member company with 130,000 covered lives
estimates that without networks premiums would increase by
approximately $8,000, a 45 percent increase.
The council is also concerned that a requirement for
payment by employer sponsored plans to providers in excess of
in-network rates or by reference to build charges would
discourage network participation and drive health care costs
higher. Shifting the cost to payers merely masks the underlying
problem of a distorted market.
We also have concerns with Federal legislation mandating
finding arbitration. It would be costly, complex, and time
consuming for nationwide employers. If Federal legislation does
require the use of binding arbitration, policymakers should
include sufficient protections to guard against increasing
health care costs.
We offer the following recommendations for Federal
legislation addressing the problem of surprise billing. At its
root and at a nationally uniform manner. The message I'm
delivering is reflected in a letter sent to you from over 30
trade associations.
No. 1, protect patient from surprise medical bills. No. 2,
hospitals and physicians must provide up front information
about out-of-network care and costs. No. 3, require certain
reimbursement.
To ensure equitable payment for services provided without
discouraging network participation, Federal legislation should
establish a cap for emergency services at an out-of-network
facility at 125 percent of the Medicare rate which would be
clear and facilitate competition.
Legislation should also require all in-network providers,
all at an--in-network facility to accept in-network rates. When
a plan contracts with a hospital, it stands to reason that all
essential service performed at the hospital would be included
in the network.
Requiring in-network facilities to bundle medical services
for covered procedures into a single payment could also help
the problem if structured properly. Legislation must also
address ambulance services. The council looks forward to
working together on a solution that cures this problem not
merely masks its symptoms.
[The statement of Ms. Schuman follows:]
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Chairwoman WILSON. Thank you, Ms. Schuman.
Ms. SCHUMAN. I am happy to answer any questions.
Chairwoman WILSON. Thank you. We will now recognize Mr.
Isasi.
STATEMENT OF FREDERICK ISASI, J.D., MPH, EXECUTIVE DIRECTOR,
FAMILIES USA
Mr. ISASI. Thank you very much, Chairwoman Wilson and
Ranking Member Walberg and members of the subcommittee. Thank
you for the opportunity to speak with you today. I am Frederick
Isasi, the Executive Director of Families USA. For nearly 40
years, we have served as one of the leading national voices for
health care consumers both in Washington, DC. and on the State
level.
Our mission is to ensure that every individual live to
their greatest potential by ensuring that the best health care
is equally accessible and affordable to all.
Surprise out-of-network medical bills are a truly egregious
and all too frequent example of how distorted economic
incentives in the health care sector are overwhelming the
interests of patients and families.
A whopping 1 in 5 emergency department visits results in
surprise medical bills. These bills can account--can amount to
hundreds, thousands, and even tens-of-thousands of dollars.
This is an utterly nonpartisan issue affecting people across
the country in both rural and urban areas.
Given this committee's jurisdiction, it is critical to note
that self-insured as we have heard today self-insured ERISA
health plans are as likely to experience surprise billing as
fully insured and individual plans.
So, what is most important to remember about this issue? We
are talking about situations in which families despite
enrolling in health insurance, paying their premiums, doing
their homework, and trying to work within the system are being
left with completely unanticipated and sometimes financially
devastating health care bills.
And this is happening in part and I want to say this really
clearly because hospitals, doctors, and insurers are washing
their hands of their patients' interest.
Take for example one significant driver of this problem.
The movement of hospitals to offload staffing requirements for
their emergency departments to third party management
companies. These hospitals very often make no requirements of
these companies to ensure the staffing of the ED fit within the
insurance networks that the hospitals have agreed to.
As a result, a patient who does their homework ahead of
time and rightly thinks they're going to an in-network hospital
receives services from an out-of-network physician and a
surprise medical bill follows.
Let me give you one real world example. Nicole Briggs from
Morrison, Colorado outside of Denver. Nicole woke up in the
middle of the night with intense stomach pain. She went to a
free-standing ER. She was told she needed an emergency
appendectomy. She went to her local hospital.
She did her due diligence. Confirmed repeatedly that the
hospital and its providers were in-network. However, months
later she received a surprise bill from the surgeon who ended
up was out-of-network. The bill to Nicole was $5,000.
Nicole tried to work it out with her insurance company but
within 2 years a collection agency representing the surgeon
took her to court and won the full amount, including interest.
As a result, a lien was placed on her home and the collection
agency garnished her wages each month.
This came right before Nicole was about to deliver a baby
and go on maternity leave.
And by the way, this investigation found that there were
over 170 liens placed on people's homes in the Denver area by
emergency department physicians. And this is just one example.
Consumers are exposed to surprise medical bills in other
ways. Often as we have heard ground and air ambulances are out-
of-network and many ancillary services like anesthesiology,
laboratory services, imaging services can be out-of-network
despite the fact the facility and the physician that is
supervising are all in-network.
This is inexcusable behavior on the part of hospitals,
doctors, and health insurers. They each know or should know
that patients have no real way of understanding the financial
trap they have just walked into.
In these surprise bill instances, it is the providers and
insurers, not the patients who should bear the burden of
settling on a fair payment.
Nicole and millions of families around this Nation need you
to act. There are--they are paying their premiums trying to do
their due diligence and to operate within the system, but the
current system is leaving them financially vulnerable and
destabilized.
To put the needs of families first, we built a coalition
and developed 5 key principles for legislative action by
Congress to address surprise medical bills.
The first, and we have heard this from, I think from the
whole panel so far. Providers should be prohibited from billing
for surprise out-of-network services and these protections
should trigger automatically without consumers having to jump
over hurdles.
Second, it should prevent surprise out-of-network payments
from increasing health insurance premiums. That's really
important. Consumers care about their premiums too.
Third, legislation should apply protections to all
commercial health insurance plans, including ERISA plans that
this committee has jurisdiction over.
Fourth, protection should apply to all care settings and
care types where families can receive out-of-network bills due
to no fault of their own.
And finally, we are very supportive of increased
transparency in the health care sector. We fight for it all the
time. But we underscore in this instance increased transparency
cannot be the only or main strategy to deal with this problem.
So we are grateful for being able to testify to the
subcommittee. I would be very happy to talk about these
principles more or answer any questions.
[The statement of Mr. Isasi follows:]
[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:]
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Chairwoman WILSON. Thank you. Thank you, Dr. Hoadley. We
will now proceed to member questions. Under committee rule 8(a)
we will now question witnesses under the 5-minute rule. I will
now yield myself 5 minutes. First of all, let me thank you for
the very interesting testimony.
When we talk about surprise billing, it seems that a
fundamental problem facing consumers is that they often have no
way of knowing whether their provider is in the plan's network.
And it is unclear to me who has the burden of making sure that
the consumers have the information they need in order to make
an informed decision.
So I'm going to ask Mr. Isasi under current law, who is
responsible for making sure that a doctor or hospital is in-
network? Is it the doctor, the insurance company, or the
patient themselves?
Mr. ISASI. Chairwoman Wilson, thank you for the question.
To be very clear, it is the patient themselves that has a
responsibility and these negotiations are very complex. These
are some of the most important and intense negotiations in the
health care sector between a payer and a provider. There is
absolutely no visibility for a consumer to understand what is
going on there.
And so the notion that a consumer wouldn't walk into an
emergency department and know for example that their doctor was
out-of-network, because that hospital could not reach agreement
on an in-network provider for the ED, is absurd. Right. There
is no way they would ever know that.
And similarly, if you walk in and you receive surgery and
it turns out your anesthesiologist isn't in-network, there is
no way for the consumer to know that.
And I would, I would like to say there is some discussion
about transparency and creating, you know, sort of provider
directories. We have tried to do that in many instances and
what we know is that right now the health care sector has no
real way to provide real actual insight to consumers about who
is in-network, who is out-of-network.
I would posit probably everybody in this room has tried at
some point to figure out if a doctor is in-network or out-of-
network and as we know that system doesn't work.
So this idea that consumers can do research and find out
what has happened behind the scenes in these very intensive
negotiations is absurd and it doesn't work.
Chairwoman WILSON. Okay. Let me followup. The burden in
non-emergency situations is also significant. Would any of the
witnesses like to comment on this issue and elective
procedures?
Do patients always know the name of all of the doctors who
could potentially be sending them a bill later? Anyone.
Ms. SCHUMAN. I would be happy to talk about that. And the
answer again is no. And there is no obligation on the part of
those providers to provide that kind of notice to a patient
about the kind of care they are going to be getting, whose it
from and whether they are in-network or out-of-network and what
the cost associated with that is.
Therefore I do think that rules requiring some disclosure
up front at the time of scheduling when you can actually make a
difference would be helpful. But as the other witnesses pointed
out here, increased notice and transparency is only part of the
problem.
Chairwoman WILSON. But even if a patient is able to
determine the name of every doctor that will see them, I worry
that not all of the information they are given about the
network is accurate.
Dr. Hoadley, or Mr. Isasi, would you comment on the
accuracy of provider directories? What happens if a consumer
relies in good faith on accurate, on inaccurate information
about their plan's network. The changes.
Dr. HOADLEY. Yes, that's a really good point. You know,
directory, provider directories can be notoriously inaccurate.
One of the things that even if they are accurate, that I have
seen in my own family is you may be enrolled in Blue Cross. You
ask your physician are they in the--participating in Blue
Cross? They say yes. But it turns out Blue Cross has a variety
of different networks. This would be true of any insurance
company.
And so, you know, you may be in this one particular flavor
of the Blue Cross plan and your provider may not participate in
that particular network. So it's a very complex issue and some
of the States have tried to link protections for balance
billing with some of the issues around adequate networks and
adequate provider directors.
Chairwoman WILSON. Okay. Ms. Young, why is it important for
providing an appropriate Federal payment standard, whether by
establishing a benchmark or creating a dispute resolution
process? Why is that necessary to address this problem of
surprise billing?
Ms. YOUNG. Absolutely. So as my co-panelists have talked
about, notice isn't enough here. Even if a consumer had perfect
information which is not a reasonable expectation, but even if
they did have perfect information, they can't do anything with
that information. They can't go across town to get their
anesthesia and then come back to the hospital.
There, even with perfect information, they may be treated
by out-of-network providers and so we need to set a standard
that limits how much providers can be paid in these out-of-
network scenarios that makes it sort of less attractive for
providers to remain out-of-network. And so instead, they are
subject to more normal market conditions.
Chairwoman WILSON. Thank you so much. I now recognize
Ranking Member Walberg for his round of questions.
Mr. WALBERG. Thank you, Madame Chairwoman, and thank you to
the panel for being here. Ms. Schuman, we have had this hearing
specifically because of the rise, at least the ability to see
the number of surprise billings that have taken place, the
balance billings that are going on and the escalation there and
the problems.
What factors could you suggest that have led to the rise in
occurrence of these surprise billings and do you think the
trend will continue if action isn't taken?
Ms. SCHUMAN. Well, thank you for the question. And all of
these cases of surprise billing have a common theme. The
patient lacks a meaningful role in choosing between a provider
who is in the network or outside of the network. And the
provider is not bound by competitive market forces to join or
not join that network.
So the real problem fueling surprise billing is that for
example hospital-based specialists like anesthesiologists, or
radiologists, or emergency physicians don't have to lower their
prices to draw patients. They can charge higher rates and the
patients will still come.
So with these automatic referral of patients, the typical
price-volume tradeoff for joining a network does not apply.
Again, this is a fundamental market failure that I believe will
only worsen if action is not taken to restore competition and
choice.
Mr. WALBERG. We have talked about already in the initial
questioning about transparency, adequacy of information just
isn't there. Even if it were, are patients and their loved ones
capable of navigating these types of decisions about their
health care under difficult circumstances.
Ms. SCHUMAN. Well, I think any one of us who have been in
this situation either ourselves or with our family members know
how challenging that is. And patients and loved ones should not
be put in the position or expected in a stressful emergency
circumstance to be able to understand and navigate all the
complexities of our health care system.
In these instances, our laws should go beyond just the mere
notice of a provider's network status to protect individuals
against costly surprises when they are in no position to direct
their care themselves.
Mr. WALBERG. List a few mechanisms or approaches for
patients, I guess we could say rate payers, insurance rate
payers as well to protect themselves against that surprise
billing experience.
Ms. SCHUMAN. Well, I laid out some of the recommendations.
And to reiterate, I think it has to start again with protection
of the patients and a ban on the practice.
But beyond that, we really do need to address this in a
uniform way to make sure that we capture the 60 percent of
ERISA self-funded plans and also one that is directed at the
root of the problem which I just described.
And so therefore we need to remove those incentives that
encourage these--out-of-network providers to stay out-of-
network while at the same time ensure that they are equitably
compensated for our services.
So in the case of an out-of-network hospital or facility,
performing emergency services, I suggest that a Medicare rate
of 125 percent it's clear and a way to restore competition and
negotiation with respect to that out-of-network facility for
emergency services.
For--in-network hospitals, when a plan has contracted with
that in-network hospital, all of the providers practicing at
that hospital should be paid no more than an in-network rate.
When you buy a car, you assume that the steering wheel and
the tires are going to be attached. And I think it is somewhat
similar to that.
I think there has also been a discussion about a bundled
payment model whereby the hospital submits one single bill. And
that might have some merit. Again but if there is appropriate
safeguards on there to prevent against price escalation or
undermining employer plan networks which are the greatest tool
that employers have to both reduce the cost of health care and
increase the quality.
Mr. WALBERG. Just for the--I'm going to run out of time so
I won't do this to you.
Chairwoman WILSON. Go ahead.
Mr. WALBERG. If you could just briefly discuss the price
difference between--in-network rates and--out-of-network rates.
Ms. SCHUMAN. Sure. Happy to. And I think what we have seen
is--in-network rates or--out-of-network rates more than two or
three times--in-network rates depending upon again certain
specialties.
And I think we have also seen a trend, a recent report
about the fact that gap is growing and that it's alarming. It's
not a comparison to cost and it's not in comparison to
networks.
And I think as that trend continues and that gap continues
to grow, we want to address the situation in a way that narrows
that gap, not only makes it wider.
Mr. WALBERG. Thank you. And thanks for the grace period.
Chairwoman WILSON. Thank you.
Mr. WALBERG. I yield back.
Chairwoman WILSON. We will now hear from the distinguished
chairman of the Education and Labor Committee, Mr. Scott.
Welcome.
Mr. SCOTT. Thank you. Thank you, Madam Chair. Ms. Young,
Section 1311(e)(3) of the Affordable Care Act helped improve
transparency by requiring plans to provide public and timely
disclosure of certain information. Why is this section
important and what is the status of the implementation?
Ms. YOUNG. Thank you for the question. I think as we have
talked about transparency, it is important, it is not a
comprehensive solution to this problem. But it is important to
give consumers information about their health care services.
The Federal Department of Health and Human Services has
taken some steps to require disclosure of basic information
about health plan information for qualified health plans under
1311(e) of the Affordable Care Act so those rules have been in
place for a couple of years and I think we have those sort of
first year data has become publicly available just over the
last 6 months or so.
Mr. SCOTT. How useful is that information and is the
Department of Labor doing its job under the provisions of the
act?
Ms. YOUNG. So we don't think the information in--under
section 1311(e) is particularly useful for consumers that are
trying to navigate the out-of-network situation, though it does
provide us some insight about what is going on in health plan
networks and I think researchers would certainly welcome that
transparency.
For the Department of Labor, so there is a parallel
requirement on that group health plans make information
available. My understanding is that the Department of Labor
proposed some standards about updating sort of the tax form
that ERISA plans file to include better information about
health plans but that those policies have not been implemented
and are not in effect.
Mr. SCOTT. And we have had a lot of back and forth about
what doctors can charge. Why doesn't normal contract law apply?
That a doctor can't charge what he or she wants? When you go
into the hospital and receive the services, you have under
contract law agreed to pay a reasonable fee, not whatever the
doctor thinks he can get out of you.
Why isn't what they accept under Medicare, what other
physicians similarly situated accept? Why isn't there some more
reasonable calculation of what a physician is owed? Not just
what he wants, two, three, four five times what Medicare pays?
I mean, it's a contract law.
Ms. YOUNG. Yes, so this is a, I think an interesting area
of the law. Right now when patients are seen out-of-network,
the providers are sending them balance bills at a rate that as
you suggest, the provider has sort of largely made up. It's not
determined by market forces.
There are some legal scholars who have been advancing this
idea that there is no contract between the patient and the
anesthesiologists in this circumstance and so as a result,
the--there hasn't been a meeting of the minds and so we fall
back on background contract law principles that would limit how
much the anesthesiologist gets paid.
And there have been a couple of cases across the country
that try to test this theory. I'm not an expert in these cases.
I don't think any of them have been successful yet, but it is
an interesting area of legal inquiry.
Mr. SCOTT. I don't know who this should be aimed at, but
there is another surprise bill when you go in for a screening
and which is supposed to be free under the Affordable Care Act
and they do some little procedure in the middle of it.
It converts the whole thing into a treatment which is not
free under the Affordable Care Act. Is that not a surprise in
addition to the other surprises we are getting?
Ms. YOUNG. So I can talk a little bit about that issue. As
you noted, it's not the same problem as the surprise balance
billing that we have been talking about but consumers who are
receiving free preventive care under the Affordable Care Act
may--an example is a colonoscopy where the individual sort of
starts with a screening colonoscopy and ends up getting a
biopsy or a polyp removal.
Mr. SCOTT. And then you have to pay for the whole thing.
Ms. YOUNG. And that can generate charges. My
understanding--
Mr. SCOTT. What about what kind of charge are we talking
about?
Ms. YOUNG. It will depend on the procedure, but it can be
fairly expensive or, I mean, it's an invasive outpatient
procedure so it can be expensive.
The Department of Labor, HHS and Treasury have issued
guidance that tries to limit that practice for colonoscopies
performed in employer coverage, but my understanding is this is
still a problem in the Medicare context.
Mr. SCOTT. Anybody else want to comment on that?
Dr. HOADLEY. I would simply note that, you know, it's an
example of a broader issue that is what we are talking about
here which is a lot of situations you go in for one particular
procedure, you are doing an elective procedure but something
else arises.
So you might be going in for your knee replacement but
something happens while you are in the middle of that surgery.
And your heart is not doing the right thing so they bring in a
consulting cardiologist. And that could turn out to be one of
these out-of-network situations.
So, you know, health care is not so predictable. We can't
assume that simply because you went in to do X, a screening
colonoscopy, a knee replacement, that isn't going to trigger
some other problem and then that's part of what we are I think
trying to address in these issues.
Chairwoman WILSON. Thank you, Mr. Scott. Dr. Roe.
Mr. ROE. I thank the Chair and I want to thank the Chair
for having this very important hearing and all the members for
being here.
And, Dr. Hoadley, I note, I was reading your what is a
surprise medical bill that is any bill sent by a medical
provider to a patient for an amount larger than expected.
I think all the bills I ever sent to patients thought they
were larger than they expected. So probably applies to
everything.
I really appreciate you being here and, Ms. Schuman, you
make a point about a car. The difference in health care though
is you go down to your car dealer and you buy a car. He doesn't
have you sent you out without a car unless you pay for it.
There is a law passed and as it should have been in 1986 called
MTALA. You are very familiar with it and we have to cover
anyone who comes into an emergency room and sees a Medicare
patient as we should.
I'm an obstetrician by training and I have done that many,
many times before. And so what happens to us in, on the
provider side is that we have to provide those services as we
should, regardless of your ability to pay. So we have that
restriction on us as we should in the hospital.
I have been negotiated out of health care networks. Our
group which was a large group so there are no innocents in this
when you look at the insurers, the hospitals, the providers.
Everybody is culpable here.
And I could not agree more about transparency. I have had a
surprise bill after a surgery I had a year and a half ago so
I'm very much aware of that and I could negotiate it because I
knew the nuances of this. Many people cannot. It is
complicated.
And even, Dr. Hoadley, as you said, even having--I have
been--had my name in-networks that I wasn't in. That you use
and many of those unscrupulous networks will use that to get
people to sign up because this doctor, my doctor is in there
when you are really not. And you get surprised bills.
So another couple things I want to mention is that we have
to look at when you look at Medicare for instance as a
benchmark, and most of us don't have a problem with that except
if you look at the Medicare Wage Index.
Where I live in rural Tennessee, we have the lowest--second
lowest Medicare Wage Index in the United States. We get .73
cents for what someone else gets $1 for. Now in California for
instance they have a very, very generous Medicare Wage Index.
So we have to, we pay our providers less and we can keep
less than 10 percent of the nurses that we actually train in
our area because we can't pay them enough. So when you
benchmark off Medicare, you are just again where we live you're
discriminating against us. And so we need to work that out and
it is a very unfair system that needs to be fixed.
And one other buzz I have got up my--a burr up my saddle is
in Medicare if I saw an elderly patient that had a very limited
income and I wanted to waive her copay, it is illegal for me to
do that. And yet in California it is illegal for a doctor to
balance bill. You have got two very--it's a dichotomy.
So how do we do all this and put this together where it is
fair to the patients and it is also fair to the providers? And
one other thing and anybody can comment on this. We have one
hospital system where I live now. They've merged so there is no
competition. There is one.
And when you have a bundle payment where that goes just to
the hospital what leverage does a provider have to be treated
fairly?
Ms. SCHUMAN. Can I just comment on that and thank you so
much for saying that. I think that we all stakeholders have to
be part of this solution without a doubt. And you know, and I
think that, you know, to that point, I think it is very
important that all stakeholders again are part of the solution.
And we are looking at this in the broader context of the effort
to increase transparency and lower health care costs.
And I think one of the big drivers behind rising health
care costs is that lack of competition that you talked about.
So we really do have a unique opportunity to try to address the
root of this problem and the lack of competition that is
driving it more.
Mr. ROE. And to the Chairman's point a minute ago, let me
tell you how frustrating it is as a provider. I am doing a
procedure, let's say a colonoscopy on a patient. And you're
doing a Medicare patient and you see the polyp that is there.
If you take it out that's a second bill. I mean, are you going
to stop and bring that patient back? I think that's awful to
have a patient go through all of that again.
And so as I said there are no innocents here. I really
appreciate just the start of having this discussion. We need to
stop surprise billing, no question about that and do it fairly
for everyone. I yield back.
Chairwoman WILSON. Thank you, Dr. Roe. And now Ms. Wild
from Pennsylvania.
Ms. WILD. Thank you, Madam Chairwoman. Thank you all for
being here. I am somewhat gratified by the fact that it seems
that we have bipartisan consensus that surprise billing really
is a genuine problem and that patients are the ones who really
are the losers in this system.
I am, you know, I am struck by the fact that we all seem to
be wanting a solution to this problem. But the solutions that
I'm hearing don't really sound very workable in the context of
our present medical system. And that's, you know, that's where
I really struggle to understand how we are going to fix this.
Ms. Schuman made the comment that all stakeholders have to
be a part of this and I agree with you. The problem is the
ultimate stakeholder is the patient. And the patient has no
part in this in terms of negotiation or even understanding the
complexity of the insurance market and who may be in-network or
out-of-network.
I will tell you as somebody with a post-graduate degree who
has worked in as a lawyer in the insurance field for many, many
years, I never understand a hospital bill without calling and
seeking answers. And that's somebody--coming from somebody
who's educated, literate, and knows the field and I still have
a tremendous problem with it.
Ms. Schuman, you also used the phrase and I think what you
said was that we need more competition in choice. Was that your
statement?
Ms. SCHUMAN. Yes, that was.
Ms. WILD. And what does that mean?
Ms. SCHUMAN. What that means I think that what Dr. Roe was
talking about the fact that there was only one hospital in town
and when you only have one hospital in town its sort of
difficult to negotiate.
And I think that again was what I was getting to both
specifically with respect to having more than one hospital in
an area but also more specifically when we are talking about
surprise billing and the fact that some of these specialties
have this free flow of patients that are coming to them without
having to compete on prices and quality to attract them.
Ms. WILD. I'm sorry, I have just never found that
competition causes any sort of clarity when it comes to medical
charges. If I develop a relationship with a physician, I
continue to go see that physician because I have a level of
comfort with him or her, if I--it--I happen to be in a district
with two excellent regional medical centers. There is plenty of
competition in my district but that hasn't done anything to
drive the prices down.
And I guess my question to you is isn't the real problem
that we have turned over our medical system to private market
forces?
Ms. SCHUMAN. Well, I think that indeed those private market
forces are the best lever to drive health care value, drive
down costs and increase quality. And that's why I cited an
example of an employer member of ours, one of our member
companies who networks because of networks basically they're
saving their employees and their families 45 percent than
without networks.
So I think that networks and the high-value, high-quality
lower-cost networks are the key to innovation and to be able to
get better value, better cost, and better quality.
Ms. WILD. But using your reasoning, a patient in New York
City which has a wealth of hospitals and physicians and
insurance plans, should result in no patients having surprise
billing.
And yet I am quite certain that there are plenty of New
Yorkers who have surprise billing every single day. So, I come
back to my question of, you know, I am really not convinced
that private market forces and competition in choice is the
solution here.
Ms. SCHUMAN. Well, I think I also said that there is a
fundamental market failure right now. And I think that that's
what we are looking for, some sort of national response to this
that restores those fundamental--so the market can work because
when the market can work it works best. But there needs to be
assistance and intervention to make that market work.
Ms. WILD. Well, I, you know, Mr. Roe used the expression
there are no innocents here and I would agree with him except
to say that I think the patients are the innocents. And so,
there is an innocent party here.
Mr. Isasi, you seem to want to say something so please.
Mr. ISASI. I was going to say I think there are so many
observations that we would agree with, but in particular,
you're saying, you know, what is the workable solution here?
What--I can't see the constructive, what--how do we move the
ball forward? And what I would say is there is a concept here
which is what does in-network mean? Right.
When you sit down with your husband or your partner and
decide what kind of insurance do we want for our kids? Right?
We want to make sure that they can go to the ED if they're
playing soccer they get hurt, all those sorts of things.
The question is when you make that decision and you say oh
look this hospital is in-network. Right. But what does that
mean? If you can go to that hospital and all the services
they're providing are out-of-network, right?
And I think as you've said and as we have heard from other
folks, the patient is not the person who should be responsible
for that. It's the folks who are negotiating. It's the
hospital, it's the docs and the payers that should bear that
responsibility.
So, let's start by clarifying what does in-network mean so
that we have some way of making educated decisions about the
insurance that we are purchasing and putting our trust in.
Chairwoman WILSON. Thank you. Thank you so much. And now we
will hear from Mr. Meuser.
Mr. MEUSER. Thank you, Madam Chair, for holding this
hearing and for allowing members and staff to learn more about
the issues of surprise billing and thank you certainly to our
witnesses for sharing your expertise. I have and I would
venture to guess many of my colleagues if not all have heard
stories from distraught constituents about what is very
appropriately named surprise billing where they go for an
emergency visit or often, a scheduled planned medical procedure
or surgery which goes according to plan and then receives a
surprise bill often in the tens of thousands of dollars.
So, Ms. Schuman, lets walk through a scenario please. And I
have heard from individuals have experienced similar scenarios
firsthand. At the advice of a doctor, an individual schedules a
surgery and confirms that the hospital is--in-network. The
surgery is scheduled 8 weeks in advance and the individual
assumes that there will be no issues with undergoing surgery in
an--in-network hospital.
Only after the surgery does the individual learn that the
surgeon was out-of-network. The primary surgeon mind you and
receives a bill for $25,000. Had the individual known the
surgeon was out-of-network, they would have very likely found
an--in-network surgeon. Doesn't that sound reasonable?
Ms. SCHUMAN. Absolutely.
Mr. MEUSER. Okay.
Ms. SCHUMAN. And I think that that--I think that exactly
the situation with the patient is doing their homework, they're
doing their research. How are they to expect that some of those
other services would be out-of-network?
Mr. MEUSER. Okay. Well, what would the patient--what do you
recommend that the patient do differently? Ask further
questions?
Ms. SCHUMAN. Well, I think in this kind of situation, the
patient did everything that they could be doing. And the
problem is not the patient. The problem is not the consumer.
The problem is that the consumer didn't have knowledge and
didn't have a choice.
And again, in some situations even when they have knowledge
upfront and they are informed of that, they still may not have
choices. So, I think it's knowledge and choice that the
consumer needs.
Mr. MEUSER. Choice would be understandable. Knowledge not
so much. What about the hospital? Do you feel they have any
responsibility here in this scenario?
Ms. SCHUMAN. Absolutely. Hospitals play a critical role in
this. When you go to a hospital, again, they have the ones,
they have the leverage, they have the ability to negotiate with
those physicians that are practicing in their hospital.
Getting back to something from my testimony, it stands to
reason that when you contract with a hospital all of those
essential services that are performed in the hospital under
that roof like anesthesiology or radiologists, would be in-
network. How can you go to a hospital? How can you have surgery
without anesthesiology or a hospital operate without
radiologists?
Mr. MEUSER. So you also feel the surgeon in that scenario
would have responsibility or would it be the hospital?
Ms. SCHUMAN. Absolutely. And I think getting back to this
point, everyone has a stake in this. All of the stakeholders
have a role to play.
Mr. MEUSER. Okay. So what would you offer that could be
done during that 8 week period leading up to the surgery to
help assure that the patient would not receive a surprise bill?
Ms. SCHUMAN. Well, I think we have to look at this in a
comprehensive way. And I think again we had talked about
transparency, upfront disclosure. So at the time of scheduling,
not when they get into the emergency--not when they get into
the surgery room, to be able to make a decision based upon
their action.
But even that alone is not enough. And I think what we have
to talk about is getting behind the reason why the patients
might not have a meaningful choice or might not even know. And
that's why I think a Federal standard, a Federal solution that
does not discourage these out-of-network specialists to stay
out-of-network and generate these surprise bills in the first
place is the core of the solution.
Mr. MEUSER. Okay, thank you. Madam Chair, I yield back the
remainder of my time.
Chairwoman WILSON. Thank you, Mr. Meuser. And now McBath?
Okay. Ms. McBath. Welcome.
Ms. MCBATH. Thank you, Madam Chairman, Chairwoman, excuse
me, for holding this important hearing today. And I have been
hearing about surprise medical bills from constituents in my
district and from many stories in the news and like I'm sure
that we all have.
The recent statistics have been alarming to say the least.
I will tell you I'm a two-time breast cancer survivor. I have
had many surgeries in my time and I can tell you the number of
times that I was surprised myself by these surprise bills that
came in unexpectedly.
A recent Kaiser Health survey showed that two-thirds of
American are very worried or somewhat worried that they or a
family member will receive a surprise medical bill.
In another survey, we see that 57 percent of American
adults have been surprised by a medical bill for something that
they expected to be covered by their health insurance.
Now I have here a whole number of individuals just within
Georgia alone, and I'm sure there will be millions more that
represent just these very things that have happened, these
surprise bills.
These Americans, they are our friends, they are our
neighbors and our family members. And I brought these stories
from individuals in my district who have been affected by these
surprise bills.
There is Michelle from Alpharetta and then also there is
Tom from John's Creek, Elaine from Roswell and countless
others. And like other Americans across the country, they were
taken by surprise by a medical bill.
These men and women are worried about the financial impact
that these bills have on themselves and their families. Some
are able to get their bills reduced but most aren't and most
aren't that lucky.
Now for me these stories make it clear that we have got to
do something at the Federal level to address the financial
impacts and emotional distress these surprise medical bills
have on patients.
Mr. Isasi, I would like to ask you and thank you for your
testimony. As Sarah Kliff of Vox and others have extensively
documented, surprise medical bills lead to devastating
consequences for consumers throughout our country. Now I really
like evidence and data and could you talk about what data
exists that could help us here in this room and in Congress
understand just how large these expenses can be for consumers?
Mr. ISASI. Absolutely. So, as we have heard today there are
a few facts. One, almost a fifth of all emergency department
visits involve surprise bills. Right. So, for all of us, you
know, as I was saying earlier, if your kid gets hurt playing
soccer and you go to an ED, there is a really good chance you
are going to get a surprise bill.
As you mentioned, we know that right now almost half of
Americans' health care costs are top of mind and they are--they
report they cannot meet basic, their basic health care needs
with--because the costs are too high.
They won't go see a doctor, they won't get their meds,
because they can't afford it and a third of people in this
country right now are saying that their basic needs of life,
their rent, their heat, their food, they cannot pay for those
things because of health care costs.
So, this question of surprise billing is falling into much
largest context which is that American families are overwhelmed
by health care costs. And surprise bills are just that moment
where despite trying everything, paying your premiums, checking
to see if you're in-network, right, you find out now I owe
$5,000, $10,000.
And what we know as we have heard is those bills typically
are about three times more than they would be paying in-network
but they can be tens of thousands of dollars more. Because as
we have heard, there isn't a structured contract between that
patient and that doctor. And therefore, they can charge
whatever they can get away with. Right. So, I would say that to
your question one of the most important concepts here is and we
have heard this and I actually in a previous life saw this
happening, right.
The negotiations between an insurer, a hospital, and a
physician group are some of the most intense and sophisticated
negotiations occurring in markets in this country. And the
notion that you or I as a patient, as a person in need of
health care services has to be able to track all of that and
then be responsible because my hospital could not negotiate an
in-network contract with an ED doctor so now I'm going to get
stuck with the bill.
Is the tail wagging the dog? Right. That hospital should
have the responsibility of saying if I am an in-network
provider for you, you can come to my ED and not get stuck with
a hospital bill that is three times larger and my cost-sharing
is much larger, right. That is the tail wagging the dog.
Ms. MCBATH. Thank you. So how prepared are Americans for
these unexpected expenses and could you speak on the impact
that these expenses also have on individuals' overall
wellbeing?
Mr. ISASI. You bet. Absolutely. And as I noticed in my
testimony that right now what we know is that more people are
scared of hospital bills and health care bills than getting
sick. I mean, that's where we are as a Nation.
So we are--there is more harm right now happening in this
country in some way psychologically around the cost of health
care than actually being scared about their health. Okay. And
in terms of the--what was the, I'm sorry, I missed the first
part of your question.
Ms. MCBATH. Oh, I was just saying how prepared are
Americans for these unexpected.
Mr. ISASI. Oh. Well, this is another thing we know is that
almost half of Americans, they don't--they have less than $400
in savings, right. And so, a surprise medical bill for $2,000
means I'm going to have to miss my car payment, miss my
mortgage payment. I'm going to have to take out of my
retirement account. Right.
These are--when people pay for health insurance, what they
are trying to pay for is financial security. To know I am doing
my part, I am paying into a system, now I get sick and now that
system takes care of me and makes sure that I don't lose
everything I worked for in my whole life because I got sick.
Ms. MCBATH. Right.
Mr. ISASI. And what we know is a surprise medical bill is
a, can be a devastating blow on a family that is trying to live
that life and be self-actualized.
Chairwoman WILSON. Thank you. Thank you. And now, Mr.
Allen. Thank you.
Mr. ALLEN. Thank you, Chairwoman and thank you, panel for
giving us some insight onto just how magnified this problem is
and of course, you know, I hear from constituents that surprise
medical billing has become a significant concern for Georgia
families.
You know, the problem is this whole process of health care
is so complex that you have a, if you are--out-of-network, or
in-network, you know, deductibles, and, you know, is your
doctor in-network? I mean, you were supposed to be able to keep
your doctor, it's just a total mess. And it needs to be fixed
sooner than later.
But you know, 2/3 of Americans say they are somewhat
worried about being able to afford their own family members
unexpected medical bills and as we said, these surprises, how
does a family deal with it?
Ms. Schuman, 22 States have passed legislation on surprise
billing. What are the different models that States have enacted
and are there any lessons learned from their approach to this
problem?
Ms. SCHUMAN. Thank you. Yes, a number of States have acted
to address surprise billing in a number of circumstances, some
of which we have discussed here ranging from purely protecting
the patient to requiring for example binding arbitration
between the payer and provider to resolve that dispute.
Or in some cases California for example requiring setting a
reimbursement that's the greater of 125 percent of Medicare or
the average in-network rate. There are some lessons to be
learned from that, but they are limited. They're limited by
time and scope.
By time, because for example the California law just became
effective at the beginning of this year so we really don't know
the impact it's having.
But I think more critically they're limited in terms of
scope because they don't cover ERISA self-funded plans 60
percent of employer sponsored coverage. So we don't necessarily
know if those some lessons would apply on a national level.
And I do want to say just with respect to Texas, there
could be some important lessons there with respect to a binding
arbitration or dispute resolution process. In terms of a
backlog of cases in the Texas system to try to address this
through managed through dispute resolution.
They have changed the law but again, I think we need to be
careful of that if we are thinking about employing that on a
nationwide level.
Mr. ALLEN. Well, certainly we need to look at these models
and see what we need to do at the Federal level because health
and the other problem is healthcare costs are just accelerating
like nobody has ever seen in the country.
We have heard a lot about the role of patients and
providers and employers and finding a solution through surprise
billing. Should hospitals also have a role in addressing
surprise billing? In other words, should the hospital know that
hey, you know, you are going to get a bill from, you know, this
group or that group? I mean, it looks like full disclosure
should be on the agenda here.
Ms. SCHUMAN. Absolutely. Hospitals play a critical role in
this. The hospitals are the one with these hospital-based
physicians. Often times those specialties that are integral to
being able to operate that hospital and treat patients are not
employed by the hospital. They're not in that hospital network.
And that leverage, that relationship between the hospital
and the physicians that are practicing at that hospital is key
and I think fundamental to addressing this problem in a way
that works.
Mr. ALLEN. We have got about a minute. Many of the patients
that receive surprise bills are covered through employer
sponsored plans. What are employers doing and of course, you
know, the business community is trying their best to address
this accelerating cost of health care.
What are they doing to provide more information and
transparency for their employees to help avoid these
situations?
Ms. SCHUMAN. Well, thank you so much for that question. And
this is a deep concern for employers. And council member
companies are taking steps to limit the incidents of surprise
billing in the first place, through for example enhanced
communications to their employees about the potential for
balance bills. And also, provide assistance to their employees
who do receive a balance bill in the form of contracting with
other entities to try to negotiate that down or providing some
sort of legal defense funds. But despite these efforts of
employer, the problems still persist.
Mr. ALLEN. Yes. Well, thank you so much and I yield back
Chairwoman WILSON. Thank you. Ms. Underwood.
Ms. UNDERWOOD. Thank you, Madam Chair.
Chairwoman WILSON. You're welcome.
Ms. UNDERWOOD. Thank you for holding this really important
hearing today and I would like to thank our panelists for being
here and for your really comprehensive written testimony. I
have enjoyed reading through your comments.
Like many of us, people in my community in Illinois have
experienced surprise billing and I frequently hear from
constituents about their struggles to afford health care even
health care more broadly when I'm home.
And so according to the Health Care Cost Institute, in my
home State of Illinois, about 15 percent of in-network hospital
admissions resulted in at least one out-of-network claim in
2016. And so, my questions are for you, Dr. Hoadley.
I'm proud that Illinois has taken a leading role in
addressing this issue by enacting consumer protections that you
have described as comprehensive in your research. Given your
expertise on these State approaches, I was interested in
getting your perspective on how effectively Illinois has
addressed this issue.
So first, what are some of the strengths of the Illinois
law in terms of its scope and protections for consumers?
Dr. HOADLEY. Well, certainly one of the strengths of its
law is that it does apply to a broad variety of circumstances.
They regulate both the HMO environment, the PPO environments
regardless to the type of insurance.
They address both situations that arise in emergencies as
well as those that arise in more elective procedures as we have
heard talked about, some of the circumstances where you go in
to get a particular elective surgical procedure but might
encounter an out-of-network anesthesiologist. So, Illinois does
have a good law in place.
Ms. UNDERWOOD. Great. And so how does the Illinois law
resolve disputes between the providers and insurers?
Dr. HOADLEY. So, what they really look to is to try to get
the provider and the insurer to negotiate a private amount.
There is a dispute resolution option in Illinois. When we last
talked to the folks in Illinois, they said that had not
actually been invoked. So, it was there perhaps as a backup, a
backstop but for the most part things got resolved privately.
They did have some concern when we talked to the Illinois
officials that there may be instances where consumers get bills
sent to them, aren't aware that they don't need to pay them, so
don't start the process. And that goes to this sort of point of
how do you really make sure it's not the consumers
responsibility to figure out that oh, I don't--by law I don't
actually have to pay this bill. Now what do I do to make sure
that happens? If you don't know that, that doesn't really help
you.
And so, what some other States like California has done is
to include a provision that says the provider really can't send
a bill and if they do end up sending a bill and the consumer
pays it, there is an obligation on that provider to refund the
amount that was paid back to the consumer. And that's something
we haven't seen in some of the other States.
Ms. UNDERWOOD. That is interesting, thank you. As we look
to develop this comprehensive Federal solution, what lessons do
you think we can learn from how Illinois has tackled the issue?
Dr. HOADLEY. So certainly, you know, trying to do something
that is comprehensive is an important part. I think one thing
that is also a somewhat of a limitation in the Illinois law is
that in the non-emergency situations, it limits the protections
to a certain specified list of provider types.
So, you know, it does cover the emergency room doctor, the
most common ones that come up. The anesthesiologists, the
radiologists and so forth. But it doesn't necessarily address
an issue of when there is a consulting cardiologist that's
called into your case or where maybe an orthopedist is called
in because you came in with some situation that involved a bone
injury.
And so, you know, one of the things that other States have
done is to make sure that the law applies comprehensive to all
types of providers rather than specifying the list of the ones.
And yes, they do list the ones that are most commonly come up.
But that doesn't mean it necessarily works in your particular
case.
Ms. UNDERWOOD. Thank you. Speaking of the providers, I was
reading in Christen Linke Young's testimony about the
neonatologists and some specific surprise bills that often
arise upon the likely early birth of a child and some
unexpected out-of-network claims. I just was wondering if you
wanted to expand a little bit on that.
Ms. YOUNG. Absolutely. Thank you for the question. So, we
have talked a lot about the, this issue from the patient's
perspective which I think is extremely important. But it is
also helpful to think about the issue from the perspective of
one of these providers.
Once a provider like an anesthesiologist or a neonatologist
is in the hospital practicing, they will receive a flow of
patients regardless of whether or not they join insurance
company networks and regardless of what price they set.
So, for that neonatologist, once they're in the hospital,
they're going to be the neonatologist taking care of those
babies and they have a very limited incentive to join insurance
company networks and accept a negotiated contract rate from an
insurance company.
It's the same dynamic that all of these provider types
face. And the key to a solution is to get rid of that set of
incentives and instead encourage those folks to come back in-
network or work with hospitals for their payment.
Ms. UNDERWOOD. Well, I would like to thank you all so
much--
Chairwoman WILSON. Thank you.
Ms. UNDERWOOD [continuing]. for your expertise and I yield
back my time.
Chairwoman WILSON. Thank you Ms. Underwood. Now Dr. Foxx,
our distinguished ranking member of the Education and Labor
Committee.
Ms. FOXX. Thank you.
Chairwoman WILSON. For 5 minutes.
Ms. FOXX. Thank you, Madam Chairman, and thank you for
organizing this hearing and I want to thank all of our
witnesses for being here today. They've been very, very
informative.
Ms. Schuman, I know that surprise billing impacts patients
on a personal level. On a larger scale, how often do patients
receive surprise bills? Do we have information on that?
Ms. SCHUMAN. Sure. Kaiser Family Foundation of medical debt
found that among individuals who faced--out-of-network bills
that they could not afford, nearly seven in 10 of those didn't
even know the provider was--out-of-network at the time they
received care hence the survive--the surprise. Another analysis
of medical bills from large employer plans found that nearly
one in five inpatient admissions included a claim from an out-
of-network provider that could result in a surprise bill.
Even when enrollees choose in-network facilities, 15
percent of inpatient admissions include a bill from an out-of-
network provider such as an anesthesiologist.
Ms. FOXX. So does the percentage change based on whether
the patient is receiving emergency care? Do we have information
about that?
Ms. SCHUMAN. Yes. And for inpatient admissions that include
an emergency claim, they're much more likely, 27 percent to
include a claim from an--out-of-network provider that
admissions without an emergency room claim 15 percent. That's
the case whether or not employees, enrollees use an in-network
or--out-of-network facility.
Ms. FOXX. All right. What about when ambulances are
provided.
Ms. SCHUMAN. Well, for ambulance services, the figures are
even more alarming for patients in the most dire of
circumstances.
As Ms. Young's testimony notes, among people with employer
sponsored health plans, 51 percent of all ambulance cases
involved out-of-network ambulances. And according to a recent
GAO analysis of air ambulance transports of privately insured
patients, 69 percent were out-of-network.
Ms. FOXX. Okay. So let's talk a little bit about what
happens after a patient receives a surprise bill. What--are
patients able to successfully negotiate down the amount?
Professor Hoadley alluded to this in his comments recently but
are they able to negotiate down the amount or are they forced
to pay the entire bill?
Ms. SCHUMAN. Well, generally a patient does not have much
recourse after he or she receives a balance bill. And that's
because State laws generally hold individuals liable for the
cost of goods and services received not just with consumer's
goods but for medical care as well.
And to that end, providers generally have individuals sign
a contract prior to service indicating that they agree to be
responsible for all billed charges. And it's these contracts
and the related State laws the providers use as the basis for
balance billings.
Now in some instances, employers do try to protect their
patients from receiving or otherwise having to pay these
balance bills by negotiating with the--out-of-network provider
but these employer actions themselves are not without costs
because employers that voluntarily try to protect their
employees from balance bills have increased plan costs because
in most cases they end up having to pay more to settle the
balance bill and this gets reflected into higher premiums for
all consumers.
Ms. FOXX. Lets pursue that a little bit more. Determining
whether providers are in or--out-of-network can be confusing
and obviously it sounds like for plan providers as well as
patients.
So what influences a provider's decision to participate or
not participate in insurance network and are there incentives
or tradeoffs for participating?
Ms. SCHUMAN. This is the key question. And the incentive
for providers to participate in the network is to have access
to a volume of plan enrollees whose plans are trying to drive
patients to a high value network.
The tradeoff for a lower--in-network reimbursement rate is
a provider is going to more than make up for that in volume.
But for some of these hospital based specialists that we have
been talking about, they have inelastic demand. The patients
are going to come to them anyway so that incentive is not there
and the market is therefore supported and surprise medical
bills ensure.
Chairwoman WILSON. Thank you.
Ms. FOXX. Thank you, Madam Chairman, I yield back.
Chairwoman WILSON. Thank you, Dr. Foxx. Mr. Courtney.
Mr. COURTNEY. Thank you, Madam Chairwoman, and thank you
for your leadership on this issue which is definitely sweeping
the country. It is partly because of some great reporting.
Sarah Kliff from Vox has done a great service in terms of a
series of articles on this as well as National Public Radio.
Congressman Doggett from Texas has a bill that's pending in
Congress that again would take the patient out of the cross
fire.
And as we have heard, a number of States have actually
moved forward with legislation like the State of Connecticut
which in 2016 passed a bill on a bipartisan basis by the way
that again at least focused on the question of emergency room
billing which again took the patient out, set up a standard in
terms of reimbursement and also limited the out-of-pocket loss
that would be credited against people both for out-of-network
bills in terms of their overall deductibles.
You know, again, this committee which has jurisdiction over
ERISA is exactly where this issue belongs. As I think we have
heard, the Employment Retirement Income Security Act preempts
State regulations. So, the fact that Connecticut or Illinois or
other States have done good work in terms of moving forward,
again, there is a huge number of employment-based plans that
again are unaffected by this.
And again, I think it's just so important to foot-stomp
that and I guess I would just ask Ms. Schuman again that again
ERISA really has to be dealt with if we are going to really
have a comprehensive solution for America's patients, is that
correct?
Ms. SCHUMAN. That's exactly right. For the self-funded
plans at 60 percent of employer-based plans that are not
subject to these State laws like in Connecticut or other
States, we have to have a Federal solution that addresses ERISA
so that we deal with this problem in a uniform, nationwide way.
Mr. COURTNEY. And when we passed patient protections with
the Affordable Care Act in 2009, again it was this committee
that really crafted the language regarding preexisting
conditions, lifetime limits, essential benefits which again
removed the ERISA preemption and again set a standard that was
universal in terms of all health plans.
So again, I think it's unfortunately the President has
declared war again on the Affordable Care Act but again, our
mission is just to keep again using the best information
possible because health care is such a dynamic issue and this
surprise billing issue obviously has really popped up that
really escaped the Affordable Care Act's scope of patient
protections.
So, again, I would like to ask Professor Hoadley about the
Connecticut law which again as far as emergency rooms, used a
different approach than the negotiated process of resolving
some of these bills and again, established a standard which
would appear at least in some respects to have the salutary
effect of having a pretty sort of standard process that can be
dealt with--can be implemented in a timely fashion versus a
negotiated arbitrated. I am just sort of wondering if you could
kind of tease out the pluses and the minuses from those two
approaches.
Dr. HOADLEY. Yes, there are definitely pluses and minuses
to the two approaches and, you know, we haven't had enough time
on a lot of the laws like Connecticut's and New Jersey's to
really gain a longer, richer experience to draw from.
But we can look at some of the differences, I mean, what
the payment standard that Connecticut and other States use. One
of its advantages is that it sets a clear number. It's there
for everybody to see. There is sort of no ambiguity. Now if you
don't like the number that it sets, or you think the number
that it sets has consequences so States will vary between using
a Medicare-based rate, a rate based on network charges or
sorry, network allowed amounts or a standard based on charges.
And it makes a lot of difference which of those because the
numbers involved are quite different. In any of those cases,
it's a percentage of that standard so, I mean, it's not
necessarily at the Medicare level. It might be as others have
suggested 125 percent of Medicare.
The advantage of the arbitration process is it allows the
individual circumstances of a particular case to be dealt with.
Most States that have used an arbitration process have set it
up in a way that really views it as something as kind of a last
resort. Not something that is going to be used on case after
case.
And so a combination of when they do adjudicate cases and
make a decision, those amounts become a part of public
information and so they can be a lesson to others. But simply
the fact that there is a potential way to solve a number if you
can't get to a resolution actually does create the incentive
for the parties to get together and resolve it on their own.
They want to avoid the cost of going through that process.
So there really are some merits and disadvantages on both of
those approaches.
Mr. COURTNEY. Hopefully we will move swiftly and make a
choice because again, this is an issue that can't wait. With
that I yield back, Madam Chairwoman.
Chairwoman WILSON. Thank you, Mr. Courtney. Mr. Taylor?
Mr. TAYLOR. Thank you, Madam Chair. And I will just, you
know, particularly for the chairwoman that, you know, I
consistently voted in the State legislature to address this
particular issue on a bipartisan basis in my time in Texas. And
it certainly is an issue that we as State legislatures in Texas
saw as a problem and addressed of course, you know, most
Americans, you know, over half of Americans are on ERISA plans.
So we are talking about the big plan, right.
This is really where the show is from a policy point of
view. And so one of the questions I had, Ms. Schuman, is just
what is--and let me just reiterate. It is so important that we
solve this problem. This is a real problem and it is affecting
people every single day. And I hope that we craft a bipartisan
solution in this committee because only a bipartisan solution
can actually go be signed by the President--can be passed the
Senate and go be signed by the President.
Otherwise, we are just sending another messaging bill which
will have no impact and not really solve the problem. So I
would rather have something that is going to go all the way to
the President's desk than something that is going to not get
anything done.
But, Ms. Schuman, in your mind, looking at the State
solutions, I know we have had some discussion about different
State solutions. What have they done that in your mind is a
model for us that you think could be supported by Republicans
and Democrats, get through the Senate and be signed by the
President?
Ms. SCHUMAN. Well, thank you so much and I think there are
some lessons to be learned and maybe drawing from different
States and taking pieces of different State legislation.
The California State legislation that we have talked about
does include a component of capping reimbursement at 125
percent of Medicare or the--in-network rate as a way to again
cap reimbursement so as not to undermine network participation.
Other States that have adopted an arbitration model--
Mr. TAYLOR. So you're--that's an acceptable solution for
you? 125 percent?
Ms. SCHUMAN. Well, I think--
Mr. TAYLOR. Because your original testimony I thought you
were saying we shouldn't set prices but it sounds like you
are--
Ms. SCHUMAN. Well--
Mr. TAYLOR [continuing]. saying set prices.
Ms. SCHUMAN. I think there is two--I think our
recommendation is twofold and deals with a situation of an--
out-of-network emergency service facility for emergency
services different than for an in-network hospital.
Mr. TAYLOR. Okay.
Ms. SCHUMAN. For emergency services at an--out-of-network
facility, that means a hospital didn't even contract with the
plan emergency services, that's what I would suggest that
capping it at 125 percent of Medicare is a reasonable way of
approaching that and to foster some sort of equitable
competition.
With respect to an--in-network hospital, that--in-network
hospital should ensure that providers practicing at that
hospital would pay an--in-network rate.
So the Medicare reimbursement structure is only with that I
recommended is only with respect to the--out-of-network
emergency. Otherwise, you go to a hospital, an--in-network
hospital,--in-network rate, contracted rate. And that would
remove the disincentive for these specialties, these hospital-
based specialties not to join the network.
Mr. TAYLOR. Have you seen the legislative support for those
two solutions in other States on a bipartisan basis the way
that we been able to do it--we have not approached it the way
that you are suggesting. But what we did in Texas was
bipartisan. I mean--
Ms. SCHUMAN. Yes.
Mr. TAYLOR [continuing]. everybody voted for it. It was or
pretty much everybody voted for it. So it was something that we
can all agree on. And again, I want to solve this problem here.
Ms. SCHUMAN. Yes.
Mr. TAYLOR. At this level. So my question to you is that
something that you have seen yes, there is a lot of bipartisan
support for or did that get kind of caught up in a lot of
partisan politics?
Ms. SCHUMAN. We are crafting solutions right here. We are
looking at the problem. We are looking at States like Texas,
California, no one has come up yet with a comprehensive
solution that gets it right and gets it right for everyone and
I think that is what this committee has an opportunity to do.
Mr. TAYLOR. Okay. And, Madam Chair, I will just reiterate,
you know, I voted for every effort in Texas to try to address
this issue because this is a real issue as you point out. I
think we all know this is a real issue and I just want to
entreat you as the chair of this subcommittee that you reach
out and let's get something done on a bipartisan basis so that
it can go through the Senate and be signed into law by the
President and we can address some of this problem.
I know we are not going to probably get a perfect solution
if it is a bipartisan solution unlike I am sure you could draft
a perfect solution over on your side. But the problem is a
perfect solution that doesn't go anywhere is of no help to the
people that we are trying to help.
So I am with you and I look forward to working with you on
this. With that I yield back.
Chairwoman WILSON. You got a deal. You have got a deal. All
right. Thank you, Mr. Taylor. And now, Dr. Shalala.
Ms. SHALALA. Yes, thank you very much, Madam Chair. I have
always been interested in building on when States have taken on
an issue building on their experience and it looks to me like
it is the payment standard and the dispute resolution standard
that differ between the States.
Some of the other elements there seems to be consensus on,
so it sounds like this committee has to focus on those two
things. And I am with Mr. Taylor. If we can figure out how to
get a compromise somehow but here is my question because you
have been answering questions about individual States. Has
there really been a decrease in the number of out-of-network
bills since States have adapted, particularly the comprehensive
States?
Have these--I haven't seen the answer to the question on
whether it is actually worked, particularly in the
comprehensive States. I think Texas is sort of a moderate,
somewhere in between, but I am particularly interested in the
comprehensive States.
My own State, Florida, which is for the most part
represented by my colleagues on the other side, has had a
comprehensive approach. California has had a comprehensive
approach. So, could you talk a little about how effective these
approaches have been?
Dr. HOADLEY. Yes, I can talk about that. It's a really good
question. One of the challenges we have is that a lot of these
have only been in effect a relatively short time and it is
noteworthy that many of these solutions, I think really all of
the States have done this in a very bipartisan way. And have
brought together--and the ones that have been most successful
is when they have really brought both parties and all the
different stakeholders to the table.
Now there has been some look at the track in New York
because it is one of the ones that has been in effect a few
years now and I think we are finding, I have colleagues at
Georgetown that are taking a closer look at sort of what's
worked and what hasn't in New York and they'll have that report
done soon.
But what I understand they're finding so far is a general
degree of satisfaction. That stakeholders across the spectrum
do think that things have worked out pretty well and there is
some research evidence that there has been no particular
inflationary effect coming out of the process they've used in
New York and so that's an encouraging sign.
You know, Florida has had a different approach in for a few
years and then they revised the approach just a couple of years
ago. I have not heard any particular feedback yet from Florida
on how well that's played out. California's is relatively new.
New Jersey is quite new and so that's the--that's really the
challenge in trying to learn the lessons.
But I think the overall impression at least qualitatively,
when we interview stakeholders and insurance department
officials and others that are involved in this is that they
feel like the solutions they've had have been pretty successful
and then they go back and make adjustments where they find gaps
and maybe that's a little easier to do in a State legislative
context than it is in Federal legislation, but they have been
able to go back in many of these States and make adjustment and
try to improve their law.
Ms. SHALALA. But it sounds to me like we have to learn from
the adjustments.
Dr. HOADLEY. Yes.
Ms. SHALALA. As we are crafting national legislation. I
have one other quick question and that's about air ambulances.
I live in Florida. Air ambulances are often out-of-network. And
I think the GAO recently said that 69 percent of the air
ambulances were out-of-network. Have any of you thought about
that in particular? Yes, Ms. Young.
Ms. YOUNG. Yes. So, as you know, this is an acute problem
in the air ambulance context for exactly the same reason it's a
problem in the other areas of the market that we have been
talking about.
Because there is no incentive for these providers to go in-
network because when somebody needs an air ambulance, they're
going to be picked up by a particular air ambulance and a
patient just doesn't have a choice about the network status.
So, the solution here is the same as we have been talking about
for all other provider types.
You need to sort of create conditions that diminish the
attractiveness of remaining out-of-network and encourage these
folks to come in-network at a reasonable price or to otherwise
sort of get paid an appropriate amount, so by setting a payment
standard or otherwise establishing a mechanism by which these
folks can get paid an appropriate amount.
The other complication with air ambulances which I think is
important for this committee to consider is that States are
generally preempted from regulating air ambulance conduct and
so it's a place where in particular you need Federal activity.
The one other thought that I think is important as we think
about evaluating State solutions is and what States have done
so far is not just whether or not the State law has decreased
surprise bills or out-of-network bills but also what effect it
has had on overall health care costs. Because you can have a
law that sort of makes a lot of people happy by paying more
money to these specialties and we also need to be considering
the effect we are having on premiums and overall spending.
Ms. SHALALA. Thank you.
Chairwoman WILSON. Thank you, Ms. Young.
Ms. SHALALA. I yield back.
Chairwoman WILSON. Thank you, Dr. Shalala. Mr. Banks.
Mr. BANKS. Thank you, Madam Chair. Consolidation of the
health care sector is something that we need to consider when
looking at some of the high hospital costs faced by our
constituents. A number of government policies discourage a
thriving and competitive hospital market including lack of site
neutral payments at the Federal level and certificate of need
regulations at the State level.
While I agree that surprise billing is a problem that we
need to address, it is important that we not pursue policies
that encourage even more consolidation in the hospital market
which countless studies have shown drives prices up to
unaffordable levels.
Ms. Schuman, your testimony mentions bundled payments as a
possible remedy for surprise billing. First, can you explain to
the committee how bundled payments would look different from
the system that we currently have?
Ms. SCHUMAN. Sure. You'd get one payment from the hospital
for all of the services that were provided at that hospital. So
instead of getting one bill from an--in-network facility and
the anesthesiologist that was out-of-network and you get a
different bill from their practice and the radiologist that did
an MRI on you and they're out-of-network. You get a different
bill from them. A balance bill by the way that oh, it was a
surprise, you didn't know about.
The idea of a bundled service is its one stop shopping at
an--in-network hospital, an in-network facility. So they make
sure that when they contract with the plan you're contracting
for a bundled of service, that continuum of care that the
patient is going to receiving.
And I do think that there is some promise in looking at
that and it certainly does bring hospitals into the equation
and they're a necessary partner. But we do have to have some
guardrails around there to make sure that doesn't further
escalate and increase costs and just become a bundled payment
of a much higher billed charges. And that it's also indeed a
final payment, not a starting point.
Mr. BANKS. I have another question to followup with it you
had a quick--
Mr. ISASI. I was just going to say, Congressman, it's such
an important question you are asking which are the unintended
consequences in trying to solve this problem. And this idea
that by trying to get providers to coordinate and work in
networks, you can create consolidation and then you can really
damage competition and price goes up. And it's a very valid
concern.
In this instance, however, we are dealing with these, what
folks refer to as auto-referrals or inelastic demand where
these providers' are--this isn't a situation in which you have
two competitive providers who are operating. And then you are
bringing them together and you're killing competition.
It's an instance where you have these providers who are
protected from competition because they get these auto-
referrals, right. And it could be because when I come in for a
service in this facility the lab service goes here and there is
no competition, right.
So, I think it is a really important question. We are doing
a lot of thinking about that at Families. It's a central part
of a focus of our work in the coming year, but in this
instance, because you are in this auto-referral environment
with inelastic demand, it's actually the opposite problem.
These guys never compete because they can just count on this
volume no matter what.
Mr. BANKS. And thank you for that. Let me move on really
quick. Because Medicare pays hospital owned outpatient
departments more than independent practices, hospitals have a
strong incentive to purchase outpatient departments in clinics.
Not only does this results in higher copays and out-of-pocket
expenses for patients, it pushes overall costs higher through
increased consolidation.
Ms. Schuman and Mrs. Young, or the other of you who want to
weigh in on this too if we have time left, is it fair to worry
that a bundled services model of payment could encourage even
more vertical consolidation in the hospital market and further
drive up costs just like the lack of site neutral payments? Ms.
Young?
Ms. YOUNG. Sure, I can start. So I think that in this
arena, these are already providers that are sort of by
definition practicing in the hospital. Your anesthesiologists,
your radiologists, they are already delivering the services in
the context of a hospital inpatient stay or an emergency
department visit. So, I think there is less reason to be
worried about it in this context of others.
I would also add that these provider groups and hospitals
typically have, already have sort of linked financial
relationships so there is--you're not creating a new dynamic or
a new set of incentives here.
Mr. BANKS. Ms. Schuman, I got 20 seconds left.
Ms. SCHUMAN. Yes, so I would just reiterate those same
comments and want to do--and also the importance and advocacy
for site neutral payment reform as a way to remove some of the
disincentives to a lack of competition and consolidation. And
as I said before, I think the bundled payment model could have
some promise here but we need to include the appropriate
guardrails.
Mr. BANKS. I wish I had my--
Chairwoman WILSON. Thank you.
Mr. BANKS [continuing]. more time for the rest of you but
my time has expired.
Chairwoman WILSON. Thank you, Mr. Banks. Mr. Morelle.
Mr. MORELLE. Thank you, Madam Chair, for holding this very
important hearing. I just want to note that during my time in
the New York State Assembly tackling the issue of surprise
billing was priority for me when I serve as chair of the
insurance committee. And then as majority leader, I am very
proud that our work culminated in the bipartisan passage of New
York's groundbreaking out-of-network consumer protection law.
And I just want to take a moment or two to just describe
what we did and then to get some feedback from the panel. This
law took effect in 2015, so it has been on the books now for
several years.
And the law created transparency and a simple system for
resolving out-of-network medical bills which we believe makes
life easier for every New Yorker that would otherwise be hit
with costly bills that would devastate their families.
In addition--and this was really important to us as we were
drafting--that the law did not in my view create a perverse
incentive for people, providers to move out-of-network because
they would get a benefit financially from doing so, and we
avoided that.
In New York, hospitals, clinics, physicians, provide
patients with public information regarding standard charges for
medical services and insurance plan participation, and the law
allows patients to be smart consumers of medical care, reducing
the possibility of the first place of being hit with an out-of-
network charge.
But even more importantly, the law provides a mechanism for
providers and insurers to come together to resolve out-of-
network charges without stress or additional costs to the
patient.
In cases where patients received emergency services at an
out-of-network facility, the patient is held harmless paying
the same exact copay or deductible as they would as an in-
network emergency department.
And even patients without insurance or those with non-State
regulated health insurance are eligible to file a dispute for
an emergency services bill so those self-insured and other
plans covered by ERISA not regulated by the State.
In addition to surprise emergency room bills, New York
patients are protected when a non-emergency provider sends them
an unexpected bill and rather than being forced to cover out-
of-network costs from their own pocket, patients do an
assignment of benefit to their provider who then has to
negotiate a reimbursement amount with their health plan. So
again, the consumer is taken out of it.
In the rare cases that negotiation is unsuccessful, an
independent arbitrator is able to make the determination to set
a reimbursement rate within 30 days.
I think it says a lot that in most cases arbitration is not
necessary. I heard yesterday, and I have got to verify this,
but roughly 800 arbitrations out of 7 million claims
information. Instead insurers and providers can reach an
acceptable deal without the consumer having to pay any--devote
any more time, money or any more headaches.
The law has helped settle about 2,000 billing disputes and
protecting those New Yorkers from potential harmful medical
debt.
To my colleague, Ms. Shalala, I just want to note my data
shows that out-of-network bills in New York has declined 34
percent since the law took effect in January or I think January
2015.
In addition, prices charged by in-network emergency room
doctors have dropped by 9 percent. So, it is rare but in New
York and I have talked within the last several days in advance
of this hearing to insurance plans, consumers, and health care
providers and they all agree that the system has changed for
the better and frankly there is not much that those three
groups necessarily agree on.
So to any of our panelists and I apologize, that was sort
of a long intro to this, but I would be curious as to your
observation of New York's law which has been in place now three
plus years and whether or not there are things that New York
has done that could be done better in your view and what
barriers there would be to putting those protections at the
Federal level? And I would ask each of you to quickly just--
Ms. YOUNG. So, I'll be quick. I think the strengths of the
New York law are that it is very comprehensive and it's clear
to stakeholders what the process looks like.
The potential reason for concern is that I think that
because the New York law gives guidance to arbiters that's
based on charges for services, it has the potential to be
inflationary over time. It is a concern that a lot of observers
have about how the New York law may evolve and I would
encourage folks to think carefully about that.
Mr. MORELLE. And the direction we use is that 80 percent of
the usual and customary charge is determined by the Fair Health
Plan.
Ms. YOUNG. Right. So, it is 80 percent of charges. The
problem with charges is they're not market-determined. So, it's
a bit like saying sort of, you know, the 80th percentile of
your wish list to Santa. Over time there is no constraint on
what you ask Santa for, so it can be inflationary over time in
ways that we should think carefully about.
Mr. MORELLE. Got you. Any others?
Ms. SCHUMAN. Yes, I want to just raise that same sentiment
and the concern that an arbitration model that in any way uses
a reference to billed charges is just going to billed in those
same perverse incentives that we're trying to address.
Mr. MORELLE. I do note--
Chairwoman WILSON. Thank you.
Mr. MORELLE [continuing]. the end response.
Chairwoman WILSON. Thank you.
Mr. MORELLE. I'm sorry. Let me just do this, Madam Chair. I
would ask unanimous consent to submit the following letter from
the Heath Association of New York State which highlights the
success of comprehensive legislation in New York to eliminate
surprise billings and the benefits it's created for New
Yorkers.
Chairwoman WILSON. Without objection.
Mr. MORELLE. Thank you.
Chairwoman WILSON. Thank you so much, Mr. Morelle. Mr.
Watkins.
Mr. WATKINS. Thank you, Madam Chairwoman. Nobody likes
going home, opening the envelope and finding a surprise medical
bill. Lack of network and cost transparency seems to be a
problem. As Congress members, where should we start looking to
find a solution to this? Are there State law or State law
models that we could adapt at the national level? Ms. Schuman?
Ms. SCHUMAN. Sure. Sure, happy to talk about that. and I
think your--we can look to the State models as examples. As we
talked about before, they have limited application in the sense
that they don't include ERISA plans so that's a large swath of
people that aren't going to be protected by State laws.
So and also some of them are rather new. So we don't really
know what their application over time is and just the
discussion we were just having for example with respect to New
York and the arbitration model there, I think we can, we need
to guard against any sort of structure in an arbitration model
that would use billed rates as direction to the arbitrator.
Because that would I think just fuel and further incentivize
out-of-network providers to stay out-of-network and raise their
bill charges.
So we have got certainly lessons that we look to the States
but recognizing again that to get at the problem and its root
and in a uniform matter we need Congress to act.
Mr. WATKINS. Thank you, Ms. Schuman. Mrs. Chairwoman, I
yield my time.
Chairwoman WILSON. Ms. Trahan.
Ms. TRAHAN. Thank you, Madam Chairwoman. Thank you all for
your testimony today, it has been very helpful.
My father was an ironworker before he was diagnosed with
multiple sclerosis. MS as you all know is an unpredictable and
disabling disease of the central nervous system. And for those
living with a chronic and progressive disease like MS, surprise
billing adds undue stress and financial uncertainty.
For instance, an individual living with MS might go to an
in work facility--an in-network facility but be seen by an out-
of-network neurologist.
So, Ms. Young, we all have heard stories from family
members and from our constituents who have received surprise
medical bills even after carefully researching their provider
networks. How can we best protect these individuals who suffer
from chronic diseases like MS from surprise medical bills in
all settings of care, including those non-emergency situations?
Ms. YOUNG. Thanks for that question. So, there are two key
principles in designing a solution. The first is to take
patients out of the middle as we have talked about. It's
essential that patients not be responsible for these balance
bills and not have the burden placed on them to navigate the
system.
And the second principle in designing a solution is to
create a system that doesn't drive up overall health care
spending. And with the group of scholars at the Brookings
Institution, we have recommended two potential policy
solutions.
One we call billing regulation. It's something that we have
talked a lot about this morning where we would use policy to
set a cap on what providers can get paid out-of-network. Again,
our goal here isn't to determine the ultimately correct
commercial payment rate, it's just to end the lucrative out-of-
network billing option and instead restore sort of a more
normal set of market incentives for these folks. So that's one
option.
And that's what we see in all States or the vast majority
of States that have tackled this problem. They use a model that
looks like that.
The other potential approach is something that we have
called contracting regulation, you have heard from others under
the name of bundling but the idea is simply to get this group
of providers out-of-the business of billing patients directly
at all. That's a big step, it's a big change from the way these
services are billed today but it does have analogs in other
parts of our health care system. It is how nurses and nursing
services are paid and billed today. So, I think it is an area
worthy of exploration.
Ms. TRAHAN. Great, thank you. Thank you for that. Mr.
Isasi, I--the workplace is a single, is the single largest
source of health coverage in the United States. According to
the Kaiser Family Foundation about 152 million Americans, which
is about half of our non-elderly population, are enrolled in
employer-sponsor health insurance.
So, I think it is critical for us to highlight how surprise
billing impacts employer-sponsored insurance specifically. How
common are surprise bills among enrollees in employer-sponsored
plans?
Mr. ISASI. Yes. Well, what we know is the research is very
clear. They are as common in employer-sponsored coverage as
they are in insured or individual plans. There is no
difference. It happens just as often.
Ms. TRAHAN. So same--no difference between individual and
group market?
Mr. ISASI. Exactly. Exactly.
Ms. TRAHAN. How should the committee proceed then in order
to fully protect workers in terms--from your view?
Mr. ISASI. Yes. Well, I think the principles we are
hearing, there's such broad agreement on the panel and amongst
all the members. This is really clear. As we talked about
earlier, this is a situation in which the tail is wagging the
dog, right.
When you enroll in health insurance and your hospital says
this is our network, you get to go to that hospital and get
services and be in-network. Right. You don't get to be
surprised because your hospital decided, you know what, we are
not going to negotiate with the ER docs, they will be out-of-
network. Or we are not going to negotiate for laboratory
services, right.
So, this principle that the entity that should bear the
risk of building the network and paying for it and making sure
those services are part of the contract is the hospital, the
payer and the provider. Not the consumer. So, the consumer is
taken out-of-the equation is a really important one.
The second one is the idea that transparency is not nearly
enough. We all know this, we know this from our experience, we
know this from the research that the health care sector cannot
provide real, actual information to consumers at point of
service about what their network looks like, what their costs
are. There is lots and lots of data about this.
And so you can't put the onus on the consumer to just
simply figure out what the price is or whether or not they are
in-network.
I think the third is this idea that patients--this is not
just about emergency services. Right. It's about ancillary
services that can occur without your even knowing. So, if you
go get surgery, your surgeon is in-network, your hospital is
in-network, but your anesthesiologist is not. That can't happen
either.
Ms. TRAHAN. Well, great.
Chairwoman WILSON. Thank you.
Ms. TRAHAN. Thank you so much. I yield back.
Chairwoman WILSON. Thank you, ma'am. There are no more
members here. Anyone else--questions? Wow. Okay.
I want to remind my colleagues that pursuant to committee
practice, materials for submission for the hearing record must
be submitted to the committee clerk within 14 days following
the last day of the hearing. Preferably in Microsoft Word
format.
The materials submitted must address the subject matter of
the hearing. Only a member of the committee or an invited
witness may submit materials for inclusion in the hearing
record. Documents are limited to 50 pages each. Documents
longer than 50 pages will be incorporated into the record via
an internet link that you must provide to the committee clerk
within the required timeframe. But please recognize that years
from now that link may no longer work.
Again, I want to thank the witnesses for their
participation today. Thank you so, so much. This was fabulous.
What we have heard is very valuable.
Members of the committee may have some additional questions
for you and we ask the witnesses to please respond to those
questions in writing. The hearing record will be held open for
14 days in order to receive those response. And I will
guarantee you, you will have lots of questions. Everyone seemed
to have run out of time.
I remind my colleagues that pursuant to committee practice,
witness questions for the hearing record must be submitted to
the majority committee staff or committee clerk within 7 days.
The questions submitted must address the subject matter of the
hearing.
I am now going to ask the ranking member, our distinguished
Mr. Walberg for his closing statement.
Mr. WALBERG. Thank you, Madam Chairwoman, and thank you for
leading this hearing today. It is something that I think a lot
of us have looked forward to as we have begun to hear more and
more of the problem and it is not just my situation. Or yours.
It's running rampant at this point in time.
It's impacting our employees, its impacting our employers.
It's impacting our health care providers, our insurance
industry.
But I think what came out today to me most importantly was
that No. 1 concern we need to address and I think in unanimity
here on this panel as well. We believe it is the patient. The
patient who has the need at the moment, seeking the care from
probably the best health care opportunity in the world, and yet
some of the highest costs that continue to be there because a
system is literally confused if not broken. And so as I have
listened today, Madam Chairwoman, I think we can come to an
agreement and I think the fact that we have people here on this
panel, this committee, who have done yeoman effort in their own
States to come up with solutions, I think we have had a head
start in understanding some of the pitfalls we can stay away
from.
Some of the benefits we can go directly toward and
ultimately a solution that will indeed be a compromise, but a
compromise that is a long way ahead of where it could have been
had we not had the expertise or the experience involved.
In the end, with a society that is not only intent on
having health care available, and we do our effort, our
research to find our physician that is in-network, our hospital
that is in-network and we think we have it all done for
ourselves. We need to make sure that is the case.
But I think also let's not forget the fact that we are a
mobile society. We travel all over. And one of my passions,
indeed maybe my only advice--only vice that I will admit to,
other than fly fishing is motorcycling.
When I travel around the country on my motorcycle, if
something perchance would happen, I want to make sure I am
taken to a hospital, hopefully not by a helicopter but
hopefully not by even an ambulance, but if I am, that I am
cared for.
And ultimately in this great country, I am not put into a
situation that's financially impossible as a result of taking
the care that is good care but in a place that happens to be
out-of-network.
So I am, I commit myself for working with you, Madam
Chairwoman, and appreciate your efforts on this behalf and
hopefully we will come to a conclusion sooner rather than
later. I yield back.
Chairwoman WILSON. Thank you, Mr. Walberg. We are going to
work toward that goal together. Yes. Okay. I now recognize
myself for the purpose of making my closing statement.
Again and again I would like to thank the witnesses for
providing their testimony today. This has been fabulous. This
hearing is the first step in what I hope can be a bipartisan
conversation as we work to develop a solution to the challenge
of surprise medical billing.
As the committee of jurisdiction over employer-sponsored
health coverage, we have a crucial role to play in developing
comprehensive legislation to address this problem. Our
witnesses' testimony will prove invaluable as we move forward.
We heard from Ms. Young about the prevalence and impact of
surprise bills as well as some potential ideas for solutions to
this problem.
We heard from Ms. Schuman about the perspective of large
employers regarding surprise bills.
We heard from Mr. Isasi about the devastating impact these
bills have on consumers, as well as some key principles that
should guide us as we look forward toward reform.
And we heard from Dr. Hoadley about the innovative
solutions that States have taken to protect consumers from
surprise bills.
As our witnesses have made it clear, it is up to Congress
to move forward to comprehensively address this issue on behalf
of our constituents.
I look forward to continuing this process in the weeks and
months ahead.
I thank my colleagues for an informative and productive
discussion, and I yield back my time.
If there is no further business, without objection, the
committee stands adjourned. Thank you.
[Additional submissions by Mrs. Foxx follow:]
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[Additional submissions by Mr. Morelle follow:]
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[Additional submissions by Mr. Scott follow:]
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[Additional submission by Mr. Walberg follows:]
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[Questions submitted for the record and their responses
follow:]
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[Whereupon, at 12:28 p.m., the subcommittee was adjourned.]
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