[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
NO MORE SURPRISES: PROTECTING PATIENTS
FROM SURPRISE MEDICAL BILLS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
JUNE 12, 2019
__________
Serial No. 116-43
Printed for the use of the Committee on Energy and Commerce
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
govinfo.gov/committee/house-energy
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-118 PDF WASHINGTON : 2022
-----------------------------------------------------------------------------------
COMMITTEE ON ENERGY AND COMMERCE
FRANK PALLONE, Jr., New Jersey
Chairman
BOBBY L. RUSH, Illinois GREG WALDEN, Oregon
ANNA G. ESHOO, California Ranking Member
ELIOT L. ENGEL, New York FRED UPTON, Michigan
DIANA DeGETTE, Colorado JOHN SHIMKUS, Illinois
MIKE DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana
G. K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio
DORIS O. MATSUI, California CATHY McMORRIS RODGERS, Washington
KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland PETE OLSON, Texas
JERRY McNERNEY, California DAVID B. McKINLEY, West Virginia
PETER WELCH, Vermont ADAM KINZINGER, Illinois
BEN RAY LUJAN, New Mexico H. MORGAN GRIFFITH, Virginia
PAUL TONKO, New York GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York, Vice BILL JOHNSON, Ohio
Chair BILLY LONG, Missouri
DAVID LOEBSACK, Iowa LARRY BUCSHON, Indiana
KURT SCHRADER, Oregon BILL FLORES, Texas
JOSEPH P. KENNEDY III, SUSAN W. BROOKS, Indiana
Massachusetts MARKWAYNE MULLIN, Oklahoma
TONY CARDENAS, California RICHARD HUDSON, North Carolina
RAUL RUIZ, California TIM WALBERG, Michigan
SCOTT H. PETERS, California EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan JEFF DUNCAN, South Carolina
MARC A. VEASEY, Texas GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
LISA BLUNT ROCHESTER, Delaware
DARREN SOTO, Florida
TOM O'HALLERAN, Arizona
------
Professional Staff
JEFFREY C. CARROLL, Staff Director
TIFFANY GUARASCIO, Deputy Staff Director
MIKE BLOOMQUIST, Minority Staff Director
Subcommittee on Health
ANNA G. ESHOO, California
Chairwoman
ELIOT L. ENGEL, New York MICHAEL C. BURGESS, Texas
G. K. BUTTERFIELD, North Carolina, Ranking Member
Vice Chair FRED UPTON, Michigan
DORIS O. MATSUI, California JOHN SHIMKUS, Illinois
KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland H. MORGAN GRIFFITH, Virginia
BEN RAY LUJAN, New Mexico GUS M. BILIRAKIS, Florida
KURT SCHRADER, Oregon BILLY LONG, Missouri
JOSEPH P. KENNEDY III, LARRY BUCSHON, Indiana
Massachusetts SUSAN W. BROOKS, Indiana
TONY CARDENAS, California MARKWAYNE MULLIN, Oklahoma
PETER WELCH, Vermont RICHARD HUDSON, North Carolina
RAUL RUIZ, California EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire GREG WALDEN, Oregon (ex officio)
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
LISA BLUNT ROCHESTER, Delaware
BOBBY L. RUSH, Illinois
FRANK PALLONE, Jr., New Jersey (ex
officio)
C O N T E N T S
----------
Page
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 1
Prepared statement........................................... 3
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 4
Prepared statement........................................... 5
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 6
Prepared statement........................................... 8
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 9
Prepared statement........................................... 11
Witnesses
Sonji Wilkes, Patient Advocate................................... 12
Prepared statement........................................... 15
Sherif Zaafran, M.D., Chair, Physicians for Fair Coverage........ 18
Prepared statement........................................... 21
Answers to submitted questions............................... 268
Rick Sherlock, President and CEO, Association of Air Medical
Services....................................................... 29
Prepared statement........................................... 31
Answers to submitted questions............................... 270
James Gelfand, Senior Vice President, Health Policy, The Erisa
Industry Committee............................................. 42
Prepared statement........................................... 44
Answers to submitted questions............................... 273
Thomas Nickels, Executive Vice President, American Hospital
Association.................................................... 52
Prepared statement........................................... 54
Answers to submitted questions............................... 277
Jeanette Thornton, Senior Vice President of Product, Employer,
and Commercial Policy, America's Health Insurance Plans........ 70
Prepared statement........................................... 72
Answers to submitted questions............................... 278
Vidor E. Friedman, M.D., President, American College Of Emergency
Physicians..................................................... 86
Prepared statement........................................... 88
Claire McAndrew, M.P.H., Director of the Campaigns and
Partnerships, Families USA..................................... 115
Prepared statement........................................... 117
Submitted Material
H.R. 3630, the No Surprises Act.................................. 175
Letter of June 10, 2019, by A. J. Wilhelmi, President and CEO,
Illinois Health and Hospital Association, to Mr. Shimkus,
submitted by Ms. Eshoo......................................... 197
Report of Air Ambulance Memorial, New Mexico, Office of
Superintendent of Insurance, to Mr. Lujan, submitted by Ms.
Eshoo.......................................................... 199
Statement of Taken for a ride: Your medical emergency end in
bankruptcy, February 21, 2019, by Larry Barker, submitted by
Ms. Eshoo...................................................... 217
Statement of National Observation Stays Coalition, June 12, 2019,
submitted by Ms. Eshoo......................................... 221
Statement of American Medical Association, June 11, 2019,
submitted by Ms. Eshoo......................................... 223
Statement of College of American Pathologists, et al., 2019,
submitted by Ms. Eshoo......................................... 231
Statement of Association of American Medical Colleges, et al.,
submitted by Ms. Eshoo......................................... 236
Statement of William T. Thorwrath, Jr., M.D., FACR, Chief
Executive Officer, June 12, 2019, American College of
Radiology, submitted by Ms. Eshoo.............................. 243
Statement of Blue Cross Blue Shield Association, of June 11,
2019, submitted by Ms. Eshoo................................... 248
Statement of Partnership for Employer-Sponsored Coverage, et al.,
submitted by Ms. Eshoo......................................... 257
Statement of Scott Frey, Director of Federal Government Affairs,
June 12, 2019, American Federation of State, County, and
Municipal employees, submitted by Ms. Eshoo.................... 261
Letter of June 12, 2019, from David Certner, Legislative Counsel
and Legislative Policy Director, Government Affairs, AARP, to
Ms. Eshoo and Mr. Burgess, submitted by Ms. Eshoo.............. 264
Statement of Blue Shield of California, Pacific Business Group of
Health, SEIU United Healthcare Workers West, June 11, 2019,
submitted by Ms. Eshoo......................................... 267
NO MORE SURPRISES: PROTECTING PATIENTS FROM SURPRISE MEDICAL BILLS
----------
WEDNESDAY, JUNE 12, 2019
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m., in
the John D. Dingell Room 2123 Rayburn House Office Building,
Hon. Anna G. Eshoo (chairwoman of the subcommittee) presiding.
Members present: Representatives Eshoo, Butterfield,
Matsui, Castor, Sarbanes, Lujan, Schrader, Kennedy, Cardenas,
Welch, Ruiz, Dingell, Kuster, Kelly, Barragan, Blunt Rochester,
Pallone (ex officio), Burgess (subcommittee ranking member),
Upton, Shimkus, Guthrie, Griffith, Bilirakis, Long, Bucshon,
Brooks, Mullin, Hudson, Carter, and Walden (ex officio).
Also present: Representative Soto.
Staff present: Waverly Gordon, Deputy Chief Counsel;
Tiffany Guarascio, Deputy Staff Director; Zach Kahan, Outreach
and Member Service Coordinator; Josh Krantz, Policy Analyst;
Una Lee, Senior Health Counsel; Aisling McDonough; Policy
Coordinator; Meghan Mullon, Staff Assistant; Kaitlyn Peel,
Digital Director; Samantha Satchell, Professional Staff Member;
C. J. Young, Press Secretary; Mike Bloomquist, Minority Staff
Director; S. K. Bowen, Minority Press Assistant; Adam Buckalew,
Minority Director of Coalitions and Deputy Chief Counsel,
Health; Jordan Davis, Minority Senior Advisor; Margaret Tucker
Fogarty, Minority Staff Assistant; Melissa Froelich, Minority
Chief Counsel, Consumer Protection and Commerce; Peter Kielty,
Minority General Counsel; Bijan Koohmaraie, Minority Counsel,
Counsel, Consumer Protection and Commerce; Ryan Long, Minority
Deputy Staff Director; and Brannon Rains, Minority Staff
Assistant.
Ms. Eshoo. Good morning, everyone. The Subcommittee on
Health will now come to order.
The Chair now recognizes herself for five minutes for an
opening statement. Welcome to all of our witnesses. That's
quite a table--quite a lineup, and we are eager to hear from
you.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Today is a bipartisan hearing about solutions to end
surprise medical billing. Patients receive surprise bills when
they receive care from providers who are not part of the health
plan they are insured by, often referred to as out-of-network
providers, and they are caught between insurers, hospitals, and
doctors.
[Sounds gavel.]
Ms. Eshoo. The committee will come to order, please. There
are staffers that want to have a great conversation. We have
lots of side rooms for them.
These are often people who play by the rules. They bought
an insurance plan, they paid their premiums, and they go to
providers in their network.
Now, we all expect to receive medical bills, but the
``surprise'' in a surprise bill is a shock--it should be called
shock billing--because it can amount to more than what most
people have in a savings account, if they even have one.
In a recent Kaiser Family Foundation poll, 67 percent of
the American people said they are worried about being able to
afford their own or a family member's unexpected medical bills.
And it makes sense for them to be worried because receiving
a surprise bill--medical bill--is incredibly common,
regrettably. It has become incredibly common.
One in 5 emergency department visits result in a surprise
medical bill. If you need a ground or air ambulance, you are at
an especially high risk for a surprise bill.
More than half of all ambulance rides are billed out of
network and the GAO found that nearly 70 percent of air
ambulance trips were billed out of network.
In my region, a young woman by the name of Nina Dang broke
her arm while she was riding her bike. Paramedics took her to
the emergency room at Zuckerberg San Francisco General
Hospital.
According to Vox reporter Sarah Kliff, who wrote a series
of articles exposing surprise bills, Nina Dang left with a cast
and a few months later received a bill for $20,243.
That's because Zuckerberg San Francisco General was not in
her insurance network. Under current Federal law, providers are
permitted to bill privately--insured patients for the balance
not paid by the insurance plan.
California, New York, and several other States already have
strong State protections for out-of-network emergency patients.
But State law cannot regulate self-funded employer plans that
cover about 100 million Americans, thus, our joint presence
here today.
That means that without action from Congress, millions of
Americans will be left unprotected from surprise bills.
Today, we will hear testimony from those who represent each
part of the system that produces surprise bills, and we welcome
each one of you.
In reading the written testimonies, I found that there was
a tendency to confuse the surprise billing issue with other
concerns: large deductibles, narrow networks, or the pressure
of high healthcare costs for both patients and what it costs
our country.
I think that those are all big concerns and I want our
subcommittee to tackle them. But they are not today's agenda.
Our work today is not exactly simple, but I think that it is
very clear. We have to protect every American from a surprise
medical bill.
I am proud of the bipartisan work our subcommittee has
tackled so far on this Congress. In our drug pricing hearings,
we were able to put the finger pointing aside and get to the
root of the issue and pass legislation to help patients, and I
believe we will continue to do that.
So here is my ask of our witnesses. We need you to help us
to find the best policy. We all look forward to your testimony
and look forward to working--I look forward to working with my
colleagues to develop a bipartisan solution to end surprise
billing.
[The prepared statement of Ms. Eshoo follow:]
Prepared Statement of Hon. Anna G. Eshoo
Today is a bipartisan hearing about solutions to end
surprise medical billing. Patients receive surprise bills when
they receive care from providers who are not part of the health
plan they're insured by--often referred to as out-of-network
providers--and they're caught between insurers, hospitals, and
doctors.
These are often people who play by the rules. They bought
an insurance plan, they paid their premiums, and they go to
providers in their network. We all expect to receive medical
bills, but the ``surprise" in a surprise bill is a shock that
can amount to more than people have in their savings account.
In a recent Kaiser Family Foundation poll, 67% of Americans
said they are worried about being able to afford their own or a
family member's unexpected medical bills.
It makes sense why people are so worried. Receiving a
surprise medical bill is incredibly common.
One in five emergency department visits result in a
surprise medical bill. If you need a ground or air ambulance,
you are at an especially high risk for a surprise bill. More
than half of all ambulance rides are billed out of network, and
the GAO found that nearly 70% of air ambulance trips were
billed out of network.
In my region, a young woman, Nina Dang, broke her arm while
riding her bike. Paramedics took her to an emergency room at
Zuckerberg San Francisco General Hospital. According to Vox
reporter Sarah Kliff, who wrote a series of articles exposing
surprise bills, Nina Dang left with a cast and a few months
later received a bill for $20,243. That's because Zuckerberg
San Francisco General was not in her insurance network.
California, like New York and several other states, already
has strong State protections for out-of-network emergency
patients, but State law cannot regulate self-funded employer
plans that cover about 100 million Americans. That means that
without action from Congress, millions of Americans are
unprotected from surprise bills.
Today, we'll hear testimony from the many who are part of
the system that produces surprise bills. Hospitals, physicians,
and health insurers know that patients can't control where they
are treated in an emergency. They know that patients don't
expect to receive an out-of-network bill when they go to an in-
network facility. However, they still participate and
contribute to a system that can bankrupt a person.
In some of our witnesses' testimony, I've seen a tendency
to confuse the surprise billing issue with other concerns--
large deductibles, narrow networks, or the pressure of high
healthcare costs for both patients and the nation. I want our
subcommittee to tackle these problems, but they are not today's
agenda. Our work today is not simple, but it is clear. We must
protect every Americans from a surprise medical bill.
I'm proud of the bipartisan work our Subcommittee has
tackled so far this Congress. In our drug pricing hearings,
we've been able to put the finger pointing aside, get to the
root of the issue, and pass legislation to help patients.
I ask our witnesses to do the same. Help us find the best
policy. I look forward to your testimony, and I look forward to
working with my colleagues to develop a bipartisan solution to
end surprise billing.
Ms. Eshoo. With that, I would like to now recognize Dr.
Burgess, the ranking member of the Subcommittee on Health, for
five minutes for his opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, and good morning to all of our
witnesses and thank you for being here today to testify on this
important topic of out-of-network billing.
It is an issue that has hit home in our districts and our
states and, certainly, it's a topic of conversation when I go
home to Texas.
One of the most prominent out--of--network billing stories
in Texas is that of Drew Calver, a 44-year-old high school
teacher in Austin, Texas, who suffered a heart attack and was
rushed to the emergency room at St. David's Medical Center.
Good for them.
He was stented and his heart muscle was saved. And so this
was an individual who was otherwise healthy. He had competed in
an Ironman triathlon earlier in the year, and he was told at
the outset that the hospital would accept his insurance.
He has insurance through his school district and he was
billed a total of $110,000 for his 4-day hospital stay. That's
more than two times his annual pay.
So problems with out-of-network billing is not an easy
problem to solve but it's one where many of the stakeholders
disagree on the solution.
But it is quite intentional that we have called those
stakeholders who might not agree to testify at the same table
today. If there is anything upon which we should all agree it
is that the patient should be held harmless so that they can
avoid massive bills like the one Mr. Calver received,
especially in emergency situations.
And I just want to underscore what the chairwoman of the
subcommittee said, and while you all are all very smart--you
have differences of opinion about this--we need your help. We
solicit your help.
That is why you are here today. And if you don't help us
solve the problem, we will solve the problem and none of you
will like it.
In addressing this issue, I hope that the stakeholders here
today--physicians, insurers, hospitals, and patients--come to
an agreeable conclusion, even if it is not their first choice.
My State of Texas just passed a new bill in the State
legislature because the first legislative fix passed 2 years
ago did not adequately address out-of-network billing.
While Texas and numerous other states have made efforts to
mitigate the billing issues, states are unable to legislate
what happens in cases involving multi-state employer-sponsored
plans.
This is why the Energy and Commerce Committee is looking to
address this issue and why the president has been so vocal in
putting forth a set of guiding principles in addressing
surprise medical bills.
President Trump's principles include protecting patients
without increasing Federal health expenditures while
maintaining choice for patients. I, largely, agree with
President Trump's principles and I hope that Congress can come
to a consensus upon the best way to execute a legislative
effort and send something to the president's desk.
As a physician I understand the payment issues at hand when
it comes to billing for healthcare services and I am really
grateful that we have two physicians on our panel today.
It is important that throughout this conversation we
consider the potential effect of shifting payment incentives
for physicians, for insurers, for hospitals, and that we are
not driving payment rates too far in one direction or another.
I do think it is critical that on such an important issue
we take into account the various perspectives of the
stakeholders and I am encouraged that we do have such a robust
panel before us this morning.
The committee released a discussion draft a few weeks prior
to this hearing and my understanding is the committee has
received a lot of comments on the discussion draft.
So I am hopeful that this subcommittee will lead the charge
on addressing out-of-network billing. But I think the number of
proposals that members have produced shows there is serious
interest to accomplish something legislatively.
Patients deserve better than to receive bills they were not
expecting for the care that they needed, especially when that
care is non-elective or emergent in nature.
Again, I want to thank all of our witnesses for being here
today and look forward to a lively and productive discussion.
Thank you, and I will yield back.
[The prepared statement of Mr. Burgess follow:]
Prepared Statement of Hon. Michael C. Burgess
Good morning and thank you to all of our witnesses for
being here today to testify on the important topic of surprise
billing. This is an issue that has hit home in our districts,
and it has certainly been a topic of conversation when I go
home to Texas.
One of the most prominent surprise billing stories in Texas
is that of Drew Calver, a 44-year-old high school teacher in
Austin, who suffered a heart attack and was rushed to the
emergency room at St. David's Medical Center. Mr. Calver was
healthy and had completed an ironman triathlon earlier in the
year. Despite being told that the hospital would accept his
insurance, Mr. Calver was billed a total of nearly $110,000 for
his 4-day hospital stay. This amount is more than two times his
annual pay.
Surprise billing is not an easy problem to solve, and it is
one where the many stakeholders disagree on the solution. It is
quite intentional that we have called all those stakeholders to
testify at the same table today. If there is anything upon
which we should all agree, it is that the patient should be
held harmless so they can avoid massive bills like the one that
Mr. Calver received, especially in emergency situations.
In addressing this issue, I hope that the stakeholders--
physicians, insurers, hospitals, patients, and others--are able
to come to an agreeable conclusion, even if it is not their
first choice. My home State of Texas just passed a new bill in
the State legislature because the first legislative fix did not
adequately address surprise billing. While Texas and numerous
other states have made efforts to mitigate surprise billing,
states are unable to legislate what happens in cases involving
employer-sponsored plans. This is why the Energy and Commerce
Committee is looking to address this issue, and why the
President has been so vocal in putting forth a set of guiding
principles in addressing surprise medical bills. The
President's principles include protecting patients without
increasing Federal healthcare expenditures, while maintaining
choice for patients. I largely agree with these principles and
hope that Congress can come to a consensus upon the best way to
execute a legislative effort and send something to the
President's desk.
As a physician, I understand the payment issues at hand
when it comes to billing for healthcare services, and I am glad
that we have two physicians on our panel today to represent the
physician perspective. It is important that throughout this
conversation we consider the potential effect of shifting
payment incentives for physicians, and for insurers, such that
we are not driving payment rates too far in one direction or
the other.
I do think it is critical that on such an important issue
we take into account the various perspectives that the
stakeholders have. I am encouraged that we have such a robust
panel before us this morning, and that the Committee has
received more than 60 comments on the discussion draft.
I am hopeful that this Committee will lead the charge on
addressing surprise billing, but I think the number of
proposals that Members have produced shows that there is
serious interest to accomplish something legislatively.
Patients deserve better than to receive surprise bills for the
care they needed, especially non-elective or emergency care. I
would like to thank our witnesses for being here today, and I
look forward to a productive discussion.
Ms. Eshoo. I thank the gentleman, and he yields back.
The Chair now recognizes Mr. Pallone, the chairman of the
full committee, for five minutes for his opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Madam Chair.
I came in when Dr. Burgess was giving his opening statement
and I thought, well, maybe I have to revise my remarks to be
more evil. I am not usually playing good guy to his bad guy,
but whatever. Maybe I didn't hear everything correctly.
[Laughter.]
Mr. Pallone. But anyway, it's long past time for Congress
to take decisive action to protect patients from the
unreasonable and unacceptable practice of surprise billing.
Every day we hear new stories about American families being
devastated financially and put through the tremendous emotional
toll of surprise medical bills.
Stories like Stefan Kappas-Rocha of California who went to
the emergency room for a kidney infection at Zuckerberg
Hospital in San Francisco. She spent one night in the emergency
room and was sent home a day later with Ibuprofen. Two months
later, she received a bill for more than $27,000.
Then there's a story in my county of Joseph from Sea Girt
who went to an in-network hospital for an emergency surgery on
his leg, only to later receive a $60,000 bill from a surgeon
who was out of his network.
And then there's the story of Drew Calver of Dallas, Texas,
who received a $108,000 surprise medical bill from St. David's
Medical Center after treatment for a heart attack.
These stories highlight a clear market failure. I know we
will see a lot of finger pointing today about who's at fault
for this failure, and this is the same finger pointing that has
resulted in patients going into debt, ruining their credit, and
questioning whether they should take their child to the
hospital.
But let me be clear. I am interested in fixing this problem
for consumers, not for the stakeholders who have allowed this
problem to persist for decades while consumers continually paid
the price.
It is clear that the private sector is not going to fix
this problem on its own and that Congress needs to step in and
provide relief to consumers.
That being said, I want to commend the stakeholders here
today for all agreeing that it's no longer acceptable to have
patients in the middle of their disputes. People who need
emergency care who were treated by a doctor they did not choose
should be held harmless.
Now, fortunately, there's a bipartisan agreement on the
committee that we must act. Ranking Member Walden and I have
worked together to craft a common-sense bipartisan solution for
the problem of surprise billing.
Our draft legislation would ensure that consumers with all
types of private insurance are protected from surprise bills.
It holds the patient harmless in surprise bill situations by
ensuring that an individual's cost sharing for out-of-network
care is limited to what the individual would have paid if the
services were provided by an in-network provider.
This would ensure that patients are no longer penalized by
the provider and the insurer's failure to contract, which is no
fault of their own.
Providers would no longer be able to balance bill patients
for out-of-network emergency services or for scheduled services
from providers the patient was not aware would be involved in
their treatment.
For the vast majority of cases, our discussion draft is
simply asking providers to be more transparent about their
billing practices and charges.
Insurers and hospitals also have a large role to play in
making sure consumers understand their coverage. It is critical
that we build some basic transparency and fairness into a
system I think we all agree is incredibly difficult for
consumers to navigate.
Providers, hospitals, and insurers should share this goal
because the status quo is severely damaging the reputation and
trustworthiness in the eyes of consumers.
Now, the discussion draft proposes resolving the payment
dispute between the provider and the insurer by requiring the
insuring plan to pay at a minimum the median in-network rate
for that service in that geographic area.
This ensures that in the absence of balance billing every
provider will be guaranteed some payment for their services and
this would also create a predictable transparent means of
resolving these disputes between providers and insurers who
have failed to contract. It would also place little or no
administrative burden on states, the Federal government, or the
parties involved in the dispute.
So I look forward, Madam Chair, to hearing constructive
feedback in the draft proposal. But I strongly believe that any
viable solution in this space cannot result in rising
healthcare costs.
This debate has shed light on the fact that some providers'
charges and hospital fees are inexplicably high and I worry
that if Congress chooses the wrong approach, consumers will
simply end up paying those costs through higher premiums and we
simply can't allow this to happen.
So I hope that today we can have a productive discussion
without pointing fingers and passing the buck. We should
instead focus on policy solutions that protect consumers.
Ideally, such a solution will not only take the patient out of
the middle and hold him financially harmless from surprise
billing.
It'll also help create a lower cost, more rational
healthcare system for all Americans, and I believe that the
discussion draft accomplishes these goals and look forward to
the feedback from our witnesses.
Obviously, Madam Chair and Dr. Burgess, you know, this
discussion draft doesn't have to be the end all, and that's the
reason we are having the hearing today and will continue to
have discussions with people who may have alternative ideas or,
you know, improving on what this discussion draft has here
today.
So thank you, Madam Chair, and I--back to Dr. Burgess
again, I am not used to being--he was like the bad guy today
and I felt like I was----
Ms. Eshoo. No, he wasn't.
Mr. Pallone. He wasn't?
Ms. Eshoo. No.
Mr. Pallone. Oh, then I misunderstood then. Oh, very even
tempered. OK. All right. Thank you. I yield back.
[The prepared statement of Mr. Pallone follow:]
Prepared Statement of Hon. Frank Pallone, Jr.
It is long past time for Congress to take decisive action
to protect patients from the unreasonable and unacceptable
practice of surprise billing. Every day, we hear new stories
about American families being devastated financially and put
through the tremendous emotional toll of surprise medical
bills. Stories like Stefan Kappes-Rocha's of California, who
went to the emergency room for a kidney infection at Zuckerberg
Hospital in San Francisco. She spent one night in the emergency
room and was sent home a day later with ibuprofen. Two months
later, she received a bill for more than $27,000. Then there's
the story of Joseph from Sea Girt, New Jersey who went to an
in-network hospital for anemergency surgery on his leg only to
later receive a $60,000 bill from a surgeon who was out of his
network. And then there's the story of Drew Calver of Dallas,
Texas, who received a $108,000 surprise medical bill from St.
David's Medical Center, after treatment for a heart attack.
These stories highlight a clear market failure. I know we
will see a lot of finger pointing today about who is at fault
for this failure--this is the same finger pointing that has
resulted in patients going into debt, ruining their credit, and
questioning whether they should take their child to the
hospital. But let me be clear--I'm interested in fixing this
problem for consumers not for the stakeholders who've allowed
this problem to persist for decades while consumers continually
paid the price.
It is clear that the private sector is not going to fix
this problem on its own, and that Congress needs to step in and
provide relief to consumers. That being said, I want to commend
the stakeholders here today for all agreeing that it's no
longer acceptable to have patients in the middle of their
disputes. People who need emergency care or who are treated by
a doctor they did not choose should be held harmless.
Fortunately, there is bipartisan agreement on this
Committee that we must act. Ranking Member Walden and I have
worked together to craft a commonsense, bipartisan solution to
the problem of surprise billing. Our draft legislation would
ensure that consumers with all types of private insurance are
protected from surprise bills. It holds the patient harmless in
surprise bill situations, by ensuring that an individual's cost
sharing for out-of-network care is limited to what the
individual would have paid if the services were provided by an
in-network provider. This would ensure that patients are no
longer penalized by the provider and the insurers failure to
contract, which is no fault of their own.
Providers would no longer be able to balance bill patients
for out-of-network emergency services or for scheduled services
from providers the patient was not aware would be involved in
their treatment. For the vast majority of cases our discussion
draft is simply asking providers to be more transparent about
their billing practices and charges.
Insurers and hospitals also have a large role to play in
making sure consumers understand their coverage. It is critical
that we build some basic transparency and fairness into a
system I think we all agree is incredibly difficult for
consumers to navigate. Providers, hospitals, and insurers
should share this goal--because the status quo is severely
damaging their reputation and trustworthiness in the eyes of
consumers.
The discussion draft proposes resolving the payment dispute
between the provider and the insurer by requiring the insurance
plan to pay, at a minimum, the median in-network rate for that
service in that geographic area. This ensures that in the
absence of balance billing, every provider will be guaranteed
some payment for their services. This would also create a
predictable, transparent means of resolving these disputes
between providers and insurers who have failed to contract. It
would also place little to no administrative burden on States,
the Federal Government, or the parties involved in the dispute.
I look forward to hearing constructive feedback on the
draft proposal, but I strongly believe that any viable solution
in this space cannot result in rising healthcare costs. This
debate has shed light on the fact that some provider's charges
and hospital fees are inexplicably high, and I worry that if
Congress chooses the wrong approach, consumers will simply end
up paying those costs through higher premiums. We simply cannot
allow this to happen.
I hope that today we can have a productive discussion
without pointing fingers and passing the buck. We should
instead focus on policy solutions that protect consumers.
Ideally, such a solution will not only take the patient out of
the middle and hold them financially harmless from surprise
billing, but will also help create a lower-cost, more rational
healthcare system for all Americans. I believe that the
Pallone-Walden discussion draft accomplishes these goals, and I
look forward to feedback from our witnesses.
I yield back.
Ms. Eshoo. He was in great form today, even better form.
He's always in good form.
The gentleman yields back. Now I'd like to recognize my
friend, the ranking member of the full committee, Mr. Walden,
for five minutes for his opening statement.
OPENING STATEMENT OF HON. GREG WALDEN A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Well, thank you, Madam Chair, and thanks to Dr.
Burgess and you for this hearing and to Mr. Pallone for working
in the bipartisan way we are to address this surprise billing
issue.
The hearing really is about patients, first and foremost.
We are actually going to put them first. We have all heard the
stories and you heard some more today.
Patients who followed the rules, they pay their premiums,
and then through no fault of their own following some sort of
emergency situation or surgery, receive a 6-digit bill in the
mail weeks later, which they have no way of paying.
It is not fair. It should not happen and we are going to
put a stop to it one way or the other. We must protect patients
from these bills and we want to get it right.
Since we released this draft last month, Chairman Pallone
and I have received more than 60 comment letters on this draft
from stakeholders across the healthcare industry.
That feedback is critical as we work to take the patient
out of these surprise billing scenarios without raising overall
healthcare costs.
I'd also like to thank all of our witnesses for being here
today, many of whom have provided helpful feedback on this
legislation and I'd particularly like to thank Ms. Wilkes.
Unfortunately, you have had to become an expert on this
topic the hard way by living through it with your children. As
a parent, I share your frustration and your desire to fix
surprise billing once and for all.
Unfortunately, as you know, your experience is not unique,
and I recently spoke with a doctor whose daughter's case has
become pretty well known. The president had her down at the
White House.
She had been in the hospital and on the way out her
provider suggested she take a simple drug test. Little did she
know that that test then was sent to an out-of-network lab and
she soon received a bill for $17,850 in the mail. She had no
reason to know or even to think to ask if the lab was in or out
of network. She was just following her doctor's advice.
Situations like hers and yours, Ms. Wilkes, are why we are
here today. We are going to stop this and it's why Chairman
Pallone and I are moving forward with legislation to protect
patients.
I am also pleased the president has taken on this issue. He
was very serious about fixing surprise billing when we had a
bipartisan event at the White House a couple weeks ago and I am
encouraged our draft legislation lines up pretty well with the
principles the president has set forth for a solution that
could get his signature and into law.
So we are moving forward on this. The draft before us
today, the No Surprises Act, would take a number of steps to
address surprise medical bills.
First and foremost, this bill prohibits balance billing of
patients and limits a patient's bill to their in-network cost-
sharing amount in emergency situations.
This is common sense when a patient has little or no
control over who gives them lifesaving care and can hardly be
expected to make sure everyone is in network.
For scheduled care like elective surgeries, patients must
receive both verbal and written notice of any out-of-network
providers who will be involved in their care, and if they don't
consent to that notice, they cannot be balance billed.
Under our draft bill, providers who would currently balance
bill the patient will instead be paid to by the patient's
insurer at the median in-network rate for the service they
provided in that geographic area.
And by the way, my home State of Oregon passed legislation
on surprise billing last year with a similar approach and other
states have passed their own models that create an arbitration
process for providers and insurers to come to an agreement on a
reasonable payment, and there are combinations of the two.
Under our draft, these State laws, by the way, would remain
in effect, and we know what many of the organizations
represented in this room said when Oregon took up its law and
what they've said since, and we know how it's playing out.
There are a number of options on how to deal with the
payments to providers and I look forward to hearing from our
panel on their experience with these different models.
In closing, I want to stress again this is an issue that is
important to us and to our constituents and to all consumers in
America. I understand there are competing interests here today.
I expect we will have plenty of back and forth on the policies
in this draft and that's what we are seeking.
Protecting patients, however, must be put at the forefront
of this discussion and I'll continue to work with my colleagues
on both sides of the aisle to do just that. We are going to
resolve this once and for all.
With that, I yield back.
[The prepared statement of Mr. Walden follow:]
Prepared Statement of Hon. Greg Walden
Thank you, Madam Chair, and Dr. Burgess for holding this
hearing. I'd also like to thank the Chairman of the full
committee, Mr. Pallone, for working in good faith and in a
bipartisan manner to release a discussion draft to address
surprise billing.
This hearing is really about patients. We've all heard the
stories from our constituents. Patients who follow the rules,
pay their premiums, and then through no fault of their own,
following an emergency situation or surgery receive a 6-digit
bill in the mail weeks later, which they have no way of paying.
It is not fair. It should not happen.
We must protect patients from these bills, and we want to
get it right. Since we released this draft last month, Chairman
Pallone and I have received over 60 comment letters on this
draft from stakeholders across the healthcare industry. That
feedback is critical as we work to take the patient out of
these surprise billing scenarios without raising overall
healthcare costs.
I'd like to thank all our witnesses for being here today,
many of whom have provided that helpful feedback on this bill.
I'd particularly like to thank Ms. Wilkes--unfortunately you've
become an expert on this topic the hard way, by living through
it with your children. As a parent I share your frustration and
your desire to fix surprise billing once and for all.
Unfortunately, as you know, your experience is not unique--
I recently spoke with a doctor whose daughter's case has become
pretty well-known: She had been in the hospital, and on the way
out her provider suggested that she take a simple drug test.
Little did she know, that test was sent to an out-of-network
lab and she soon received a $17,850 bill in the mail. She had
no reason to know, or even think to ask, if the lab was in- or
out-of-network. She was just following her doctor's advice.
Situations like hers and yours, Ms. Wilkes, are why we're here
today, We have to stop this. And it is why Chairman Pallone and
I are moving forward with legislation to protect patients.
I'm also pleased that the President has taken on this
issue. He was very serious about fixing surprise billing at a
bipartisan event at the White House a few weeks ago. I am
encouraged that our draft legislation lines up well with the
principles the White House has set forth for a solution that
could get the President's signature and become law.
The draft before us today, the No Surprises Act, would take
a number of steps to address surprise medical bills. First, and
most importantly, this bill prohibits balance billing of
patients and limits a patient's bill to their in-network cost-
sharing amount in emergency situations. This is commonsense
when a patient has little to no control over who gives them
life-saving care and can hardly be expected to make sure
everyone is in-network. For scheduled care like elective
surgeries, patients must receive both verbal and written notice
of any out-of-network providers who will be involved in their
care--if they don't consent to that notice, then they can't be
balance billed.
Under our draft bill, providers who would currently balance
bill the patient will instead be paid by the patient's insurer
at the median in-network rate for the service they provided in
that geographic area. My home State of Oregon passed
legislation on surprise billing last year with a similar
approach, and other states have passed their own models that
create an arbitration process for providers and insurers to
come to an agreement on a reasonable payment--and there are
combinations of the two. Under our draft, these State laws
would remain in place.
There are a number of options on how to deal with the
payment to providers, and I look forward to hearing from our
panel on their experience with these different models.
In closing, I would like to once again stress how important
this issue is to our constituents. I understand there are
competing interests here today and I expect plenty of back and
forth on the policies in the draft. Protecting patients,
however, must be put at the forefront of this discussion and I
will continue to work with my colleagues on both sides of the
aisle to do just that.
Thank you, Madam Chair, and I yield back.
Ms. Eshoo. The gentleman yields back. The Chair would like
to remind Members that pursuant to committee rules, all
Members' written statements--opening statements will be made
part of the record.
I now would like to introduce all of our witnesses that are
here today.
Ms. Sonji Wilkes, who is a patient advocate--thank you very
much for being here; Dr. Sherif Zaafran, thank you for you
being here--he is the chair for Physicians for Fair Coverage;
Mr. Rick Sherlock, the president and CEO for the Association of
Air Medical Services--thank you to you; Mr. James Gelfand,
executive--senior vice president to health policy, the ERISA
Industry Committee; Mr. Thomas Nickels, the executive vice
president of the American Hospital Association--it's nice to
see you again; Ms. Jeanette Thornton, the senior vice president
of product, employer, and commercial policy, America's Health
Insurance Plans--welcome to you and thank you; Ms. Claire
McAndrew, director of Campaigns and Partnerships at Families
USA--thank you to you and the work that the organization does;
Dr. Vidor--is it Vitor or Vidor?
Dr. Friedman. Madam Chairwoman, it's Vidor.
Ms. Eshoo. Vidor.
Dr. Friedman. Thank you.
Ms. Eshoo. Thank you. Vidor Friedman. Dr. Friedman,
president of the American College of Emergency Physicians.
So we thank all of our witnesses for joining us today and
we look forward to your testimony.
The Chair is going to begin by recognizing our first
witness.
Each one of you have five minutes to give your opening
statement, and you're probably all pretty familiar with what
the light system.
The one you really have to pay attention to is red because
it's over then, OK? So when it's yellow you have 1-minute
remaining to wrap up your point.
So, Ms. Wilkes, again, thank you for being here. Tell us
your story. You're recognized for five minutes.
STATEMENTS OF SONJI WILKES, PATIENT ADVOCATE; SHERIF ZAAFRAN,
M.D., FASA, CHAIR, PHYSICIANS FOR FAIR COVERAGE; RICK SHERLOCK,
PRESIDENT AND CEO, ASSOCIATION OF AIR MEDICAL SERVICES; JAMES
GELFAND, SENIOR VICE PRESIDENT, HEALTH POLICY, THE ERISA
INDUSTRY COMMITTEE; THOMAS NICKELS, EXECUTIVE VICE PRESIDENT,
AMERICAN HOSPITAL ASSOCIATION; JEANETTE THORNTON, SENIOR VICE
PRESIDENT OF PRODUCT, EMPLOYER, AND COMMERCIAL POLICY,
AMERICA'S HEALTH INSURANCE PLANS; CLAIRE McANDREW, M.P.H.,
DIRECTOR OF THE CAMPAIGNS AND PARTNERSHIPS, FAMILIES USA; AND
VIDOR E. FRIEDMAN, M.D., FACEP, PRESIDENT, AMERICAN COLLEGE OF
EMERGENCY PHYSICIANS
STATEMENT OF SONJI WILKES
Ms. Wilkes. Thank you, Madam Chairwoman.
My name is Sonji Wilkes and I am a mom from Englewood,
Colorado. I would like to thank the chairwoman, Congressman
Burgess, and members of the subcommittee for the opportunity to
discuss my family's experience with surprise billing and ask
you to end this practice.
When my husband and I became first-time parents as health
20 somethings, neither of us had much experience with
insurance. But we had a valuable lesson when we received a bill
double what we expected.
Seems the insurance company counted me and my newborn
daughter as two separate patients. Though surprised, we paid
the claim and moved on.
Two years later, we decided to grow our family. A little
wiser, we made sure to ask specifically if we would incur two
co-pays. We double checked that our OB/Gyn and the facility
that we were to deliver at were in network.
Per the documentation from our insurance provider, we were
covered. My son, Thomas, was born full term. By all appearances
he was a healthy boy.
Several hours after Thomas was circumcised, our
pediatrician called to say that he was concerned that the
circumcision site continued to bleed. The next day he called us
in tears to say that Thomas had severe hemophilia A, a genetic
disorder that prevents his blood from clotting.
Our doctor told us that hemophilia was a rare--excuse me,
Thomas was taken to the neonatal intensive care unit so that he
could be closely observed. Within the hour, a specialist from
the local hemophilia treatment center was standing in our
hospital room and, after asking if we had good insurance, spent
the next few hours explaining hemophilia to us.
She brought a dose of clotting factor for Thomas to stop
the bleeding as the hospital did not stock that medication. In
the NICU, the hematologist started an IV line in my son's scalp
while the NICU staff intently watched. They had never treated
hemophilia.
While the hematologist was not part of the hospital or the
NICU staff, we never saw a bill for the medication she
administered or for her time or services.
Thomas remained in the NICU overnight for observation.
Neither my husband or I left our son's side, and other than
monitoring his vitals, there was no direct care give to Thomas.
As a nearly 10-pound baby, he was a bit out of place in the
NICU.
We were discharged within the normal post-partum period and
went home to come to grips with an unexpected chronic disorder
diagnosis for our baby boy.
A few weeks later, we received another shock--a $50,000
bill for Thomas' stay in the NICU. We were dumbfounded. We had
been at an in-network facility. How could we possibly be
responsible for that amount?
My husband and I felt we should not be held responsible. We
did some research and found out that the hospital had
subcontracted the NICU out to a third-party provider. This
third-party provider was the one demanding payment.
We had made a good faith effort to stay in network. We
refused to pay the bill and, subsequently, were sent to
collections. Our credit was ruined.
Sometime later our minivan lease was expiring. As we headed
to the dealership, we knew we wouldn't qualify for a new lease.
I had to have a car. Thomas was being seen at the hemophilia
treatment center multiple times a week. At the finance
manager's desk, my husband and I explained the surprise bill.
As I emptied the Kleenex box sitting on his desk, he started
tapping on his computer, wiped a tear of his own, and said, we
will make something happen for you. It might be at a crazy high
interest rate and you'll have to keep the car until the day it
dies. But I understand your situation because something similar
happened to my family.
I am still driving that minivan.
When you are told your baby's body lacks the ability to
stop bleeding and that he needs immediate specialized
treatment, your first reaction isn't, gee, I wonder if that's
in-network.
Your first reaction is, do whatever it takes to save my
baby. Why would I check if the NICU, just 50 steps away from
the room that I gave birth in, was in network? I think any
reasonable person would assume it to be because it seems
reckless and cruel that it would not be.
No family should face financial ruin because they are duped
into thinking that they are at an in-network facility or
because the in-network provider contracts out services like
radiology, lab services, imaging, or more without the patient's
knowledge.
While transparency and disclosure of any out-of-network
subprovider is critical, it's not enough. Navigating health
insurance is extremely difficult and especially so in crisis or
for the inexperienced.
According to a recent Kaiser Family Foundation poll, four
out of ten respondents said they had received an unexpected
bill from a hospital, lab, or doctor in the past year.
But surprise billing is not a new issue. My personal story
is from 2003. Patients need you to pass protections to stop
these harmful practices.
I wish this wasn't mine or anyone else's stories to share.
Please protect Americans from excessive bills and medical debt
by ending this surprise billing.
My family and millions of others thank you in advance.
[The prepared statement of Ms. Wilkes follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Ms. Wilkes.
How is your son today?
Ms. Wilkes. He's very good.
Ms. Eshoo. Good. That's great.
Ms. Wilkes. Fifteen years old and learning how to drive in
that minivan.
Ms. Eshoo. Isn't that wonderful? Isn't that great? Isn't
that great? I just want to make a suggestion. I think that the
witnesses all need to direct their comments attached to Ms.
Wilkes' story. I mean, this is--I don't know--I don't think
there's anyone here that can defend it. But it's just a
suggestion.
I am now pleased to recognize Dr. Zaafran for five minutes
for his testimony. Thank you and welcome.
STATEMENT OF SHERIF ZAAFRAN, M.D.
Dr. Zaafran. Thank you. Good morning, Chairman Eshoo,
Ranking Member Burgess, and distinguished members of the
committee.
Thank you for inviting me to testify today on behalf of
Physicians for Fair Coverage. My name is Sherif Zaafran and I
serve as chair of the board of PFC and I am a practicing
anesthesiologist.
PFC is a non-profit nonpartisan multi-specialty association
of tens of thousands of physicians partnered with patient
advocates to end surprise medical billing.
We are committed to finding a solution that creates strong
patient protections, ensures access to care, and improves
transparency.
To be clear, PFC-affiliated physicians prefer to be in-
network and are actually in-network with the vast majority of
the patients we see. These numbers are actually representative
of the larger market for emergency medicine, anaesthesiology,
radiology, and other hospital-based physicians.
On behalf of PFC, I want to commend all of you for working
to address out-of-network surprise billing for our patients. As
a physician, I live and work by the creed do no harm and
believe that any solution to surprise billing should meet this
test as well.
In this spirit, PFC believes that protecting patients from
potential financial stress by eliminating balance billing for
unanticipated out-of-network care and ensuring patients pay no
more than their in-network cost sharing is the right thing to
do.
It is important, however, to understand what causes
surprise billing before we talk about the solution. There are
two key factors: an increasing proliferation of high deductible
plans, many of which can be $5,000 or more, which has resulted
in a significant financial burden on patients that is
unanticipated; and two, complicated plan designs with tiered
and narrowing networks which force doctors to be out of network
and in many instances not by their choice.
Understandably, a Federal solution is key to solving the
problem of unanticipated out-of-network costs. We want to
recognize the leadership of Congressmen Ruiz and Bucshon for
putting for a very thoughtful proposal, and we appreciate the
proposal offered by full committee Chairman Pallone and Ranking
Member Walden.
PFC does have concerns, however, that the median in-network
benchmark currently in the full committee's discussion draft
could have the unintended consequences of potentially driving
more patients and their physicians out of network.
Our recommendation is to turn the benchmark payment concept
into an interim payment with the ability of either side to go
to a baseball-style independent dispute resolution process if
there is a disagreement.
The care provided by different physicians is not always
uniform. There can be variability in quality and the cost of
providing high-value care, especially when providing certain
types of care in different geographical areas.
While there may be a desire by some to reduce spending in
critical pinnacle areas for patients in order to increase their
own profitability, physicians would prefer to decrease overall
healthcare costs by investing in resources that allow for
better patient outcomes.
To be sure, the best arbitration process is one that does
not need to be utilized. We believe an appropriate interim
payment will resolve most disputes. For those that it does not,
IDR provides the opportunity to appeal the payment in a fair
and expedited way.
And this cut both ways. Plans and providers alike will have
the opportunity to appeal. PFC has been very involved in the
debate on this issue in the states and we note that solutions
incorporating IDR such as New York and, most recently, in
Texas, have proven successful.
Indeed, in New York, such a process resulted in out-of-
network rate dropping from 20.1 percent to 6.4 percent after
IDR solution was put in place. According to a recent study by
the Georgetown University Center on Health Insurance Reforms,
the independent dispute resolution process has resulted in a
decrease in out-of-network claims, a dramatic decline in
consumer complaints about surprise bills, and no indication of
an inflationary effect on insurers' annual premium rate
filings.
The law has also led to stronger protections for patients
and more patient-centric health plans, enhanced transparency
from health insurers, and increased network participation and
fewer out-of-network claims.
We believe a Federal solution should build on this proven
success and we encourage the committee to include the IDR
process in future iterations of the legislation.
Doing so will preserve existing in-network arrangements,
ensure both providers and payers have the ability to achieve a
fair rate, take the patient out of the middle, and avoid
significant disruption that would result from moving the market
to a set benchmark rate.
On the other hand, a poorly constructed untested solution
could threaten patients' access to quality care and the
provider's ability to serve their communities.
For example, the experience in California shows that a
benchmark approach does not work. The law has had unintended
consequences, resulting in insurers refusing to renew
longstanding contracts or offering significantly reduced rates
that undermine good faith contracts.
Insurers in the State now have little incentive to contract
with physicians.
Finally, we urge you to reject the false narrative advanced
by some that arbitration necessarily involves a choice between
so-called reasonable rate and providers' full billed charges.
Arbitration guardrails can and should be designed to guide
the parties to market-based rates while preserving appropriate
variation based on performance and local conditions which
economic studies have shown is the outcome produced with
baseball-style former in particular.
In conclusion, PFC advocates for and supports a ban on
balance billing for unanticipated out-of-network care with
strong patients' protections, fair reimbursement backed by an
IDR process to ensure access to care, greater network adequacy
standards, and improved transparency for all patients.
Madam Chair, members of the committee, we appreciate your
leadership on this important issue and thank you for the
opportunity to testify.
PFC stands ready to work with you in the best interests of
our patients and physicians who care for them, and I am happy
to answer any questions you may have.
[The Prepared Statement of Dr. Zaafran follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Doctor.
The Chair now is pleased to recognized Mr. Sherlock for
five minutes for your oral testimony, and thank you for being
here again.
STATEMENT OF RICK SHERLOCK
Mr. Sherlock. Thank you. Good morning, Chairwoman Eshoo,
Ranking Member Burgess, and distinguished members of the
subcommittee.
On behalf of the association of Air Medical Services, we
look forward to working with you to ensure everyone in America
has access to lifesaving emergency air medical services when
they need it most.
Emergency air medical services are highly effective medical
interventions appropriate in cases where getting a patient
directly to the closest most appropriate medical facility can
make a significant difference in their survival and recovery.
Today, because of air medical services, 90 percent of
Americans can reach a level one or level two trauma center
within an hour. However, since 2010, 90 hospitals have closed
in rural areas and an estimated 20 percent more are at risk of
closing.
Our members fill the gap created by closures, but this
lifeline is fraying as 31 air medical bases have also closed in
2019. Emergency air medical providers never make the decision
on who to transport. That decision is always made by a
requesting physician or medically trained first responder.
Air medical crews then respond within minutes, 24 hours a
day, 7 days a week without any knowledge of a patient's ability
to pay for their services.
Our members are unique in the healthcare system. The
service is heavily regulated by the states for the purposes of
healthcare as ambulances and the Federal government for
aviation safety and services as air carriers. It is their
status as air carriers that allow rapid transport of patients
over significant distances.
Over 33 percent of our flights cross State lines every day.
For that reason, the Airline Deregulation Act's uniform
authority over the national airspace is essential to the
provision of this lifesaving service.
Exemption air medical services from the ADA would allow
states to regulate aviation services including where and when
they are able to fly, limiting access to healthcare for
patients in crisis.
Congress took significant action on emergency air medical
billing in 2018. In the FAA reauthorization act, Congress
established the Advisory Committee on Air Ambulance and Patient
Billing.
Congress would benefit from reviewing the work of the
Advisory Committee, which was tasked to recommend actions to
provide relief for patients while taking into account the
unique operational, regulatory, and financial aspects of
emergency air medical services.
To prevent balance billing, our members are actively
negotiating with insurance companies to secure in-network
agreements. One member alone has increased their participation
from five percent to almost 43 percent in the last three years.
Despite that, some insurers have refused to discuss in-
network agreements. That hurts both patients and caregivers.
Air medical services are not a cost driver for insurance.
According to testimony before the Montana legislature Joint
Economic Affairs Subcommittee in 2016, supported by national
health insurance data, covering air medical services in full
represents about a $1.70 of the average monthly premium. More
than 70 percent of the 360,000 patients transported by
helicopter air ambulances each year are covered by Medicare,
Medicaid, or are uninsured. According to a study conducted by
Xcenda in 2017, $10,199 was the median cost of providing a
helicopter transport, while Medicare paid $5,998, Medicaid paid
$3,463 and the uninsured paid $354.
This results in an ongoing imbalance between actual costs
and government reimbursement and is the single biggest factor
in increasing costs.
AAMS strongly supports legislation that would increase
transparency regarding air medical services and reform the
Medicare reimbursement system for those services, which is a
primary driver of balance billing.
Legislation introduced in the 115th Congress supported on
this committee by Congressman Ruiz and Johnson and co-sponsored
by Chairwoman Eshoo, the Ensuring Access to Air Ambulance
Services Act, would mandate 100 percent industry reporting of
comprehensive cost data to the Centers for Medicare and
Medicaid and then rebase Medicare fees for emergency air
medical transport using that data, which would address the gap
between reimbursements and costs.
Additionally, there are reported incidents where
individuals receive high bills for cases of prescheduled
nonemergent private airplane transports. AAMS refers all such
inquiries and reports to the Department of Transportation
consumer protection division in the hopes that the agency
exercises its already existing authority to protect consumers.
Finally, AAMS would ask the committee to recognize the
tremendous commitment our industry members and caregivers make
who have dedicated their life's work to serving others and to
ensure critical emergency medical response is always available
to the communities they serve.
AAMS believes in protecting patients. Our members protect
them every day. AAMS thanks the committee for the opportunity
to offer this testimony and asks the committee to recognize the
unique aspects of this essential service and not to curtail
access to healthcare for patients in crisis.
[The Prepared Statement of Mr. Sherlock follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Mr. Sherlock.
Now I would like to recognize Mr. Gelfand for five minutes
for your testimony.
STATEMENT OF JAMES GELFAND
Mr. Gelfand. Chairwoman Eshoo, Ranking Member Burgess, and
members of the subcommittee, thank you for this opportunity to
testify.
I am James Gelfand, senior vice president for health policy
at the ERISA Industry Committee, a trade association
representing large employer plan sponsors.
Our member companies offer comprehensive health benefits
and as self-insured plans pay around 85 percent of healthcare
costs for our beneficiaries. About 181 million Americans get
insurance through a job and surprise billing fundamentally
frustrates the goal of providing quality affordable employer-
sponsored coverage.
The vast majority of our employees are not doctors, HR
executives, or medical billing experts, nor should they have to
be. But patients are falling victim to impossible complexities.
Employers are ready to work with Congress to right the ship. We
are focused on three scenarios in which patients end up with
big bills they couldn't see coming or avoid.
Number 1, a patient receives care at an in-network facility
but is treated by an out-of-network provider. Number 2, a
patient requires emergency care, but the provider's facility or
transportation are out of network. And number 3, a patient is
transferred or handed off without sufficient information or
alternatives. It is usually not the providers you're planning
to see.
It is the anesthesiologists, radiologists, pathologists, or
emergency providers or transport for an unexpected trip to the
NICU.
Many work for outsourced medical staffing firms that have
adopted a scam strategy of staying out of networks, practicing
at in-network facilities, and surprise billing patients. It is
deeply concerning but the problem is narrowly defined and
therefore we can fix it.
ERIC applauds the committee for taking the lead on solving
this. The No Surprises Act nails it. It takes patients out of
the middle and creates a market-based benchmark rate to pay
providers fairly.
The benchmark is not developed by government and it is not
price setting. The committee might also consider network
matching. It is simple.
If a provider practices at an in-network facility, they
take the in-network rate, or they go work somewhere else. Or
base the benchmark on Medicare. You could set the rate higher,
say, 125 percent of Medicare, and still make the system more
affordable, sustainable, and simpler.
These approaches will eliminate the surprise bills. That's
a huge win for patients and improves the system by creating
certainty for payers and fair pay for providers.
But not everyone wants to stop surprise bills. Some
provider specialties are saying, let us keep doing what we are
doing--just use binding arbitration to make someone else pay
these bills. They're asking for a nontransparent process that
could force plans and employers to pay massive and fake medical
list prices.
It is essentially setting money on fire. Funds that would
have been used to pay for healthcare will instead be spent on
administrative costs such as lawyers, arbitrators, facility
fees, and on unreasonable settlement amounts. Make no mistake,
patients will pay these costs.
The ground and air ambulance companies are asking Congress
to let them keep surprise billing, too. Do nothing, wait for
another study, another report, and there have already been
four.
They know patients cannot shop for them and many
participate in no networks. State insurance commissioners are
begging for help with air ambulances. But Congress has tied
their hands.
Employers think Congress should end this. Treat medical
transport the same as emergency care. We should end surprise
billing in the ER and on the way there.
Other providers figure they're willing to stop surprise
billing but only if they can increase in-network rates. They're
calling for network adequacy rules to force insurers and
employers to add more providers to their networks, even if
those providers demand astronomical payments.
Does anyone here actually believe that these hospital-based
doctors whose services cannot be shopped for, who are
guaranteed to see our patients, are begging to be included in
our networks but nobody will return their calls? That they have
no choice but to go and join these out-of-network Wall Street-
owned firms?
It doesn't make sense. Employers design health benefits to
help our beneficiaries. We don't sell insurance. We want
networks that meet our patients' needs. Why would we want to
cover an operation but leave out the anaesthesia?
We want our employees to be able to afford their health
insurance, too, and that means we must be able to say no when
providers are gaming the system. We are here to solve a
specific problem, not to create new ones. Network adequacy is a
distraction. Let's focus on protecting patients from surprise
medical bills.
In conclusion, thank you for this opportunity to share our
views. The ERISA Industry Committee is eager to work with
Congress towards a bipartisan comprehensive solution that
protects access to care and ends the surprise billing crisis
without driving up health insurance costs.
And I am happy to answer any questions.
[The prepared statement of Mr. Gelfand follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Mr. Gelfand.
Mr. Nickels, you are now recognized for your five minutes
of testimony.
STATEMENT OF THOMAS NICKELS
Mr. Nickels. Thank you, Madam Chair. I appreciate the
opportunity. My name is Tom Nickels. I am executive vice
president of the American Hospitals Association here
representing our 5,000 member hospitals and health systems.
Our bottom line is that we must protect patients like Ms.
Wilkes from surprise medical bills and the AHA supports Federal
legislation to do so.
Congress must act, as has been mentioned, to protect the 60
percent of Americans who are in employer-sponsored plans under
ERISA and those who live in states that have not enacted
protections to address the issue of surprise medical bills.
Patients should not be subject to balance billing when they
have access to emergency services outside their network or have
acted in good faith to obtain in-network care. They also
shouldn't be surprised by coverage denials from their insurers
when they access any emergency services in network or out of
network.
I would like to respond to a few of the ideas put forward
in the Energy and Commerce discussion draft. First, we agree
with that legislation should explicitly prohibit balance
billing in the scenarios I just outlined and make sure that
patients are kept out of the process to determine
reimbursements between the payer and the provider. I would
encourage you to also improve the standards for provider
networks and ensure adequate oversight to prevent instances of
out-of-network care.
Once the patient is protected, we believe Congress should
allow providers and payers to determine fair and appropriate
reimbursement.
We oppose a national rate or benchmark for out-of-network
services such as a median contracted in-network rate even if
geographically adjusted as it would not be able to capture the
many factors that specific health plans and providers consider.
We are also concerned at setting a reimbursement standard
in law would serve as a disincentive for insurers to maintain
adequate provider networks.
We've already seen an increase in the use of no-network
reference-based pricing models in the commercial market and
this could accelerate should insurers have the option to
default to a government-established out-of-network rate.
Health plans should not be absolved of their core function
of establishing provider networks including negotiating rates
with providers.
The committee's discussion draft provides $50 million
grants for state-level all payer claims databases--APCD--that
would presumably assist in determining a median contracted in-
network rate.
While we appreciate the committee's efforts to develop
APCDs, we do not believe that the committee should rely on them
for the purposes of this policy.
While the AHA believes that hospitals and payers are able
to negotiate reimbursement for out-of-network claims without
government involvement, there may be a role for a dispute
resolution process not for hospital services but for physician
claims.
The baseball-style of arbitration similar to what New York
State has implemented, which does not include hospitals,
appears to be an inefficient process that places the
responsibility to initiate the request with the provider or
health insurer and not the patient.
Studies have shown a 34 percent reduction in out-of-network
billing. Physicians have been largely split between the
providers and payers, and there has not been a noticeable
inflationary impact on premium insurance rates.
The National Association of Insurance Commissioners has
also put forward a model act that outlines a mediation process
to resolve disputes. Again, these are state-level solutions.
They do not resolve surprise bills under ERISA.
However, they could be successfully deployed at the Federal
level with some modification. The committee's discussion draft
requires providers at the time of scheduling to give patients
both oral and written notice about the provider's network
status and any potential charges they could be liable for if
treated by an out-of-network provider. While we believe
providing the patient with this information on network status
is important, it is not in and of itself a solution to surprise
medical bills.
Should the committee move forward with legislative language
requiring notice and disclosure, we would ask that you include
physicians and insurance plans in any requirements as they also
have a role to play in keeping patients informed about their
status.
Lastly, I would like to address the concept of network
matching, which is not in the committee's draft but has been
suggested previously, in surprise medical billing. In this
scenario, the facility-based practitioner will be required to
contract with every plan for which the facility has a contract.
AHA opposes this approach because it would interfere with
the fundamental relationship between hospital and physician
partners and severely limits providers' ability to negotiate
contract terms with insurers.
If you require hospitals to enforce this approach it would
raise anti-trust concerns as it could be seen as an effort by
hospitals to restrict the physicians' ability to practice.
Madam Chair, we have an opportunity to protect patients
from surprise bills as a consensus has developed among all
parties. We should not risk moving forward by adding other
policies that could put passage at risk.
I look forward to working with the committee and the
subcommittee to make sure that patients are protected from
surprise medical bills.
Thank you very much.
[The prepared statement of Mr. Nickels follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Mr. Nickels.
I know would like to recognize Ms. Thornton for five
minutes for your testimony.
STATEMENT OF JEANETTE THORNTON
Ms. Thornton. Thank you.
Chairwoman Eshoo and Ranking Member Burgess, and members of
the subcommittee, I am Jeanette Thornton, senior vice president
of product, employer, and commercial policy for America's
Health Insurance Plans.
I appreciate this opportunity to testify on solutions to
protect the American people from surprise medical bills. We
want to end surprise medical bills so that patients like Ms.
Wilkes and her family have the peace of mind in an emergency
that they will not receive inflated bills from doctors they did
not seek out for care.
We applaud the leaders of the House Energy and Commerce
Committee for developing a bipartisan discussion draft of the
No Surprises Act. This draft bill takes important steps to
protect patients, ensure that doctors are paid fairly, support
health plan networks, and use market-based approaches to ensure
affordable high-quality care.
Our written testimony focuses on the following: a review of
how surprise medical bills occur along with data demonstrating
the frequency and magnitude, recommendations we support to
protect patients, information on how surprise medical billing
legislation will not weaken health plan networks, our concerns
regarding arbitration and how this approach would increase
healthcare costs for everyone, and a discussion of State laws
in California, Texas, and New York that provide important
lessons for Federal legislation.
We have all heard personal stories that demonstrate the
need for Federal legislation to protect patients from surprise
medical bills: the Yoder family whose child experienced a
$142,000 snake bite at summer camp, including a $55,000 air
ambulance ride; Nellie Lu, who faced a $28,000 bill for her
fall on her gym's climbing wall from a hospital at which at
that time did not contract with any private insurers and was
her only option; Dr. Kahn, whose ride in the ATV resulted in a
$56,000 air ambulance ride and a balance bill of $44,000. He
was one of dozens of patients across the country who have faced
air ambulance bills from $28,000 to $97,000, and we have all
heard the stories of American families who are afraid to seek
treatment for fear of the high bills they will experience.
These stories make it clear that surprise medical bills are
creating financial hardship for the American people and that
Federal legislative action is needed.
Here is what we support. First, a balance billing should be
banned in situations where patients are involuntarily treated
by an out-of-network provider. This includes ER services
provided at any hospital, any healthcare services that are
provided at an in-network hospital by an out-of-network
provider, and ambulance transportation in an emergency.
Second, health insurance providers should be required to
reimburse out-of-network providers an appropriate and
reasonable amount in these scenarios.
Third, states should be required to establish a dispute
resolution process that works in tandem with the established
payment benchmark.
And fourth, hospitals and other healthcare providers should
be required to furnish advanced notice to patients of the
network status of treating providers.
These protections must apply for self-funded plans and for
people who live in states without adequate protections. The
reason surprise medical bills are a problem is not a lack of
network adequacy that some may suggest.
Surprise bills are caused by a small subset of medical
specialists who lack the financial incentives to participate in
health plan networks.
We urge you to reject proposals that would use arbitration
to determine payments to out-of-network providers. This
approach imposes administrative burdens on the entire
healthcare system including employers that offer self-funded
coverage.
It also fails to address the root cause of surprise medical
bills--exorbitant bills from certain specialty doctors.
We appreciate that the committee's discussion draft and the
Trump administration have rejected arbitration in favor of a
market-based approach--an in-network payment benchmark.
It is also important to look at State laws addressing this
issue. Based on our analysis of laws enacted in California,
Texas, and New York, we urge Congress to pursue a California
style solution that both protects patients and consumers with
common sense rules, does not undermine networks, and does not
lead to higher cost-sharing or premiums.
I thank you for this opportunity to testify. AHIP and our
member health plans stand ready to work with the committee to
alleviate the financial burdens imposed by the American people
by surprise medical bills.
Thank you.
[The prepared statement of Ms. Thornton follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you.
Dr. Vidor Friedman, you have five minutes for your
testimony.
STATEMENT OF VIDOR FRIEDMAN, M.D.
Dr. Friedman. Thank you, Madam Chair and members of the
Health Subcommittee.
On behalf of the American College of Emergency Physicians--
ACEP--and our 38,000 members, I would like to thank you for the
opportunity to speak with you today about this critical issue
of surprise medical bills.
The reason emergency physicians like myself do what we do
first and foremost is to take care of patients in their moments
of greatest need. This is not the time where patients should be
worrying about verifying who their provider is, are in network,
or what their deductible is, or what the cost of--the total
cost of treatment might be.
I care for each and every one of the patients that comes to
my emergency department regardless of ability to pay. I do this
not just because of the oath that I took as a physician but
because it is appropriately required by Federal law.
Unlike most physicians, emergency physicians are prohibited
by Federal law from discussing with a patient any potential
costs of care or insurance details until they are screened and
stabilized.
This important patient protection, known as EMTALA, ensures
physicians focus on the immediate medical needs of patients.
However, it also means that patients cannot fully understand
the potential cost of their care or the limitations of their
insurance coverage until they receive the bill.
We understand that this can cause frustration, confusion,
and, frankly, even be scary for patients. We agree with the
committee's commitments to take patients out of the middle of
surprise billing disputes and I would like to emphasize 3 key
principles that ACEP urges Congress to consider as it works to
address surprise billing.
The first, and above all, is protecting patients. Congress
should limit patients' out-of-pocket responsibility for
emergency care, so they won't pay any more than the in-network
amount.
Currently, this protection only applies to co-payments and
co-insurance, not to deductibles. We support the committee's
intent on this provision in the discussion draft but urge you
to go further than simply counting co-payments and co-insurance
towards any deductible or out-of-network max.
Rather, we urge you to require deductibles for out-of-
network emergency services to be treated as if they were in
network.
The second principle is to improve transparency. While
EMTALA prohibits me from discussing potential costs of care
with my patients in advance, there are other ways Congress can
improve transparency for emergency patients. Insurers should
more clearly convey plan details to their enrollees. This will
help patients better understand the limitations of their
insurance coverage and all potential out-of-pocket costs.
Insurers should also be required to explain to enrollees
what their rights are under Federal law related to emergency
care in easy to understand clear language.
Third, now that we have taken the patient out of the
middle, Congress should ensure fair and transparent dispute
resolution between physicians and insurers. The goal should be
a system in which everyone is in network or essentially that.
That requires a level playing field between providers and
insurers. Insurers are concerned that bench marking even median
charges favors providers. Providers are concerned that bench
marking the median in-network rates favors insurers. What's
Congress to do?
ACEP supports a system that has already proven to be
balanced between insurers and providers. That is a baseball-
style independent dispute resolution process similar to that
used in New York and noted in the legislative proposal put
forth by Drs. Ruiz, Roe, and Bucshon.
In New York this simple and effective solution has almost
completely eliminated surprise bills. It incentivizes
physicians to charge reasonable rates and it also incentivizes
insurers to compensate at appropriate levels. Insurance
premiums and healthcare costs in New York have actually grown
more slowly than the rest of the nation.
This model would be the least disruptive to the current
system. It is the only model with empirical data detailing the
positive impact it has had for patients and all stakeholders.
To be clear, this model has not been extraordinarily
bureaucratic, costly, burdensome, or inflationary. More must be
done to protect patients and their families from unexpected
medical bills, and we stand with you in this regard.
On behalf of the 150 million Americans my members care for
every year, I thank you for your consideration and the
opportunity to speak with you today.
[The prepared statement of Dr. Friedman follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Thank you, Doctor.
Now I have the pleasure of recognizing Ms. McAndrew for
five minutes for your testimony.
STATEMENT OF CLAIRE McANDREW
Ms. McAndrew. Chairwoman Eshoo, Dr. Burgess, and members of
the subcommittee, I am Claire McAndrew, the director of
Campaigns and Partnerships at Families U.S.A., where I lead the
organization's work on surprise billing.
For nearly 40 years, we have served as a leading voice for
healthcare consumers and our mission is to ensure that every
individual can access the healthcare and the best health in
order to ensure that no matter where you live or who you are
you can have the life that you need to--based on achieving the
best health and healthcare.
And so high and rising healthcare costs are truly an
affront to our mission as they are forcing people to choose
between getting the healthcare they need and affording their
other most basic necessities, and we heard about that from Ms.
Wilkes.
Surprise bills are a particularly egregious form of
healthcare costs because families who are doing everything,
they can to navigate our overly complex healthcare system,
working to go to only in-network providers, going to only in-
network facilities are still receiving these egregious bills.
And, unfortunately, these bills are incredibly common. One
in five emergency visits results in a surprise bill. But these
bills are also occurring outside our emergency situations.
For examples, families who welcome a new baby, ensuring
that they're getting an in-network OB/Gyn in an in-network
facility are still getting surprise bills 11 percent of the
time.
So, what's causing these bills? Surprise bills are the
result of a systemic problem in our healthcare system placing
families directly in the middle of a tug of war between
healthcare providers and health insurers fighting over the
price of services.
While health systems and insurers are vying for leverage
including because of consolidation, consumers are completely
trapped between these industries.
What does not cause surprise bills, despite claims by some
stakeholders, evidence does not conclude that narrow networks
are a driving factor behind surprise bills.
We know that people who are covered in plans that tend to
have narrower networks and people covered in plans that tend to
have broader networks are actually getting surprise bills at
about the same rate.
And so, I want to be clear that Families USA does support
network adequacy standards. It is something we have advocated
for. But we understand that in this particular situation around
surprise bills network adequacy standards aren't going to solve
the problem alone.
Another common misperception I want to raise that we heard
about from Ms. Wilkes is the fact that this is not a new
problem. Consumers have been subjected to unexpected and
unaffordable costs from surprise bills for literally decades,
and the proof is real for us because Families USA has been
working on this for decades.
We actually joined with other stakeholders in 1997
recommending banning surprise bills in emergencies as part of
President Clinton's efforts around the Consumer Bill of Rights.
So this is a very longstanding problem and for far too long
it's warranted congressional action.
Only Congress can fix this, because even when states
address this problem, many consumers are left out because they
are in ERISA-regulated plans.
So we commend the Energy and Commerce Committee for
responding to this urgent need with the release of the No
Surprises Act. This legislation takes really important steps.
It holds consumers harmless from surprise bills and it sets
a reasonable benchmark to pay providers from insurers at a rate
that's not inflationary so that families don't experience
increased premiums.
We support the No Surprises Act, but we are concerned. So
much of this debate has been about making insurers and
providers happy based on a payment rate. This legislation is
supposed to be about consumers.
And so, we want to ensure that this discussion is not
consumed about what makes powerful industries happy and that
the needs of consumers are not lost, and the pace of this
legislation is not slowed based on appeasing insurers and
providers.
And so we want to make two recommendations about the needs
of consumers. First, we urge the subcommittee to broaden the
scope of the providers included in the legislation so that no
loopholes remain.
We want to make sure that there's not just a discrete set
of providers and facilities subject to the legislation but that
any facility or provider that could incur a surprise bill is
included.
And second, we urge the subcommittee to strengthen the
bill's notice requirements. We are concerned that just 24
hours' notice could be too short for a consumer to find out
that nonfacility-based providers are out of network.
We would urge looking at more like a week because if you
have scheduled medical leave, if you're about to undergo an
important medical procedure, 24 hours might be too short of a
time to learn that you have to find another option.
We are so grateful to the subcommittee for taking on this
issue. This is such an important hearing. We urge Congress to
very swiftly take action. Our number-one recommendation is not
to wait.
This legislation must pass this year. I really appreciate
what you said, Chairwoman Eshoo. If stakeholders can't agree,
Congress has to solve the solution because consumers cannot
wait any longer and Families USA is with you to help you solve
this problem in any way possible.
Thank you very much.
[The prepared statement of Ms. McAndrew follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. Terrific. Thank you very much to each one of our
witnesses. So now we have concluded all the statements and move
to members' questions.
Each member will have five minutes to ask questions of our
witnesses and I will begin by recognizing myself for five
minutes.
To the panel, does everyone here agree that patients should
not receive surprise billing? Is there anyone that disagrees
with that?
A hundred percent. Well, that's a good beginning.
Mr. Nickels, are there hospitals in your association that
send patients surprise medical bills and, if so, why?
Mr. Nickels. The statistic that we like to quote the most
is most of our member hospitals are in network. The Federal
Trade Commission did a study recently that showed----
Ms. Eshoo. Well, do you have any hospitals in your
association that send surprise medical bills, yes or----
Mr. Nickels. You mentioned one a little earlier, I
believe--San Francisco General.
Ms. Eshoo. Yes.
Mr. Nickels. To the best of my knowledge, they are the only
ones who were doing what you described.
Ms. Eshoo. And how many hospitals do you represent in the
country?
Mr. Nickels. Five thousand.
Ms. Eshoo. Five thousand. So 4,999 do not send any surprise
bills?
Mr. Nickels. Where the hospital services--the facility
charge, no, they do not, and coming to one of our----
Ms. Eshoo. Do you have any hospitals that have--well,
you're saying that 4,999 of your hospitals have successfully
stopped sending surprise billing?
Mr. Nickels. For the facility--for the hospital facility
fee, that is correct.
Ms. Eshoo. What does that mean, what you are saying? I
don't get it.
Mr. Nickels. Well, the examples that have been given have
been physician examples and we are not absolving ourselves from
responsibility here. These are physicians who practice in our
institutions.
Ms. Eshoo. Well, using your own words in the way you
describe your systems--your hospitals--how many actually do
surprise billing?
Mr. Nickels. If you're saying are there--are you asking if
there are physicians in our facilities who are surprise
billing?
Ms. Eshoo. You're representing hospitals.
Mr. Nickels. Right. Hospitals----
Ms. Eshoo. Hospitals are a part of the problem, right?
Mr. Nickels. Well, the----
Ms. Eshoo. We have hospitals, we have insurance providers,
we have physicians. You're 1 of the stakeholders. So I don't
want to spend all of my time questioning you, but it doesn't
seem to me that you can give me--perhaps you can give me a
better answer in writing.
Mr. Nickels. Sure.
Ms. Eshoo. Let me go to Dr.--to the Drs. Zaafran and Dr.
Friedman. Have you or any physician you know billed a patient
with what we would consider a surprise bill----
Dr. Zaafran. So the company that I work----
Ms. Eshoo [continuing]. And why, if you have?
Dr. Zaafran. The company that I work for has a policy of
not sending surprise bills. What I will tell you, though, is
that in instances where we don't know that we are actually out
of network, and that's one of the things that I wanted to make
sure that I brought up is that this out-of-network providers
concept is a little bit of a misnomer.
I may be in network with every single insurance carrier out
there but happen to be out of network with one plan of one
carrier, and in many instances, I may not know that.
And as much as we try to know if we are out of network with
that specific plan, we may not know that right away and we may
actually inadvertently send a bill.
But once the patient contacts us, we take care of that
right away. So that's where there's some discrepancy as far as
whether we know we are actually in network or not out of
network with a specific plan of a specific carrier.
Ms. Eshoo. I can't help but wonder what Ms. McAndrew and
Ms. Wilkes are thinking so far in terms of the question I asked
and the answers we have gotten. Think about it for a moment.
To Ms. Thornton, I want to ask you the same question. Are
there any health plans in your association that where patients
are not protected from surprise billing and, if so, why?
Ms. Thornton. Yes. So patients who receive coverage through
their employer through a self-funded plan are not protected by
the various State laws that are out there.
Ms. Eshoo. Which is one of the main reasons that Congress
has to act. Right. But there is surprise billing, though, in
terms----
Ms. Thornton. Yes. There have been widespread reports. Yes.
Ms. Eshoo. Yes. Right. So I want to go to the patient
advocates. Tell us what you think--I think I know what you
think but it's worth stating it for the record. We've heard a
lot of testimony. They're all stakeholders. These are all good
people with a system that's really messed up.
So what would you like to tell the committee? You want us
to do it pronto. We all agree with that. Patients are being
subjected to absurdities. What else would you like to say,
having heard everyone else's testimony?
Ms. Wilkes. Well, I believe that, as I said, insurance is
very, very difficult to navigate. My husband and I consider
ourselves to be pretty health literate and we still don't
understand our insurance plan.
So in the case of an emergency, that's not your first
thought. Your first thought is take care of my baby--take care
of myself, and I feel like it should just be go to your doctor,
get the care that you need, and not have to worry about the
business side of things.
Ms. Eshoo. Right. Ms. McAndrew?
Ms. McAndrew. I think the data speaks for itself. This is
happening in urban areas, rural areas, non-profit hospitals,
for-profit hospitals. Everyone agrees the patient should be
held harmless, but the patient isn't being held harmless. This
is not going to stop unless we have a policy solution.
So I understand that everybody, you know, wants to stop
this problem. But there's money involved. There's not going to
be any voluntary cessation of this problem unless we have a
congressional solution.
Ms. Eshoo. It is always about money. That's just the way it
is.
I now would like to recognize the ranking member for his
five minutes of questioning, Dr. Burgess.
Mr. Burgess. Thank you, and Ms. Wilkes, let me just say
your testimony was very compelling this morning and it
underscores why not just this discussion this morning is
important but we are also having discussions on drug pricing.
I guess the good news in the realm of illnesses such as
your son's is there are some very promising therapies right on
the horizon with gene therapies. These may be single
administration therapies that produce long-term benefits, and
we have no frame of reference on how to price.
And the work we are doing on drug pricing becomes so
important because everyone on this committee voted for a bill
called CURES for the 21st Century. We want those cures to be
put in the hands of doctors. They don't do any good if no one
can afford them when they arrive.
So the work that this subcommittee does, yes, on this issue
is important and on the larger issue of drug pricing in general
and how do we--how do we price these new breakthrough
therapies--hemophilia, sickle cell disease, spinal muscular
atrophy. All of these are big deals that are happening, and we
are grateful that they're happening.
They're happening largely because of work done in this
subcommittee. We've got to be--the same type of forward-leaning
thought that went into CURES for the 21st Century also needs to
be there on the pricing of those therapies.
So, Dr. Zaafran and Dr. Friedman, let me just talk to you
all for a moment. Now, I had a medical practice. I didn't use a
billing service in my medical practice. I just billed through--
we had our own billing department.
I never turned anyone over to collections because you never
knew down the road when someone's going to have a problem and
if they got a bill the same day they would say, hey, it's your
fault, and being an OB I practice defensive medicine as one of
my specialties.
But you have--Dr. Zaafran, I am going to assume that
you're--you have got a big anaesthesia group--you have a
billing service, correct?
Dr. Zaafran. Correct.
Mr. Burgess. And, Dr. Friedman, in your ER group?
Dr. Friedman. That's correct.
Mr. Burgess. So are you doing anything with the billing
services that you employ to at least begin to mitigate this
issue or do you have a patient ombudsman who will look into
these things if they're brought to your attention?
Dr. Zaafran. Dr. Burgess, we have a customer service line
to make sure that if Ms. Wilkes ever received a bill that she
was not expecting that we would work with her directly to make
sure that if it was an out-of-network bill, for example, in the
very, you know, small percent of cases where it might be the
case that we would--that we would not let her have to get
involved in that.
There are other instances where because, again, of high
deductible plans where if we happen to be 1 of the first ones
who have billed and the patient's responsibility for the
deductible is the entire amount that's there, there may be some
difficulties there.
And part of the problem is that physicians are responsible,
or hospitals, are responsible for having to collect those
deductibles and co-pays, and as those numbers have been
increasing, as those deductibles have been increasing to, in
many instances, more than $5,000, it has put a significant
burden on us having to work with patients to collect that.
I mean, I think since it's a contract between the payer and
the consumer, it would be better for the payer to collect what
they contractually agreed to collect and not have to put that
burden on us where I may not have any idea at what portion of
the deductible that patient has been paid.
Mr. Burgess. Yes. You never want to be first. That's right.
Dr. Friedman?
Dr. Friedman. Yes. The companies that I've worked for--and
I've worked for 3--we have all had customer service folks that
will work with people when they get an out-of-network bill.
One of the things that I want to emphasize to the committee
I happen to work in Orlando, Florida at the hospital closest to
Disney World.
Forty percent of my patients come from out of the state.
Mr. Burgess. Sure.
Dr. Friedman. So 40 percent of my patients are out of
network.
Mr. Burgess. And can you just comment a little bit on
EMTALA and how that intersects with all of this discussion,
having----
Dr. Friedman. Well, as I mentioned in my testimony, both my
written and my oral, EMTALA prohibits us from discussing
anything about payment.
In my 30 years of practice as an emergency physician, I've
never asked a patient if they have insurance. I take care of
the patient.
I get them to the place they need to be, whether that's
home or admitted to the hospital or an observation unit, and
then afterwards they get a bill.
But I don't know if they're in network. I don't know if
they even have insurance, and that's the way we operate in
emergency medicine.
And one of the concerns that we have is that while folks
have talked about the fact that high deductibles may not be the
root cause of this, high deductibles, unfortunately, give an
incentive for insurers to not negotiate in good faith with
emergency providers.
They know we are going to take care of their enrollees. We
are obligated by Federal law to do that.
Mr. Burgess. And you do obligate then the downstream--the
cardiologist, the OB/Gyn to whom you refer--they also are
obligated under those--without having a contract?
Dr. Friedman. The boundaries in EMTALA are a little bit----
Ms. Eshoo. Please wrap up. The gentleman's time has
expired. Just quickly.
Dr. Friedman. Oh, OK.
Mr. Burgess. Please answer the question.
Dr. Friedman. The boundaries of EMTALA are complicated. It
would make it a lot simpler if it was when the patient was
discharged from the hospital that EMTALA ended.
Mr. Burgess. All right. Thank you.
Ms. Eshoo. The gentleman yields back.
I now would like to recognize the chairman of the full
committee, Mr. Pallone, for his five minutes of questions.
Mr. Pallone. Thank you, Madam Chair.
Healthcare costs are one of the top issues on the minds of
all our constituents and this discussion has really highlighted
the shocking costs people are dealing with, and when you look
at some of these bills they're very unclear about what services
were provided and why the services cost as much as they do.
So I wanted to ask some questions. Ms. Wilkes, when you
received that $50,000 bill, was it easy to understand what you
were being charged for and were you able to compare costs and
determine if you were being billed fairly?
Ms. Wilkes. No. The bill was not itemized at all. It just
was a dollar amount.
Mr. Pallone. You know, I have to say, you know, this is,
totally anecdotal but a few years ago--it might be, like, 15
years ago--I remember talking to one hospital administrator who
told me that, you know, that basically they just assign costs,
you know, on a bill without any reference to what the actual
cost is.
And so that's why you can have an ice bag that's, you know,
$150 at one place and $15 at another because it's really not
based on the actual cost.
But who knows? You know, hopefully that's not true.
Dr. Zaafran or Dr. Friedman, could you briefly explain who
determines provider charges and how they are set? Start with
Dr. Zaafran.
Dr. Zaafran. Thank you, Mr. Pallone.
Our charges are based on an aggregate cost of what it costs
us to deliver service. So in anaesthesia it's a little unique
because it's time based. So we charge based on a unit of time
for every 15 minutes.
So it's not an arbitrary cost. We know exactly how much we
are billing, depending on whether the surgeon takes 15 minutes
or an hour or hour and a half.
We, from our standpoint, because we try to focus on quality
care, our expenses include nursing, having an opioid-free type
of perioperative type of environment because we know it reduces
overall cost. So all of that is built into how much we charge
per unit of time.
Mr. Pallone. And it's not broken down?
Dr. Zaafran. Actually, if a patient calls us and asks us
what that is, we do break it down because, again, it's based on
the specific type of surgery. We can tell them exactly----
Mr. Pallone. They'd have to ask you?
Dr. Zaafran. We can provide it, and if it's on a piece of
paper it may not make sense because we don't know how long a
surgery is going to take. But we tell them that it took about
an hour and a half, it was this kind of surgery, it was this
many units and this much unit per time, and this is what the
total cost was.
Mr. Pallone. OK.
Dr. Friedman?
Dr. Friedman. So in emergency medicine, Chairman, it's a
little bit different. We bill typically by what's called E&M
codes, which are levels of service.
There are five E&M codes from a level one, which is we
hardly ever use--it's basically a suture removal or recheck on
something minor--up to a level 5, which would be someone that
would be going to a critical care unit.
Maybe you are having a heart attack. You're receiving
significant amounts of care. And then we can also bill a
critical care charge, which would supersede that if you do
receive critical care treatment in the emergency department.
Mr. Pallone. All right. Thanks.
Now, we have all heard stories about patients being billed
for hospital fees. One Vox article tells a story of a man who
took his one-year-old daughter to the emergency room after a
minor accident, as many worried parents do. For five minutes of
the provider's time, water, gauze, and a Band-Aid for his
daughter's finger, led to a $629 bill from the hospital's
emergency department.
So I am going to go back to Dr. Nickels. But, again, I use
the example where, you know, a few years ago a hospital
administrator told me, you know, we just assign these things--
they're not actually referencing, you know, actual costs for
the--you know, in this case for the Band-Aid or the gauze or
the water or the provider's time.
You know, could you give us a sense, Mr. Nickels, of how
much hospitals charge and facility fees on average and what are
hospitals doing to make these fees more transparent?
And, you know, maybe if you want to dispute what I just
said, you know, like in this case would they actually figure
out how much it costs for these different things, or not?
Mr. Nickels. Yes. I mean, the charge system is obtuse, to
be kind, and I think it's a broken system. We are trying to
work--we have a committee.
We are working with the Trump administration. We need to
figure out a way to fix it. But most people, almost anyone who
is insured is not paying charges. The Government doesn't pay us
charges. We negotiate with insurers. They don't pay charges----
Mr. Pallone. Well, I only--30 seconds. So it's very
possible that in this case, or using my example, you know,
there's really no breakdown for those five minutes of the
provider's time, the water, the gauze, the Band-Aid. It is not
done that way.
Mr. Nickels. Correct. It may be but it may not, if that's--
--
Mr. Pallone. Right. So very possible that what I talked
about, you know, 10 or 15 years ago, we just assign things--
very possible.
Mr. Nickels. Yes.
Mr. Pallone. All right. That's pretty sad, Madam Chair.
But thank you.
Ms. Eshoo. Thank you, Mr. Chairman.
I now would like to recognize my friend, the ranking member
of the full committee, Mr. Walden, for his five minutes of
questions.
Mr. Walden. Thank you, Madam Chair, and we have this other
hearing going on upstairs I had to go up to on FERC--Federal
Energy. So we are back.
Ms. Thornton, the comments submitted to the committee as
well as Dr. Zaafran's testimony providers have argued that
California's benchmark has led to payers refusing to renew
long-standing contracts or offering lower rates.
But in your testimony you mentioned that California's
benchmark has led to an increase in network participation and
the Blue Shield of California has told us that current State
laws on network adequacy still apply and, in fact, since their
surprise billing law went into effect they have increased their
number of contracted physicians by five percent overall and six
percent specifically at acute care hospital facilities.
Can you help this committee better understand what's taking
place in California by sharing a bit more about those
preliminary reports? And what about other states such as mine,
Oregon, with benchmark solutions? What can you tell us about
that?
Ms. Thornton. Thank you. So yes, so there's been a lot of
debate around the California law, and the California law just
took effect in January of 2019. So it's very new.
Mr. Walden. Right.
Ms. Thornton. And so we have been talking with our plans
and their experience with implementation of the law and they
have not reported to us that they've seen, you know, decrease
in network participation.
In fact, as you have mentioned. One of our plans has
actually seen an increase in providers participating. So I
don't think the California law can be used as a reason why
we'll see decreasing networks. We want strong networks for our
members.
Mr. Walden. And have you seen something similar in Oregon?
Ms. Thornton. No, I have not.
Mr. Walden. OK. So you don't have any data on what's
happening in Oregon? All right.
Doctor, do you want to address this from your point of
view?
Dr. Zaafran. Yes, sir. Thanks, Mr. Walden. We know of
actually 2 of the largest groups in California. One of them who
has been in network for many, many years have not had actually
any kind of cost of living increase or anything like that.
We were told point blank that they're going to have to take
a big cut or they can simply just go out of network and they'll
be paid a very low benchmark based on Assembly Bill 72.
We also know of a very large group in the northern part of
California where they have not been in network, have wanted to
be in network, have been told that they have no desire to be
allowed to be in network and, again, that they would be paid a
very low benchmark based on Assembly Bill 72.
Again, I know that it's a new law that just started in
January. But the anecdotal evidence that we have from the
groups that are being affected by this is that they've been
impacted.
Mr. Walden. And who is telling them that?
Dr. Zaafran. The specific insurance carriers that they're
negotiating with to try to be in network.
Mr. Walden. I suppose you don't really want to identify
those specific insurers here before us today?
Dr. Zaafran. I would rather just talk in general
statements, but yes.
Mr. Walden. Uh-huh. All right. Several stakeholders suggest
requiring plans to update their provider network directories in
a more timely manner. Seems pretty practical. I think Texas was
working on--oh, you're no longer from Texas.
[Laughter.]
Mr. Walden. You're changing out on me. I know Texas was
working on some of that disclosure language as well. I don't
know where that ended up through the system.
But how regularly do plans update their directories right
now? And I've heard from people that go, great, I signed up for
the plan. I am in the system. The provider is in the system.
Then something changes and I can't change my insurance and
now I am stuck in a plan that my provider used to be in and now
they are not. Now I am out of network. Now I am going to get
one of these nutty bills. That is not putting the consumer
first. Ms. Thornton, can you address this, please?
Ms. Thornton. Sure, of course, and I think one of the
things I first want to set aside is that in an emergency
situation we don't want anybody to have to worry about the
provider directory. We want the patients to be protected in
that situation.
But I will say to your question it is very important to our
plans that we have accurate and reliable data for consumers
for--in the provider directories when they are seeking care,
scheduled care, et cetera, and are working very hard to make
sure that that occurs.
Mr. Walden. Can you put all of that online on a regular
basis? How do these directories work? Do I have to get a
printed copy sent to me in the mail?
Ms. Thornton. Oh, they're all online. You can also call our
plan's customer service to get information via the phone if you
don't have access online.
Mr. Walden. Do you notify policy holders when things
change?
Ms. Thornton. If a patient has been seeing a particular
provider there is also often a notification that takes place.
Mr. Walden. Often. All right. Because I think you ought to
be notified. I think you ought to--how do you know? How do you
keep up with this stuff? You think you're covered. I am just
telling you that you're headed to a big train wreck here.
Ms. Thornton. Information changes daily. I understand.
Mr. Walden. And you know it because you know how to send a
bill out. The consumer ought to know it because they're the
ones getting the surprise bill.
That's where I am coming from here, as a consumer and
representing consumers. How do we know? I will tell you 1 quick
story, and I know I am going to go over. Just a second, Madam
Chair, with your indulgence.
A guy at a think tank here--this is second hand--who goes
in for a colonoscopy, is on the table prepped and ready to go--
and those of you who are old enough to have been through this
you understand what's at stake here--asked the doc, is the
anesthesiologist in my network. I don't know. Well, before I
sign this I need to know.
Well, I can't tell you--I don't know. Do you want the
procedure today or not, because I've got five more of these to
do? The guy signs it, goes under, boom, done. Is that what we
are doing to consumers? I think this is nuts.
Ms. Thornton. I mean, that's horrible and that's why we
need this legislation.
Mr. Walden. And this is going on every day in America and
it shouldn't be. You forgot who you serve and it's the
consumer.
Thank you, Madam Chair, for your indulgence.
Ms. Eshoo. Thank you for your important questions. I don't
know--I just want to throw something out here. This business of
notification, and you just put a spotlight on it. Who's going
to be notified when, and then what the heck do they do once
they're informed?
What, you're in labor and then you find out that the--
whomever, the anesthesiologist is--exactly--well, I will hold
on to this child and try to get to another place. I don't know
what this notification--most of this is in an emergency room
setting, at least that's what the statistics show.
So I don't know if it's really very smart to be focusing on
notice. Yes, people should be noticed. But let's use some
common sense about how notice is--how effective, quote,
``notice'' is going to be.
I mean, given the settings, it's not making too much sense
and it's making it sound as if we throw that in there that
it's, boy, is this really going to do something. So I am not--
you can tell I am not convinced.
All right. With that, I would like to recognize a total
gentleman from North Carolina--yes, it's you. It is you. Mr.
Butterfield for five minutes of his questions.
Mr. Butterfield. I will wake up, Madam Chair. Thank you.
Thank you so very much for those kind words. Thank you for
convening this very important hearing today.
Thank you to the eight witnesses for your testimony. Like
Mr. Walden said, I've been bouncing between hearings today and
knew that my time was coming up pretty soon and so I am back
here with you.
While I am on the thank you trail, let me also thank Mr.
Pallone and Mr. Walden for their bipartisanship in putting
forth this discussion draft. I think it's going to lead to good
legislation which is ultimately going to protect every consumer
in America.
Let me begin with Mr. Nickels. Mr. Nickels, I represent a
very low-income district in eastern North Carolina. It is not
unlike any other rural community in America. We face unique
challenges when it comes to healthcare.
In some areas in my district there isn't a hospital for
many, many miles, and you have heard that before and it's not a
surprise. These markets have little competition. Residents have
few facilities to choose from.
The small hospitals that do serve these areas are often
operating at a loss or near loss and they rely on
reimbursements as their primary revenue source.
In your opinion, how would the imposition of statutory
rates impact small rural hospitals?
Mr. Nickels. Yes. We do worry about, as you said, the
imposition of those kinds of rates. One-size-fits-all won't
work because there are unique circumstances----
Ms. Eshoo. Can't hear you.
Mr. Nickels. OK. I certainly agree with what you're saying
there. One of the reasons we don't like national rates is
because they don't take into consideration local conditions
like the ones you describe and it's really important that that
be more of a function of negotiation between the hospital and
the insurer who will be, hopefully, persuaded of the importance
of those facilities. And there is a crisis in rural America.
There's a crisis of rural hospitals. It is a whole different
issue but it's another one that we need to solve.
Mr. Butterfield. We have competing interests here between
small rural hospitals and the need to protect the consumer, and
as legislators we have got to work through that tension and
find a good solution.
Mr. Friedman, can you help me with that a little bit?
Dr. Friedman. Well, I would agree with you that there is a
conflict there. But I would suggest that one of the things that
the Congress consider is that access is vital.
If you have a mechanism that goes into place, as you
suggested, that would decrease access, particularly in rural
communities, that doesn't serve consumers either.
If they can't get--they don't get a surprise bill but
there's no provider or hospital to provide that service, we
have done them a service.
Mr. Butterfield. Ms. McAndrew, can you help us with this?
Ms. McAndrew. I would just call attention to the fact that
the reason we are having this discussion right now is that this
is already a problem in rural areas. I actually pulled some
data in advance of this hearing and I just want to draw
attention to how many consumers are already suffering because
there are not in-network providers and consumers are getting
surprise bills in rural areas.
I looked at your State of North Carolina and already
consumers are--in-network hospital admissions are getting out-
of-network claims more than 10 percent of the time. So what
that tells me is that providers are staying out of network
already and consumers are suffering.
So while I acknowledge the fact that we want to study this
as we move forward on the legislation, I would urge against
hesitating because consumers are suffering from this problem in
rural areas. So we already know status quo this is a problem.
And so while we can worry about unintended consequences, we
know the current consequence is that consumers are getting out-
of-network bills in rural areas. That's also true more than 10
percent of time. Consumers in in-network hospitals are getting
out-of-network claims and rural states like Indiana, Kentucky,
Oklahoma are represented on this committee so I would not
hesitate to solve this problem because of unintended
consequences in this.
Mr. Butterfield. Well, you know, I've seen both
consequences. I've seen rural hospitals close for lack of
revenue. That's at one end of the debate. I've seen consumers
go bankrupt because of their inability to pay those statements
when they arrive. I've seen it from both extremes and, as
legislators, we have got to reconcile those two interests.
Ms. Thornton, let me--let me conclude with you. What role
does the lack of network adequacy play in the occurrence of
surprise bills?
Ms. Thornton. Thank you. So health plans need networks to
function. We want our members to have access to a large and
high-quality network.
However, you cannot control when you have an emergency, you
know, where you are across the country. And so we really don't
think the network adequacy is directly related to the issue of
surprise billing.
Claire--Ms. McAndrew, excuse me--mentioned that you're just
as likely to experience a surprise medical bill if you're in a
large employer plan with a broad network in a narrow--more
narrow network individual market plan.
Mr. Butterfield. Thank you.
Madam Chair, I yield back and right on time. Thank you.
Ms. Eshoo. I thank the gentleman.
I recognize the gentleman from Illinois, Mr. Shimkus, for
his five minutes of questioning.
Mr. Shimkus. Thank you, Madam Chairwoman.
Madam Chairwoman, I also asked--I was happy that you asked
about Ms. Wilkes' son. I am sure he's very proud of you today,
and if he's not had him talk to me because you did a wonderful
job.
I would also like to ask unanimous consent that this letter
sent to me on June 10th by the Illinois Hospital Association be
submitted for the record.
Ms. Eshoo. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Shimkus. Thank you, Madam Chairman.
You know, a lot of this debate and a lot of testimony
referenced specific State attempts to address this issue and
baseball, apparently, and we are getting close to the
congressional game so a lot of us are focused on baseball.
For example, Illinois does use the baseball-style
arbitration method in the event a dispute arises between
providers and health plans. Each party must submit a proposed
best and final offer to the arbiter who then chooses one of the
two without modification, thus keeping the consumer out of that
fight. You really have different sizes of big versus the small
individual in that process.
However, these State laws don't apply to self-insured ERISA
plans, as has been highlighted by the testimony, used by,
roughly, 100 million Americans.
I was also interested to hear a number of witnesses
mentioned another Federal law involved in this debate, the
Emergency Medical Treatment and Labor Act--EMTALA.
I talk about it quite a bit because it--we all need them.
We all use emergency rooms. Cost shifting at the hospitals to
help pay for the emergency room, and what's occurred, as you
all know because you live in this world, is that we are really
pushing our citizens and constituents to go to urgent care
centers, you know, if they're not emergent.
We need emergency rooms, but we need--we need to encourage
that.
But EMTALA, the Federal law right now is unique to
emergency care and it's an important element of our nation's
safety net.
But in choosing to require providers to treat patients
regardless of their ability to pay presents unique challenges
of its own in some States like Texas and Colorado through free-
standing emergency center operations with a State license, not
a Federal license.
So, Dr. Zaafran, in states with free-standing emergency
centers do those facilities have to abide by a similar standard
to EMTALA since they're not Federally licensed?
Dr. Zaafran. If they are licensed as an emergency center,
they do. Urgent care centers, of course, have a little bit of a
different definition. They're not necessarily looked at as
emergency centers by that definition so they wouldn't fall
under that category.
Mr. Shimkus. Yes, and I am following guidance by staff and
I talk about urgent care centers, but I really was interested
about state-licensed emergency centers not under the Federal
guidelines and that's what I am trying to get to.
Dr. Zaafran. State-licensed emergency centers are--they
have to abide by EMTALA. That's correct.
Mr. Shimkus. You also referenced the difference between
hospital-based physicians and physicians not bound by EMTALA.
Can you please walk the committee through the justification for
having one resolution process for facilities and another for
providers?
Dr. Zaafran. Yes, sir. One of the things that EMTALA does
very specifically is that it asks for emergency room physicians
to make sure that they have to see every patient regardless of
costs or anything like that.
But, again, you have a patient who may come in and the
emergency room physician decides that this person needs to be
seen by a surgeon because they have an infected appendix.
Well, that person is going to have to have surgery by the
surgeon. They're going to have to have anaesthesia by the
anesthesiologist and, you know, they many not necessarily be
specifically bound by EMTALA but once you're admitted into that
hospital and you're in an emergency setting where it is
impractical, unreasonable, and unsafe to transfer that patient,
all the physicians that are on call during the time period
where that physician has been admitted and has to be treated in
a very short fashion by all those different providers, all
those different physicians have to be--it has to be done in a
timely fashion.
So even though EMTALA may not directly apply to them, we
have to take care of them and the way we operate as
anesthesiologists is you're taking care of many of these
facilities 24 hours a day, 7 days a week, regardless of whether
they have insurance, don't have insurance. We don't even ask.
Mr. Shimkus. So my final question for you--in supporting a
benchmark concept with an arbitration backdrop you mentioned
that four recent State adoptions enjoyed the support of
providers, insurers, and patients.
So I want to clarify if your hospital partners supported
these State efforts, too.
Dr. Zaafran. So yes, they did. In Texas, specifically,
which the bill recently passed several weeks ago, all the
stakeholders--emergency room physicians, Texas College
emergency physicians, the Texas Medical Association, the Texas
Society of Anesthesiologists, the Texas Association of Health
Plans, the consumer advocacy groups including AARP--all
supported the bill.
It was a consensus bill. It was an excellent bill that was
passed that involves baseball-style arbitration with specific
guardrails to make sure that costs were contained within that
framework.
Mr. Shimkus. Thank you, Madam Chairman. I yield back my
time.
Ms. Eshoo. The gentleman yields back.
The gentlewoman from California is recognized for five
minutes for her questions--Ms. Matsui.
Ms. Matsui. Thank you very much, Madam Chair.
I thank you all for being here today. This is a very
important issue. I kept hearing about it in my roundtables back
home.
As you may know, my home State of California already has
some of the country's most robust protections against balance
billing patients for certain procedures.
In my district, I've already heard from many hospitals that
in an increasingly fragmented healthcare system there is
concern that a Federal policy that may further discourage
contracting between insurers and providers will have the
unintended consequence of decreasing innovation and
partnerships that are facilitating better and more coordinated
care and reducing costs.
As Congress considers solutions modelled after California
law, I would like to discuss how our State effort is working to
influence market dynamics between healthcare purchasers and
providers and how those changes are ultimately impacting
patients.
Specifically, the reimbursement model in California
benchmarks payments for out-of-network physicians at the
greatest of 125 percent of Medicare, or the average contracted
rate.
Dr. Zaafran, can you discuss how using a median in-network
rate as a benchmark may put downward pressure on future
contracted rates offered by insurers?
Dr. Zaafran. Yes, ma'am. Thank you for that question.
So median, by definition, means that you have certain
contracts that are above that number and certain contracts that
are below that number, and there's a reason for that.
As I have mentioned in my testimony, there's a
differentiator for why certain physicians have contracts that
pay more than others.
In fact, in Washington State my specific company, Blue
Cross Blue Shield, actually put out a press release touting a
value-based contract that they signed from the standpoint that
they're paying a premium, but they understand that the overall
cost of care is actually less.
So the ability to make sure that you're able to
differentiate based on quality metrics that a higher payment is
due is something that has to be preserved. If you keep
everything at the median and not allow for those
differentiators to exist, you're essentially kind of bringing
everybody down to that number.
And the other problem is, is that as new contracts are
negotiated, if they're negotiated in a downward fashion, that
median actually starts going down also.
Ms. Matsui. OK.
Dr. Friedman and Mr. Gelfand, from each of your
perspectives, if Congress were to establish a Federal default
fixed rate, what benchmark metric should we consider that would
preserve the incentive for future contracting between plans and
providers?
Dr. Friedman? Mr. Gelfand?
Dr. Friedman. Yes, thank you for the question,
Congresswoman Matsui. We firmly believe, as I pointed out in
our testimony, that it would be virtually impossible to find
the perfect rate, one that both providers would be happy with
and insurers would be happy with, and that's why we think that
going back to an independent dispute resolution to work out
agreements between providers of care and the insurers--the
payers of care is the most cost effective and evidence-based
model that we have.
Ms. Matsui. Mr. Gelfand?
Mr. Gelfand. Congresswoman, we support the California
model. The perfect should not be the enemy of the good. The
data bears out that the California model is working and, in the
end, a benchmark that works is a benchmark that is rarely used
because it brings parties to the table to get in network and
that's our goal.
Ms. Matsui. Mr. Nickels, from the hospital perspective, is
setting a default rate for emergency and other services
necessary to stop patients from being balance billed?
Mr. Nickels. Yes. I mean, I think there should be no
balance billing in the emergency department. There should be no
balance billing when a patient in good conscience and knowledge
comes in to an in-network facility. They should not get
anything from an out-of-network physician where they don't have
to pay any more than their in-network co-insurance.
Ms. Matsui. OK. What effect might a Federal fixed payment
rate have on a hospital's ability to ensure adequate staffing
and patient access to care?
Mr. Nickels. Yes, we are not supportive of any kind of
benchmark or any kind of rate like that, and I think it would
have all the negative consequences that were outlined already.
I mean, our members negotiate with insurers. We talk
quality. We talk volume. We talk all kinds of things that, I
think, would--especially with innovation would be really
hindered by kind of a one-size-fits-all approach.
So we do not support that. If Congress is going to do
anything, we do think that the baseball-style arbitration
approach is the best one. But let's let, you know, the
negotiation between us and the insurers continue.
Ms. Matsui. OK. Probably I am running out of time here to
ask the next question, but I wanted to ask about ERISA. You
know, states like California are taking on important steps to
address surprise bills.
Congress needs to enact a Federal solution to expand these
protections to all privately-insured patients. But some 25
states have already enacted some form of balance billing
protections at payment dispute resolutions.
And I am running out of time, but when crafting a Federal
balance billing solution how should Congress consider existing
State laws for determining out-of-network payment for surprise
bills? Should State law always supersede a new Federal law? And
I am out of time.
Anyone want to comment on that in one second?
Ms. McAndrew. So we do acknowledge that some states have
done a good job, including California, of enacting
comprehensive legislation. However, there are consumers who
would be left out.
We also worry that if laws that are less comprehensive were
to be allowed to supersede Federal law, you will have a race to
the bottom. You pass a comprehensive law here in Congress, you
will see a flood of lobbyists trying to pass less comprehensive
laws in the State if they are to supersede it. So we recommend
that Federal law take precedent unless a State law is more
comprehensive. Also, Federal law wraparound to cover ERISA when
State law cannot.
Ms. Matsui. Thank you very much, and thank you, Madam
Chair.
Ms. Eshoo. Thank you.
Pleased recognize the gentleman from Kentucky, Mr. Guthrie,
for his five minutes.
Mr. Guthrie. Thank you very much, and it's--thanks for
everybody being here. Thanks to Ms. Wilkes for being here with
your story.
And, you know, it's kind of frustrating. It gets to kind of
a larger thing. I am on Oversight investigations. We are
looking at insulin pricing and it kind of looks at the
difference in net price and list price, and it seems here--I
have an incidence--we all have instances in our area. Emergency
situation wasn't emergency room physicians where a person in my
district who's actually an insurance broker so he's very
sophisticated--talk about insurance literate. Had an emergency
situation with his son and was billed over $30,000 for a
service, and if he had an insurance that had been in network it
would have been less than $10,000. And he actually sat down--he
wanted to. They would refuse to do it.
He said, if you will sit down with me and show me your
price and your charge and some kind of reasonable return, I
would pay it. But they wouldn't sit down and go through the
pricing charged.
So that's just a big issue. He said, I will write you a
check today if you will let me--if you can show to me that it's
really part of it, and that's the source of the problem that we
are getting at, just the overall system here.
Mr. Gelfand, getting back to the notice of out of network,
in your testimony you mentioned the need to tighten the
requirements in the discussion draft on patient consent for
out-of-network procedures.
Could you elaborate what you think this should be?
Mr. Gelfand. Yes. We associate ourselves with the remarks
of Families USA in that you cannot simply give 24 hours and
allow the physician to surprise bill as long as you have 24
hours' notice that a surprise bill is coming because oftentimes
you may be going to a facility but you literally have no choice
about some of those ancillary providers that will be present at
that facility.
Mr. Guthrie. So I guess to Ms. Thornton, Ranking Member
Walden said that a person asked about is the anesthesiologist,
before I sign this form, in network and the provider there
didn't--I am sure it was the gastroenterologist or whoever is
doing--didn't know.
I mean, how do the health insurance plans fit into notice?
How--we are trying to figure out how this would work. Somebody
walks in, I need service. If they're out of network, how do we
know and how would the health insurance plans be involved in
this?
Ms. Thornton. So in the first place, it's important--when
you have an emergency or you're at an in-network facility
patients are protected, right. The Federal --this Federal law
would sort of swoop in.
So you wouldn't have situations where consumers are getting
that bill because they would be protected by the payment
benchmark that we are talking about today.
Now, in scenarios that aren't covered by the bill we do
think there is an important role to get notice, to be able to
call the health plan and say, hey, I've got this procedure next
week--can you let me know, you know, what the network status of
my provider will be, and we think that process can work for
more things that are scheduled in advance, and not emergency
care when you have no control over who's going to see you and
you're in no position to have that discussion.
Mr. Guthrie. Well, it couldn't be just in the emergency
room because Ms. Wilkes wasn't in--she was in a labor and
delivery room, I assume, and next thing you know you're in a
NICU. So, I mean, it's not just EMTALA type of situation.
Ms. Thornton. No, exactly.
Mr. Guthrie. I understand that, you know, we talk about
just don't look at unintended consequences--we just have to
move forward. But it is an issue with emergency room physicians
because they have to take care. They can't talk about price,
and that is different than other things, moving forward.
I do have a question, Ms. Thornton. You're subject to the
medical loss ratio requirements, and those are requirements
that require a minimum percentage of premium dollars taken to
be spent on paying claims.
Can you speak to how an arbitration system might have an
impact on MLR requirements?
Ms. Thornton. Sure, happy to do that.
So there are two different components of a medical loss
ratio--sort of what we are spending on medical care and what we
are spending on administrative costs.
On the medical cost side, it's really important here that
any solution that we are talking about to end surprise billing
does not increase medical spending. That $30,000 bill that you
mentioned, right, that's reflected in people's premiums that
they pay every month for coverage. So that's sort of one piece.
But on the other side, if you're taking kind of a
bureaucratic process and inserting it into the healthcare
system--Dr. Friedman mentioned 150 million ER visits a year.
Even if you took a percentage of those and threw that to
arbitration with those administrative costs, that would be
adding a lot of costs to the system.
Mr. Guthrie. So we would have to--your argument would be
that we'd have to take that out of the medical loss ratio
calculation?
Ms. Thornton. It would be administrative costs borne by the
health plan, yes.
Mr. Guthrie. OK. So this really isn't for everyone but I
just have a few--less than a minute. But so once a bill is put
into place, there's a Federal --if there is becomes a Federal
arbitration system, what do you think congressional oversight
should be and I don't know if that would be something Ms.
Wilkes wants to talk about or----
Ms. Wilkes. Well, I've been sitting here listening,
thinking, I pay my insurance premiums. I do my part and I
expect the bill to be paid. I mean, there's only so much I can
do to control that.
I don't really care how the reimbursement works and, quite
frankly, I think the insurance industry is doing probably
better in their bottom line than my bottom line. I want to go
to the best provider possible and I want the best care. I don't
really care how the payment works.
Mr. Guthrie. OK. Thanks. And I won't go on down the list
because my time has expired. But I do hope things are going
well, and the other part of our area we are looking at genetics
and things like that and some really great things that are
happening in hemophilia. So, hopefully, your son will qualify
for those as well as they--his genetics will qualify, not just
your insurance. Your genetics will qualify is my point.
Thanks. Appreciate it.
Ms. Eshoo. The gentleman yields back.
I now would like to recognize the gentlewoman from Florida,
Ms. Castor.
Ms. Castor. Well, thank you, Madam Chair, for holding this
important hearing and thank you to the witnesses for your
expert recommendations to the committee.
Ms. Wilkes, thank you so much for sharing your personal
story. My home State of Florida adopted a balance billing law
in 2016 and my understanding of the law is that first and
foremost it works to protect the patient and then establishes a
process for the payer and the provider to resolve a payment
issue.
So that if a patient receives care from a provider that is
out of network, the patient will only be responsible for in-
network cost sharing and then providers and the insurance plans
have to go through a State-arranged voluntary dispute
resolution process where a penalty is assessed to the party
that refused to accept an offer that was close to the final
arbitration order.
And I understand that the negotiation is based on the usual
and customary rate in that particular geographic area and then
it binds the parties, going forward.
Florida's law is relatively new; but I wanted to see if any
of the witnesses have feedback on how my State is doing.
Dr. Friedman, you practice in the State of Florida. What's
your view?
Dr. Friedman. Yes, thank you for the question,
Congresswoman Castor.
It is untested, frankly. The history of balance billing in
Florida and dispute resolution in Florida is not necessarily
one that is particularly good and the pervious--we have had a
balance billing for a long time for HMO products in Florida and
there was an attempt to--some time ago to add PPO products to
that.
The dispute resolution process as the State used turned out
to be very insurer friendly and providers refused to use it
after a while. So this new law has been tweaked and we hope
that it will be more provider friendly and it will be one that
both providers and insurers are happy to use.
It has not been tested yet. I know that within the
emergency medicine community at least it is due to be tested
very shortly and we look forward to seeing the results of that
experiment.
Ms. Castor. So what will happen if the Pallone bill with
Mr. Walden passes in my----
Dr. Friedman. Some of that refers to the earlier question
around Federal pre-emption of State law and we believe, first
of all, that the Federal law should apply if the State law does
not have at least the same level of protections, certainly for
patients, but also for the providers' system.
We have to support our providers that are taking care of
patients.
Ms. Castor. Ms. McAndrew, what's your view of the--a
dispute resolution process versus bench marking?
Ms. McAndrew. Thank you very much for your question,
Congresswoman Castor.
At Families USA our preferred approach would be the
benchmark approach. I think the initial reports on a CBO score
of the various approaches were quite telling--that the
benchmark approach is--produces the largest cost savings, and
cost savings that come from these various approaches trickle
down to consumers.
The reason that we think this matters to consumers is that
when we have any surprise bill law that could potentially
result in any inflationary costs within the system, those will
trickle down to consumers in their premiums.
So our goal is to have a payment rate that is as least
inflationary as possible. However, I will say, you know, at the
end of the day what matters most to us is the consumer
protection part of this.
And so while we prefer the benchmark rate, when it comes to
discussing an arbitration system, the devil is in the details.
The bottom line for us is that billed charges, should not be
considered in this.
Ms. Castor. So how do we--how do we ensure that what we do
to protect patients from surprise medical bills doesn't cause
higher premiums?
Ms. McAndrew. Well, I think that goes back to what's
considered in the payment rate. So at the end of the day,
whatever the system is as long as it's not based on billed
charges I think that's what matters most because as some
discussion has alluded to before, charges can be quite
arbitrary. Sometimes I compare them to, like, the list price of
a prescription drug. Nobody really pays it, as Mr. Nickels said
before. So we wouldn't want to bake it into our system.
Ms. Castor. Does anyone else want to comment on dispute
resolution versus bench marking?
Dr. Zaafran. I would. So, you know, we have data in New
York already as to how this has been proven and the premium
increase in New York has been actually very commensurate with
the premium increase in California.
So, you know, you have bench marking in one area. You have
dispute resolution in the other, and the premium increases have
not been any different.
But you have a decrease in New York from the standpoint of
how many out-of-network providers you have from 20.1 percent
down to a 6.4 percent.
What I do want to emphasize, though, because cost has come
up here several times, in New York the average cost of a
dispute resolution process is about $300. It takes an average
of two weeks. It is all entered in electronically, and the
resolution is adjudicated within those two weeks. It is a very
seamless, quick, and easy process and it has worked.
What I would say also from the standpoint of bench marking
versus a dispute resolution is it is not a one-size-fits-all.
My company invested a tremendous amount of resources to make
sure that we do opioid-free anaesthesia so that we don't have
folks who are on opioids a year later after they've had surgery
or that they don't have surgical site infections that have them
to be readmitted back into the hospital after they've been
discharged. Those actually decrease the cost of care, and as
referenced earlier, we have insurance carriers who are willing
to pay us a premium because they understand; and they know that
the overall cost of care does down.
Ms. Eshoo. I thank you. Your time has concluded, Doctor.
Ms. Castor. Thank you.
Ms. Eshoo. I thank the gentlewoman yielding back.
I now would like to recognize Dr. Bucshon from Indiana.
Mr. Bucshon. Thank you, Madam Chairwoman, and I was a
cardiovascular surgeon prior to coming to Congress and I think
we can all agree it's about patients here.
That said, the current draft of the No Surprises Act,
although well intended, in my view is not completely the right
solution.
Again, we can all agree that we--the liability of surprise
out-of-network bills should not be on the patient. We need a
solution. However, in my view, the draft legislation would lead
to a reimbursement race to the bottom.
It would encourage narrow networks and lower provider
reimbursement, limiting patient access, and ultimately is going
to continue to result in further physician shortages.
Since the late 1980s, physician provider reimbursement has
continually been cut in an attempt to control healthcare
costs--and you can see that hasn't worked--while other areas of
the healthcare system including large publicly-held companies
continue to earn record profits.
The draft legislation would ultimately, I believe, ask
again for providers to shoulder the financial responsibility of
a healthcare system that costs too much. As long as we have a
system that allows the business side of medicine to march on
while cutting reimbursement to those who are actually providing
patient care, our problem doesn't go away.
An approach similar to the State of New York or a hybrid
combination of bench marking and arbitration, in my view, could
help solve the problem and not lead to a reimbursement race to
the bottom.
So with that said, Dr. Friedman, based on my experience,
physicians who accept lower in-network payment rates may get
additional benefits from the health plans, preferred--
preferential referrals, things like that. Considering that
there still could be an incentive to take a lower rate offered
by an insurer, can you talk about what reasons a physician may
not be part of an insurance network?
Dr. Friedman. Well, I think, you know, from the standpoint
of my members, we want to be in network. We actively try to
contract with insurers. The only time that an emergency--most
of the emergency physicians that I know and most of the groups
that are part of my organization are out of network is when we
cannot reach a reasonable negotiated rate with an insurance
company or the example that I used before where I work in
Florida and I take care of a lot of folks from out of State
because those contracts are regional. They're not national,
even for the ERISA plans.
So I think that we want to--as providers, we want to be in
network. We want to be in contract. We don't want to be sitting
here talking about patients that have been harmed by out-of-
network billing.
Mr. Bucshon. Right, and that's the point I wanted to get at
is that physicians--we want to be in network. We don't want
patients to not be in network, and that's why my concern about
setting a benchmark could lead to an incentive from the plan's
perspective just to not renew contracts, and we have heard that
from Dr. Zaafran today--and make everybody out of network and
then we have this lower benchmark and then, of course, as the
higher contract--reimbursement contracts all of a sudden go
away, the benchmark lowers and then you get this race to the
bottom in provider reimbursement, which is--which is, I think,
the concern the State of New York had when they put in an
arbitration model, which is working. We've heard from people
from the State of New York.
So that's my main concern. So that's what I wanted to get
at. Providers want to be in network. We don't want people to be
stuck with these bills.
So in Indiana, in the largest group market last year the
largest insurer had 65 percent of the market share. The next
largest at 21 percent and the third only five percent.
Considering the limited competition, what leverage do
physicians have when negotiating reimbursement rates with
insurers? And I guess, Dr. Zaafran, you might comment on that.
Dr. Zaafran. Well, again, as Dr. Friedman said, we always
try to negotiate and be in network. But in many instances when
a large carrier does not necessarily need to because they're
narrowing their networks, they just simply won't negotiate.
And that's why, frankly, network adequacy standards are so
important. I understand that some folks may not. But I can give
you a very specific example in Texas where it was extremely
important.
We had one specific carrier a year ago between February and
August essentially drop all the anaesthesia groups in the
state--mainly, the five largest cities--out of network. These
are all mid-contracts. These were not being in the midst of
renegotiating contracts. They just dropped them.
The medical associations and societies found this out. They
realized it. They took it to the Texas Department of insurance
and based on network adequacy laws, the Texas Department of
Insurance brought this carrier in, found out that they were not
meeting those standards, put a fine on them of $700,000 and a
rule that within 90 days that they have to make sure that they
bring back their network into adequacy, and it did.
Mr. Bucshon. Thank you very much. My time has expired.
Ms. Eshoo. The gentleman yields back.
The gentleman from New Mexico, Mr. Lujan, is recognize for
five minutes for his questions.
Mr. Lujan. Thank you, Madam Chair, and I thank you and the
ranking member for bringing us together today on an important
issue facing our constituents all across America.
Mr. Sherlock, can you explain to me what the average charge
per air ambulance service is?
Mr. Sherlock. Excuse me. Thank you for the question.
According to a study conducted by Xcenda in 2017, the
median charge for a helicopter or medical transport is $10,199.
Mr. Lujan. So can I ask a follow-up there? In your
testimony you described the $10,199 amount as the median cost.
Is the median cost and the average charge the same thing?
Mr. Sherlock. No, they're not. When you look at----
Mr. Lujan. So the question that I ask you was what is the
average charge today of an air ambulance.
Mr. Sherlock. The charges are not--I don't know that there
is an average charge.
Mr. Lujan. So the----
Mr. Sherlock. The charges--when you look at the fact that
70 percent of our patients are covered by Medicare, Medicaid,
or are uninsured and the fact that Medicare, according to the
same study, reimburses at less than $0.60 of those charges--of
those costs, rather--Medicaid is always less and the uninsured
virtually pay, you know, $350. Yet that cost of uncompensated
care is what needs to maintain network adequacy because----
Mr. Lujan. So if I may, Mr. Sherlock, what the study is
that you quoted in your report by Xcenda in 2017 states that
the median cost of providing one helicopter transport is
$10,199.
What the Government Accountability Office found in 2017 is
that the median price charged is $36,400. A study that was
conducted in the State of New Mexico showed that in 2015 the
average amount charged per flight was $45,000.
I think it's an increase of about 300 percent from 2006 to
2015 in the State of New Mexico alone. I am just trying to get
my hands around why this is costing so much and why so many of
my constituents are hit with surprise bills when it comes to
air transport across the country.
What is it that is--is it in fact that you agree that the
average cost then is $10,199 for an air transport?
Mr. Sherlock. The median cost. If you look at the fact
that some----
Mr. Lujan. Let me ask the question differently then. I
apologize. We don't have so much time. What's the break-even
point?
Mr. Sherlock. The break-even point, depending on the--on
the area of the country is based on the fact that you have
Medicare that reimburses at less than $0.60 to the cost of
providing the services, Medicaid that reimburses at less than
$0.35 on the dollar to the cost of providing services, and
uninsured.
That cost of uncompensated care then raises the cost of
transports in order to be able to maintain access to healthcare
for millions of Americans who would not be able to get to a
level 1 or level 2 trauma center in an hour or less----
Mr. Lujan. Are you able to give me the cost breakdown,
exclude Medicaid and Medicare, what the cost breakdown is for
an hour transport for that aircraft? Could I submit that to
you, and you get that to me?
Mr. Sherlock. Yes. The transport is also based on the fact
that our members, our programs, are ready to respond 24 hours a
day 7 days a week.
Mr. Lujan. Well, whatever it may be--whatever it may be,
Mr. Sherlock, I just want you to give me that breakdown,
because in your testimony you argue that there has not been a
study looking at the breakdown of costs.
I just would argue that when the median cost is $10,199,
GAO says that the average charge is $36,000, in the State of
New Mexico they say the average charge is almost $46,000,
something is broken. There is something that's terribly off
there.
But I want to go to someone else. I think we need to rein
this in and the concern that I have in this area is that the
Airline Deregulation Act of 1978 pre-empts states' ability to
regulate air ambulance services. We need to do something about
this, and I hope the Act that we have does.
My next question, though, is for Jeanette Thornton. Ms.
Thornton, who gets to make decisions about medical necessity?
Insurance companies or medical doctors? Who makes that
decision?
Ms. Thornton. Thanks for the question. It typically is a
joint discussion between----
Mr. Lujan. Shouldn't my medical doctor make the decision
about what's medically necessary for me when I am in a hospital
room as opposed to some insurance company say, I am sorry, but
your doctor didn't mean to fix our heart--we are not going to
cover that cost--they should have only fixed your toe?
Ms. Thornton. Sure. We want our members to have really
high-quality care and a lot of times things like medical
necessity and prior authorization are really getting at safety
issues related--opioid prescriptions is a great example of
that. And so, you know, we welcome that conversation.
Mr. Lujan. Madam Chair, as my time has expired, I would
like to ask unanimous consent to submit into the record a few
pieces of information, the first being a study by the New
Mexico Superintendent of Insurance on air ambulance
information, and the second an article by Larry Barker,
published February 21st, 2019, about medical emergency could
end in bankruptcy, which also talks about medical necessity and
who's making those decisions.
Ms. Eshoo. So ordered.
[The information appears at the conclusion of the hearing.]
Mr. Lujan. Thank you.
Ms. Eshoo. The gentleman yields back.
I would like to recognize the gentleman from Florida, Mr.
Bilirakis, for five minutes for his questions.
Mr. Bilirakis. Thank you. Thank you, Chairwoman. I
appreciate it very much. Thanks for holding this hearing as
well. Thanks to the ranking member.
Ms. Thornton, I believe it's safe to say that we would all
like to see patients held harmless in any final proposal on
surprise and balance billing.
A question--we have heard a lot about the merits of various
proposals. Could you discuss the key differences between New
York and California--their models?
Ms. Thornton. Thank you. Happy to do so.
So the different proposals out there are really aligned
based on either having a payment benchmark. So in one of these
situations where someone does see an out-of-network provider in
an emergency where they're at an in-network facility, there
would be a quick and easy way to determine what payment should
be for that out-of-network provider.
We want that to be fair and reasonable, based on what
similar providers are paid in that geographic area. So that's
sort of the benchmark approach and that's been implemented in
California at the beginning of this year, as I mentioned.
The contrasting approach that's been mentioned on our panel
is arbitration and this is where different parties come to the
table if they disagree with the payment that was made and
produce information as to why they should be paid a different
amount, and that goes to an independent person.
Our concern with that--and this has been used in New York,
as was mentioned--our concern with that is it gives equal
weight to these excessive charges that have been talked about
at the hearing today as well as information from the health
plan and it adds unnecessary administrative costs to the
system.
Mr. Bilirakis. OK. Thank you.
Dr. Zaafran, what could be the potential long-term
consequences of reducing the number of physicians in network--
if you could maybe describe what the consequences would be long
term. I will give you some time to elaborate too because that's
so important.
Dr. Zaafran. Thank you. You know, access to care would be
significantly affected. I mean, number one, first of all, when
you're out of network, your cost sharing is much higher.
So even though my charge or rate may be the same, the
patient's responsibility for a deductible and co-pay is much
higher in an out-of-network setting versus an in-network
setting. So that right away would put the patient at a
disadvantage.
Again, there are costs to providing care, and if there is a
race to the bottom, that access to care is going to be affected
because if you have to have a physician open an office and be
able to deliver that high-quality care that's going to be
affected.
And, again, from the standpoint of not a one-size-fits-all
thing that I really want to talk about--we talked about opioids
a second ago--and other types of things that provide high-
quality care, if a physician is providing that high-quality
care it has to be--it has to be taken into consideration.
One thing that, like I said, we did in Texas, which I would
call New York 2.0--New York's law was absolutely fantastic and
we just tried to take it 1 step further, which, again, brought
the health plans along and actually agreed to the bill, is that
we wanted to reference previous history of in-network
contracted rates in the arbitration criteria along with
charges.
So the arbitrator would be able to look at a contract that
may have just been terminated and said, well, you know, you
just terminated a contract that was in existence for the last
10 years--at least give the contracted rate that was there for
those last 10 years, and from that standpoint the score of the
bill actually decreased significantly because what you're
trying to do is preserve the 90 to 95 percent of the in-network
market that already exists and not break that while at the same
time addressing the 5 to 10 percent that is out of network and
fix that and not have the unintended consequence of pushing
those in-network providers into a situation where they're
having to be paid less and not be able to deliver the kind of
care that they expect to be able to deliver.
Mr. Bilirakis. Very good. Again, you touched on this, but
have any states tried to create standards for network adequacy
and track plan performance? If so, what has the result been for
patients in those states?
Dr. Zaafran. So, again, I referenced earlier the State of
Texas has excellent network adequacy laws. We strengthened it
in this last legislative session by changing it from a self-
reporting mechanism to an automatic audit by the Texas
Department of Insurance every 2 years to make sure that they
are actually able to look at the networks.
I gave the example of a year ago where one particular
carrier essentially took all the anaesthesia companies, and
this is not 1 company. This is a variety of different
companies--small groups, big groups--and put them out of
network in existing contracts.
And if it wasn't for that network adequacy law where the
Texas Department of Insurance Commissioner was able to hold
that carrier accountable, the conversation between that carrier
and the providers would have never happened because,
essentially, they just refused to talk to the providers and
say, you're out of network--that's it--end of story. The
network adequacy law basically forced them to create an
adequate network again and those conversations happened.
Mr. Bilirakis. Very good. OK. I yield back, Madam Chair.
Thank you.
Ms. Eshoo. The gentleman yields back.
I now would like to recognize the gentleman from Oregon,
Mr. Schrader, for his five minutes of questions.
Mr. Schrader. Thank you, Madam Chair.
Dr. Zaafran, curious about evidence with the frequency of
surprise billing. I mean, is it a big chunk of the marketplace
reimbursement or is it a small piece of the reimbursement
puzzle, and does it--does it vary dramatically from network to
network and does it vary geographically? We've heard some
testimony.
Dr. Zaafran. Thank you for that question and, you know,
first of all, one out-of-network bill to Ms. Wilkes is one too
many, and that's why we have to address that.
But the overall incidence of out-of-network providers is
actually fairly low. It is in the 5 to 10 percent range. I
think nationally, if you look at all the different services
provided, it's 80 to 95 percent. So there's a little bit of
variation there.
But, again, going back to the point of preserving the in-
network providers or physicians that are already in network, we
don't want a system that's going to disincentivize carriers or
incentivize carriers not to continue those networks.
Again, we started to anecdotally see that happen in
California. We've seen the exact opposite happen in New York
where you had 20 percent of emergency rooms physicians out of
network and it went down to 6.4 percent.
So the evidence that is out there shows that with a good
arbitration style that is fair and expedited you actually can
have the effect maintaining that in-network market but
adjudicating out-of-network market in a fair manner.
Mr. Schrader. Mr. Nickels, would you agree with those
comments in the relative states and the results we are seeing?
Mr. Nickels. Absolutely, and I would throw Oregon into the
mix, too, which, as you know, the law is new there and also, I
think it's reflective of what New York set up, what Texas have.
They're all a little different.
Ms. Eshoo. Could you bring your microphone closer?
Mr. Nickels. Sorry. I keep doing that. So I think the
arbitration model, again, the data coming out of New York is
very persuasive that it works.
I don't think it's going to be the situation where there is
some, like, really high amount and some reasonable amount, and
to think that the really high amount is going to win, no
arbiter is going to pick the really high amount.
The reason we have arbitration in New York that's
successful is it brings people toward the middle. A lot of
people settle them beforehand anyway. So I think those
approaches are the best and I know our members were supportive
of the Oregon law. I know its brand new. More data needs to
be--you know, come--more data needs to come forward.
Mr. Schrader. Ms. Thornton, Dr. Zaafran talked about the
incidence of surprise billing and certainly one is too much. I
get that. But I want to get a feel from an economics
standpoint, you know, what percentage of the insurance
industry's healthcare business is resulting in paying these
surprise billing.
Ms. Thornton. Sure, not a problem.
And back to network adequacy, I just wanted to mention that
Texas has one of the largest rates of surprise billing in the
country, even though it has a robust network adequacy
provision.
But back to the economic impact, I included some data in
our testimony that was put together by Avalere as New Jersey
was considering what changes to make as part of its changes to
its out-of-network billing law and it really shows there is
quite a large economic impact.
It could be as high as--and the study showed four percent
of claims could be as a result of a benchmark that is based on
billed charges and is a higher amount than some of the other
proposals that are out there. So definitely hitting consumers
in their pocketbook in terms of economic impact.
Mr. Schrader. So it seems to me like there's this dynamic
tension between making sure that we have a robust provider
network, the insurers are encouraged, frankly, to reach out to
providers, and at the same time make sure that providers don't
get to raise rates so that the consumers at the end of the day
end up paying higher.
So there's going to be this dynamic tension because in the
long run. The more robust provider network, in my opinion,
market forces will driver those costs down. But we have got to
make sure we don't injure the consumer here in the near term.
The other big piece that's out there is transparency. I
mean, it'd be interesting to get real good data, and I would
ask you, Ms. Thornton, to talk with your insurance plans and
get back to me and the committee on what percentage of, you
know, your business is surprise billing--you know, are there
different subsets. Some people testified that there may be
certain specialties that is occurs more frequently with--some
testimony would indicate that while, no, it's all pretty equal.
It would very helpful for the committee, I think, to get that
information so we can get perspective on that.
My standpoint, I think the solution is pretty--a lot
simpler than what we are making it out to be where you can
encourage a robust network and make things happen.
Take the patient out. Everyone agrees with that. Ms. Wilkes
shouldn't have to deal with these issues. This is an insurer,
you know, provider issue and, you know, I think it you just
have the insurers providing a little extra--making sure that
they have a robust network we are not going to have this
problem at the end of the day.
So appreciate everyone being here and I yield back.
Ms. Eshoo. The gentleman yields back.
I now would like to recognize the gentleman from Oklahoma,
Mr. Mullin, for his five minutes of questioning.
Mr. Mullin. Thank you, Madam Chair.
I want to talk a little bit more about--Ms. Thornton, about
the surprise billing. Can we get a little bit more specific
about what the surprise billing ratio is in rural parts of the
country, specifically, maybe in Oklahoma?
And Ms. McAndrew, I saw you just kind of wiggle in your
seat like you might have some of that information too. So I
don't care which one wants to answer that.
Ms. McAndrew. Thank you for the question.
Yes, over 10 percent of in-patient admissions in Oklahoma
result in a surprise bill and that's the case too for other
rural states represented on the committee like North Carolina,
like Kentucky. And so I think it is important to recognize that
already there are instances in rural states where we have out-
of-network providers.
And I think, you know, we talked a little bit about how
providers want to be in network. But there's not, you know, an
equal incidence of surprise bills across----
Mr. Mullin. What's the biggest issue with the out of
network? I mean, we have seen this huge increase of out-of-
network billing over the last years. One, what's caused that
and what's the biggest issue on that?
Ms. McAndrew. Well, I guess what I was going to say is that
we have talked about how providers want to be in network, but I
think for certain types of providers, people want to be in
network but not as much as they want to get paid far more
than----
Mr. Mullin. Well, the point is people want to be in network
only if the provider provides what I am asking for them to pay
me back. And then they have another choice----
Ms. McAndrew. Providers--certain providers want to be in
network only if they can make very high rates.
Mr. Mullin. Right, and then they have a choice, well, I
don't have to be in network because I can still--I can still
have access to the hospital. So why do we see that big increase
now? Why are we seeing this big increase on surprise billing?
Ms. McAndrew. So I would say that we haven't always had
great data on surprise billing. So the data I have seen hasn't
necessarily indicated an increase because the data we have on
the surprise billing problem tends to be newer data in general.
And as I indicated, this is a problem that we have been
working on for many years, and so it has been a long-standing
problem.
Mr. Mullin. Well, let's talk about the data. You were
talking about one size doesn't fit all and Mr. Nickels, you're
kind of echoing that, too.
I do agree with that to some degree. But I do also
understand job costing and as small as my company is, I can
still go back through it and find out what my average costs are
on certain jobs, because some of them are repetitive.
Is that information not out there? I am not a big--I am not
big into arbitration for sure but there should be a fair road
someplace.
I think Ms. Thornton or, Mr. Nickels, you talked about in
the middle with arbitration finding out where it is. Maybe
that's the legislation that we are looking for that we can
provide that data.
If you can't provide the data, we can provide the data and
say, I know what the average costs of a hip replacement is. I
know what the average cost of getting two stents put in.
I understand there's special circumstances that take place.
I understand what the average costs of delivering a child is.
I've got five of them.
I can get those average costs, and is that the starting
point of coming up to where the network and the provider should
find? Somebody?
Mr. Nickels. I will take a stab at that first. I think that
there are some instances where getting the average cost is
easier. Hip replacement--if there are no complications----
Mr. Mullin. No, I get that. There're standard operations.
There're nonstandard operations. There're standard jobs that my
company does. There's standard jobs that they don't do. I get--
I get the per hour costs and I also get the idea about bidding
jobs.
Mr. Nickels. Right.
Mr. Mullin. And that is called flat pricing--up front
pricing. You can't tell me we don't have an average cost of
what it takes to do as many surgeries as we do inside this
country on as many different parts of the body--you can't tell
me we can't come up with an average cost on that.
Mr. Nickels. Yes. In most instances, we can.
Mr. Mullin. OK. Those are the most instances we are talking
about. The special cases are special cases on themselves. We
can solve the most cases, though.
For instance, this finger right here--not that I am doing
anything bad--all fingers are up--it just happened to be this
finger right here.
In Louisiana, I cut this finger. Eleven thousand dollars is
what it cost me to get stitches put in that finger. This thumb
right there, $150 at my local emergency room. Can somebody
explain to me the differences in that? Both of them were, by
the way, by a knife, which is why I don't carry one.
Dr. Zaafran. Well, I can tell you that from the physician's
standpoint--for emergency room physicians, for example, the
average weighted cost of every visit is about $150. That's the
average across the board for all services provided and as was
indicated----
Mr. Mullin. OK. There's our--then that's our starting
point.
Dr. Zaafran. So you had your----
Mr. Mullin. So why is it that we can't find an average when
we start negotiating prices?
Dr. Zaafran. My point is, though, it is not--it's not as
high as folks think it is.
Mr. Mullin. Listen, your point I get. But the billing says
it is. So your point--you can say whatever you want to about
your point. The fact is the bills that come in our mailboxes
say they are very expensive.
So I think it was Dr. Burgess that said if you don't fix
it, we will, and you guys probably won't like it, and that's
the road that we are going down because we can get access to
that data. We can find that average cost. And if you all don't
want to solve it then we are going to. All we are saying is is
do it. Solve it.
With that, I yield back.
Ms. Eshoo. The gentleman yields back.
We have a vote that we need to go to the floor to take. But
before we recess, I want to recognize the gentleman from
California, Mr. Cardenas, for his five minutes of questions.
Mr. Cardenas. Thank you very much, Madam Chair, and I
appreciate the witnesses sharing your perspectives and, Ms.
Wilkes, your personal story. Thank you so much. I am glad to
hear that your son got the critical need that he needed in that
very moment.
I do have a question for you, Ms. Wilkes. When that
provider group sent you that $50,000 bill, was it easy to
understand what you were being charged for?
Ms. Wilkes. No. As I mentioned earlier, it was just a
dollar amount. There were no specifics as to what services were
provided.
Mr. Cardenas.T1 OK. And what was the process that you felt
was available to you or how did you figure out how to deal with
that and what options you had?
Ms. Wilkes. So we called the billing--the person that was
giving us the bill--the entity that was giving us the bill, and
they were not willing to work with us on a payment plan. It
was--it was an all or nothing situation, and as we began asking
questions that's how we found out that they were a third-party
provider that was out of network in the facility that was in
network.
So it really just was butting heads. We never could come to
a solution to be able to even begin to think about paying that
off.
Mr. Cardenas.T1 OK. I mean, I have grandchildren and I
still have children on my plan at home, and I was thinking
maybe we need to make t-shirts that we need to put on our loved
ones whenever they go to the emergency room or to the doctor or
what have you and it says ``Only in-network provider! By the
way, please don't let me die, happy face.''
I am not trying to be funny. What I am saying is Americans
should expect when they go see a provider, whether it's an
emergency basis or not--I have a son who's on my plan and he
went out of network. We knew it. I, as a policy maker, didn't
know to ask more tertiary questions about how much each one
would be.
Luckily for me, it was associated--in this case, I think it
had to do with associated with a local university that one of
my fine colleagues had been to, et cetera, and, you know, it
was another $500 here, another $500 there. Thank God there were
no more zeroes on that. My son had already met the deductible
for the year.
So that was over and above what my plan had said, OK,
you're doing with your deductible--every time you go in plan
then you're going to be OK, family Cardenas.
What bothers me, and you're hearing my colleagues,
Republicans and Democrats, saying we need help to understand
what's going on out there in the real world; otherwise, we are
going to provide a solution and you're not going to like it.
Legislators, collectively, aren't necessarily known--our
track record isn't that great of hitting the nail on the head
when it comes to fixing big problems, unless we get tremendous
help from experts so that we can hopefully narrow it down and
actually make good policy solutions.
I have a question. My understanding is since the '80s--they
may have called it something differently--since the '80s or so,
there have been this surprise billing issue facing American
families.
This isn't just five and ten years old. Is that correct? I
think, Ms. McAndrew, can you shed some light on that?
Ms. McAndrew. That is correct. Networks, from our
perspective, are a necessary function because they are--they
have an ability to rein in costs for consumers.
But, of course, if you have a network, which was part of
the managed care revolution that we saw begin in the '80s and
increase in the '90s, you can get either in-network care or you
can get out-of-network care.
So if you end up inadvertently going to an out-of-network
provider you will get a surprise bill. And I mentioned that
this issue is something that our organization, Families USA,
has been working on for over 20 years.
We've published on it in the early '90s. So this is
absolutely not a new problem.
Mr. Cardenas.T1 OK. So this has been doing on for decades?
Ms. McAndrew. Absolutely.
Mr. Cardenas.T1 And has anybody here been at the table
before Congress to talk specifically about this issue over the
last, you know, 40 or 50 years? Oh, you have, Dr. Zaafran?
Dr. Zaafran. Well, not for 50 years. But since 2009
actually we have been addressing it in Texas and it's been a
progression. Of course, we addressed it in New York. But----
Mr. Cardenas.T1 So at the State level. But at the Federal
level?
Dr. Zaafran. Not at the Federal level. Correct. Well,
there's the greater of three standards that the Federal level
has--actually had and has been in place since then and it's
probably----
Mr. Cardenas.T1 Since when? Since, roughly, when? Decades?
Dr. Zaafran. It has been--it has been at least a decade.
Mr. Cardenas.T1 OK. Got it.
Dr. Zaafran. I wouldn't say decades. But at least about a
decade.
Mr. Cardenas.T1 OK. Right. OK.
The reason why I want to point that out is because I hope
that the dialogue doesn't get mired into, you know, what caused
this. It's been going on long enough.
We got to figure out how to remedy it, and I think that if
we keep clear heads and we are able to focus on the common
denominator--to me, the common denominator is the patient.
That's the common denominator, and then try to figure out how
do systems fulfil their obligation to stay afloat and provide
services out there in the communities.
I am sorry I overstepped my time. Sorry about that, Madam
Chair. I yield back.
Ms. Eshoo. Always nice to listen to you, Mr. Cardenas.
You're wonderful.
The gentleman----
Mr. Burgess. Reserving the right to object.
Ms. Eshoo. Now--the gentleman yields back.
We have a vote on the floor, and I don't know if there will
be any subsequent votes to the one that's on the floor. If
there aren't, I think that we all have a 20-minute break at
least and I hope we can just--that that's what the case will
be. So we'll recess now. We'll go to the floor, take our vote,
hoping, again, that it is one--to return. And but if it is
longer you just have to be flexible. I ask you to be flexible.
So the subcommittee will recess.
[Recess.]
Ms. Eshoo. All right. The subcommittee will come back to
order. I would like to--the chair would like to now recognize
the gentleman from California, Dr. Ruiz, for his five minutes
of testimony, and one of our members that has worked very hard
to come up with a solution to what we are grappling with.
It's so ludicrous that this could ever be called balanced.
It's not balanced. It's totally out of whack billing. But I
want to attach that compliment to Dr. Ruiz's name because he's
worked very hard since the beginning of this year on the
subject matter.
You're recognized for five minutes of questioning.
Mr. Ruiz. Thank you, Madam Chair.
And the reason why I worked so hard is because, as a
physician, we try to eliminate the pain and suffering and
anxiety from our patients, and then you find out that the
patients are getting a surprise bill that is adding to the
anxiety, which only makes their health worse. It only makes
their health worse.
In addition to being concerned, as Ms. Wilkes was about her
son, she was also concerned to tears in the anxiety of going
bankrupt or what do you do and how do you cut costs. That's an
outrage. It's unconscionable that families are going through
what they're going through, and that's the number 1, 2, and 3
reasons why I set out to find this solution.
We have to close every loophole imaginable so that patients
are not stuck in the middle of this dispute--so that patients
don't have to decide between, you know, staying in their house,
renting an apartment, paying their bills, versus paying their
medical bills because of a life-threatening situation for their
child.
We need to keep patients out of the middle and, quite
honestly, those State models, even with arbitration, don't do
enough. There's always a fine print.
There's always a window that a patient has to go through to
mail an envelope back or make a call and if they don't--if they
don't understand and they're the ones that are not going to
have those protections.
And I am concerned with this current bill that there are--
like you, Ms. McAndrew, that there are too many loopholes that
still allow providers to find a way to say, no, it is your
fault--you didn't see the sign, or it is your fault--you didn't
make the effort to look at the online list, or it is your fault
because you weren't aware that this hospital or these providers
were out of network.
In fact, asking an emergency department patient or an in-
hospital patient if they consent to be seen by the on-call
physician, if they are out of network doesn't work in the real
world and it takes somebody who cares for patients who actually
has cared for patients to understand that because those
patients will most always choose yes because they're under
duress or because their care will be delayed or because they
will not understand the implications.
And if they consent to yes in this bill, then yes, I will
be seen by the anesthesiologist because I've been in the
hospital too long, then that allows the physician to balance
bill. It's not good for patients.
And to expect that a physician who's on call that night,
who doesn't deal with their bills or doesn't deal with being
in-network or out-of-network that's a department--billing
department issue and they've got 15 different people--to expect
them to then just say, no, let me check right now to see if
you're in network or out of network or if I am in network or
out of network is not based in reality or in the real world.
So creating a loophole where, quote, ``adequate information
was provided,'' right, that somebody would say that gives a way
to balance bill. It will put the responsibility on the patient
to read the fine print or be aware of all the ways the
providers can say they were made aware beforehand and it was
patient's fault they didn't read it or understand it, and that
needs to end.
In the bill that I propose, Protecting People from Surprise
Billing Act, has the most robust patient protections out there
from any State model or any proposed bill, because that is my
number one, number 2, and number 3 priority as someone who
cares deeply, who has devoted my entire life during the arduous
training to become a physician, to do everything possible to
relieve pain and suffering and promote wellness in everyday
Americans.
So the second part is how are we going to solve this
dispute, and we need to understand that we need to pick a
system that is fair--that we are not picking winners or
losers--that we address the underlying problem.
The concern is cost. So, Dr. Zaafran, talk about cost--
inflationary rates. What does the evidence show in terms of the
models that are out there?
Dr. Zaafran. Thank you, Dr. Ruiz, and thank you again for
the effort that you have put into the bill that is out there.
Well, again, if you look at the data that is out there on
New York, which has been out there for many, many years, the
inflationary costs with that dispute resolution process has
simply not been any different than the inflationary cost data
in California. I believe the number is somewhere along the
lines of 6 to 7 percent, not 67--6 to 7 percent and it has been
the same whether you have a benchmark process in California----
Mr. Ruiz. So you're saying that there is absolute data
showing that an arbitration does not increase inflationary
costs? Because otherwise--if the data were otherwise----
Ms. Eshoo. The gentleman's--excuse me. Excuse me. The
gentleman's time has expired.
Mr. Ruiz. Thank you so much for your patience.
Ms. Eshoo. Yes. Thank you.
Now I would like to recognize the gentlewoman from Indiana,
Mrs. Brooks, for her five minutes of questioning.
Mrs. Brooks. Thank you, Madam Chairwoman. I apologize. I've
been going back and forth to other things as well, and at this
point I yield my time to Dr. Burgess, the ranking member.
Mr. Burgess. Thank you. We are so glad you came back.
Ms. Wilkes, I would just like to ask you, if I could, there
has been State legislation passed in Colorado, correct, dealing
with this? How would that have impacted your situation when
your son was born?
Ms. Wilkes. Thank you. I actually am not aware if there has
been legislation passed in Colorado, to be perfectly honest.
But depending on what this legislation said, it maybe would
have prevented us from having the bad credit rating that we
had.
Quite frankly, it is not just surprise billing in my
family's case. It's billing overall. I mean, high cost
dollars--we have gone to arbitration several times to deal with
debt to the hospital. So it is not just this.
Mr. Burgess. Because of that initial episode or subsequent?
Ms. Wilkes. It's a chronic disorder. I mean, you know, we
are not going to get rid of it. So there's going to be cost.
He's about a million dollar a year kid.
Mr. Burgess. Which is why the hope for the gene therapy
is--and when we talk about how do we price that it does have to
be in the context of what is it costing us to do nothing and,
clearly, in your case the cost is almost intolerable.
Dr. Zaafran, you were answering a question from Dr. Ruiz a
minute ago and the clock ran out on you. While I am very
sensitive to that because it runs out on me all the time, but
you want to continue your discussion just a little bit?
Dr. Zaafran. Yes. Thank you, Dr. Burgess.
No, I was just reiterating that in New York, where they
have had a New York arbitration process and dispute resolution
process that is robust and expedited that there has not been
any difference in the inflationary costs as compared to other
states.
It hasn't increased. It hasn't been any different than it
has been before and it has resulted in a decrease in the out-
of-network providers.
Mr. Burgess. Mr. Gelfand, you kind of indicated that that
was not an acceptable solution from your perspective--that data
that now Dr. Zaafran has shared with us. Does that--is that
good news from your perspective or news that is not--doesn't
necessarily move the needle one way or the other?
Mr. Gelfand. Dr. Burgess, many of the comments that you
have heard today are without context of what the markets looked
like before these State proposals were brought forward.
So specifically in Texas and New York the question is could
things have possibly gotten any worse. When we look at
arbitration models, we know that outside counsel charges us
$500 an hour on a good day and we know that the filing fees for
many of these arbitration groups are $1,500 per party per
claim, right. So we beg you spend healthcare dollars on
healthcare, not on attorneys.
Mr. Burgess. Can I just ask you about that? Because now,
I've been told from my counterparts in the State House that the
fact that arbitration is available means the parties move to an
agreement before, prior to getting to that arbitration phase.
Just the fact that it is out there means that they are going to
talk. Is that something that you have seen?
Mr. Gelfand. Dr. Burgess, we would defer to the
Congressional Budget Office that has looked at several
proposals and said that if you change to an arbitration model
it increases costs by $5 billion. That money will be paid by
patients.
Mr. Burgess. The Congressional Budget Office isn't always
high on my list of my favorite people.
But, Dr. Zaafran, can you comment on that? And Dr.
Friedman, I would like you to comment as well.
Dr. Zaafran. Dr. Burgess, the cost of arbitration in New
York is $300 for arbitration and it is split evenly between the
insurer and the physician so--and it is a 2-week process. That
is all entered electronically and it is adjudicated right away.
So this cost of arbitration being excessive, again, the
data in New York and the way it is going to be in Texas it is a
very low cost. It's split between the insurer and the provider
with very specific guardrails.
And, again, in Texas what we did is we referenced the
previous contracted rates, which is basically saying that you
don't have to have just charges out there.
There's a teleconference that happens before arbitration
that allows for both sides to sit down at the table and try to
come up with a fair payment that they both agree on.
If they don't, that final offer is what goes to
arbitration. That final offer could be your previous contracted
rate before the insurance company dropped you out of a
contract.
And so that allowed in Texas the fiscal note, the score, to
come down significantly.
Mr. Burgess. I see.
And Dr. Friedman, do you have a thought on that?
Dr. Friedman. Yes. I just want to point out that in New
York in seven million emergency department visits in the year
849 cases went to this dispute resolution process, which is
about .01 percent.
So the process in New York, at least, has worked in that
people are--the parties are resolving their dispute before they
even utilize the dispute resolution process.
Mr. Burgess. All right. Thank you. I yield back.
Ms. Eshoo. The gentleman yields back.
Now I would like to recognize the gentleman from Vermont,
Mr. Welch, for his five minutes.
Mr. Welch. Thank you, Madam Chair. Vermont does have a law.
Since 1987 it has banned balance billing in the emergency
department settings only. And while that addresses a major
issue it still had a number of holes. It doesn't do anything to
prevent surprise bills from anesthesiologists, pathologists, or
radiologists.
It doesn't protect Vermonters who seek care in other
states, and many of our Vermonters get care at Dartmouth
Hitchcock right across the Connecticut River, which is in New
Hampshire.
And finally, the bill doesn't set a rate of reimbursement.
I want to ask a few questions, but first this whole surprise
billing situation--I think of Dr. Bucshon--is reflective of how
it is so opaque what the billing mechanisms are in the
healthcare industry, and consumers have no power.
And what it feels like on the outside is that all of the
providers who are seeking to get reimbursement of the maximum
rate and make their claim as to why they need that, the lack of
transparency in fact works to their advantage, and this is just
one manifestation of it.
And the challenge for consumers they are totally
powerless--totally powerless. So the question I have
fundamentally is should the burden to bear the cost of this
lack of transparency and opaque billing system be on the
consumer, who shows up sick and powerless to affect anything,
or should it be on, collectively, the delivery system?
And that would take a lot of cooperation and probably a lot
of legislation. But I don't believe it should fairly fall on
the shoulders of a consumer who shows up and is absolutely
powerless and had nothing to do with creating the mess in the
first place.
So just a few questions. I will start with you, Mr.
Nickels. How do you see the proposed legislation--the Pallone-
Walden bill--affecting our situation in Vermont?
Mr. Nickels. Well, I think it would actually address one of
the problems that you currently have in Vermont. It does
address, of course, the emergency situation, which you have
protection for.
That bill also reaches into situations where a consumer
goes into a facility that's in-network and they knew it was in-
network and they did it all in good faith and they got a bill
from an out-of-network physician.
That situation which, apparently, is not taken care of in
your State law, would be taken care of by the Pallone bill.
Mr. Welch. OK.
Mr. Nickels. That would be an improvement. Now, we have
some concerns about the Pallone-Walden bill but on that case it
would be better for consumers than what you have in Vermont.
Mr. Welch. OK.
Ms. McAndrew, what about the situation for Vermonters who
get their care across the river in New Hampshire? And that's
about 40 percent of people in the region of Vermont that I live
in.
Ms. McAndrew. Thank you for that question. One of the
reasons we think a Federal solution is ideal is that we believe
wherever you live, wherever you receive care, you should be
fully protected. We shouldn't be relying on a patchwork state-
by-state system for protection.
Mr. Welch. OK. And while consumers are seeking specialized
care, they're bombarded with an enormous amount of information
dealing with being sick or injured, and how do we ensure that
patients are informed in a clear and meaningful way but one
that doesn't put an undue burden on providers? Do you have any
thoughts on that, Ms. McAndrew?
Ms. McAndrew. Yes. Well, I think one of the ways the
legislation recognizes that consumers shouldn't be bearing this
burden is that in facility-based provider situations the
legislation actually doesn't rely on notice requirements. If
you are getting care from a facility-based provider like an
anesthesiologist or emergency provider, my understanding in the
legislation that the protection actually is automatic.
Mr. Welch. OK. Thank you.
Ms. McAndrew. The 24-hour notice requirements, as I
understand them, although I do believe longer notice should be
required, are applying in nonemergency situations or
nonfacility-based providers.
Mr. Welch. Thank you.
Ms. McAndrew. But I think that can be done to make it even
more automatic, so we are getting rid of any phone calls, any
emails, any going back and forth between insurers and providers
is the ideal solution.
Mr. Welch. Thank you for that. I want to yield my last
minute to Dr. Ruiz, who's been a leader on this for us.
Thank you.
Mr. Ruiz. I appreciate it. Oftentimes, during negotiations
insurance companies have a take-it-or-leave-it approach with no
communication in any of--and no negotiation.
Why, Dr. Zaafran--what makes baseball-style arbitration so
appealing to states that want to impact a fair system?
Dr. Zaafran. Thank you, Dr. Ruiz. Because in that baseball-
style arbitration where you have a final offer you have some
specific guardrails or specific criteria that the arbitrator is
referencing, which is acuity, complexity, quality, previous
contract rates, et cetera.
But the key thing is that you have got two numbers. Those
two numbers are one--you only have to choose one of them.
You're not trying to pick a number somewhere in between, and it
forces both sides to be fair.
Mr. Ruiz. Another question, Dr. Friedman. When New York
implemented their solution, many feared that it would allow
providers to drive up prices exponentially. Has that been the
case?
Dr. Friedman. No, it has not. What we have seen in New York
is that providers are charging reasonable rates when they go to
arbitration or they go to negotiation and insurers in fact are
paying at reasonable rates when those bills come in, for the
most part.
What's happened is, is that it has taken care of outliers--
the extraordinary cases that where people--and there are folks
on both sides abusing the system. It has taken care of those.
Ms. Eshoo. The gentleman's time has expired.
The gentleman from Virginia, Mr. Griffith, is recognized
for five minutes for his questions.
Mr. Griffith. Thank you very much, Madam Chair, and I
apologize to the members of the committee. I've been bouncing
between this one and the others.
You have heard several other people say, and the other one
is now over--but I did want to ask some questions and I have--
during the time I have been in the room I have learned a
tremendous amount. Appreciate you all being here.
Mr. Sherlock, I want to ask you some questions about air
transport, and it comes up and I don't know whether the person
that told me this is accurate or not, but I had a child in my
district recently that was hit and I know that they were
airlifted to a hospital.
About a week later, a constituent comes in with a whole
laundry list of things and one of them was he says the family
was charged $40,000. So that's where I start my questions with
that just as a backdrop.
But you opened your written testimony by referencing the
Association of Air Medical Services support for the Air
Ambulance Patient Billing Advisory Committee in the 2018 FAA
reauthorization.
Now, we don't have jurisdiction over that. But that means
that a lot of our members of this committee may be less
familiar with how that consensus language became law.
Can you share with us the background of what led to the
establishment of the advisory committee and while you're at it
also tell us has it actually been established--because
sometimes we put it into law and it doesn't happen--and have
they started meeting?
Mr. Sherlock. Thank you for the questions.
First, the Air Ambulance Patient Advisory Committee was put
into effect because there are--currently the Department of
Transportation has a consumer protection division that has the
ability to investigate and look at how charges were determined
and hold patients harmless.
We agree with Ms. Wilkes that the medical needs of a
patient should be first and no patient should be in the middle
of a discussion between payers and providers.
That committee also includes a representative of Health
and Human Services and so it is a joint committee. We would
encourage Congress to urge them to get that committee seated
and started. They have a requirement to investigate and
recommend solutions to hold patients harmless as well as to
look at the economics of the ambulance industry, and we think
Congress would be well served by that.
We also don't believe that--our industry doesn't believe
that any patient should be caught in the middle. We have
supported legislation that would increase 100 percent
transparency of the industry by mandating 100 percent industry
reporting of comprehensive cost data that would then be turned
over to the Centers for Medicare and Medicaid, which would then
be used and analyzed to actually rebase the Medicare rates for
air ambulances at the cost of providing the services.
That Medicare gap is the single largest driver in raising
costs in the air ambulance industry and in balance bills. When
you get those comprehensive data reported and they get analyzed
and they become public data, then everybody will see where
everybody falls out on the cost curve, and in addition to that
quality of care where everybody will see where programs fall
out on the quality of care curve.
So when those become public data, that will increase both
the transparency and the accountability of the industry, and we
support--we support that legislation that was introduced and
sponsored by Mr. Ruiz and Mr. Johnson and actually cosponsored
by Chairwoman Eshoo in the previous Congress.
Mr. Griffith. And my understanding is currently the
Medicare and Medicare reimbursement is somewhere between $3,000
and $6,000 but the average for somebody that's paying without
that coverage is about $26,000. Is that accurate?
Mr. Sherlock. The median cost of a helicopter air transport
is $10,199 according to a study conducted in 2017. If you look
at the cost of uncompensated care because Medicare pays less
than $0.60 on the dollar of that $10,199--about $5,998.
Medicaid pays significantly less than that, less than $3,500 on
average, and the uninsured pay about $350. Those make up--those
three groups make up 70 percent of air medical transports.
So when you take that cost of uncompensated care and you
add it to the median cost of $10,200, that's the average charge
of $36,000 that the--that the representative from New Mexico
referenced earlier.
When you--when those kinds of situations happen, no one in
our industry wants to see a patient or their family placed in
jeopardy because they've just had a health emergency.
Our members will sit down with each individual and their
families and work out a solution tailored for them, and a
comment that was made earlier today about a snake bite victim
that was transported across State lines, in fact, that was
resolved and that patient and their family received no balance
billing in that because our programs will work with each
patient to develop a solution tailored for them.
Mr. Griffith. All right. I appreciate it and I yield back.
Ms. Eshoo. The gentleman yields back.
Now I would like to recognize the gentlewoman from
Delaware, Ms. Blunt Rochester, five minutes of questioning.
Ms. Blunt Rochester. Thank you. Thank you, Madam
Chairwoman.
And I think you have coined a new term--shock billing. I
wrote that one down. I want to also thank the witnesses
especially for your flexibility and your patience with all that
we have--many of us have been through today. But thank you for
your time.
Investigative reporting by journalists like Sarah Kliff for
Vox and Kaiser Health News and NPR's Bill of the Month series
have really shed a light on how patients, often at their
sickest and most vulnerable, get stuck in the middle of payment
disputes between providers and insurers.
We've heard countless times today that patients shouldn't
serve as an intermediary between these two entities.
Holding the patients harmless should be the crux of any
legislative solution that Congress puts forward, and I was
really encouraged today by the discussion, the fact that there
seems to be bipartisan and across the panel support that
something needs to be done and it needs to be done now, and
this No Surprises Act also maintains that standard.
In a May 2018 article by Sarah Kliff, a 34-year-old man
received a surprise $7,924 medical bill from an emergency oral
procedure after a violent attack the night before. Kliff noted
that this bill was a case she saw regularly--patients who had
large medical bills because they went to an in-network hospital
but were seen by out-of-network doctors.
The good news is that the entire bill was reversed. The bad
news is that it was after the news article.
So, Ms. McAndrew, I am sure I know the answer to this
question, but should patients have to rely on news coverage of
their surprise medical bill in order for them to negotiate a
lower bill?
Ms. McAndrew. Thank you very much for that question and, of
course, the answer is absolutely not, and we, you know,
indicated in our testimony that this problem has been going on
for a very long time.
But, unfortunately, before consumers had advocates like
reporters or their members of Congress to reach out to, a lot
of consumers don't know to take that recourse or are too sick
to take that line of recourse and are sometimes paying these
bills, going into bankruptcy, going into debt.
And so there should be policy in place that automatically
protects consumers, so they don't have to take these great
lengths to get protection.
Ms. Blunt Rochester. Thank you.
I've also heard stories from emergency care physicians in
my State where patients delay their care because of their
concerns about surprise medical bills.
Ms. McAndrew or any other member of the panel, have you
seen this where people are afraid to get care because they're
afraid that they might be--receive a shock bill?
Ms. Wilkes. I would like to respond to that because it just
happened within the last couple of months for my family.
Thomas fell at school and broke his arm, and I legitimately
did not know where to go. I didn't know whether to go to the
urgent care or to the ER.
So, ultimately, we went to urgent care, got an x-ray. Sure
enough, the arm was broken, and ended up in the ER because of
his chronic illness.
That delayed his care. He was in pain for a number of hours
while we were making that transfer.
Ms. Blunt Rochester. Thank you.
I want to transition to the question of transparency. Even
when patients are diligent about making sure that they're
receiving in-network care they can still end up with a surprise
medical bill.
Often, this is because they're unable to ultimately know if
every physician involved in their episode of care is in-
network, and I am going to ask--direct this to Dr. Zaafran.
How can we increase transparency for consumers and make
sure that they're able to easily find out what providers are
in-network?
Dr. Zaafran. Thank you.
So the short answer to that is that the insurance industry
has to have directories that are updated in a real-time
fashion. Again, there is no such thing as an out-of-network
provider. There is a provider who may happen to be out of
network with that specific product.
So the only one who knows what that product is is, of
course, the patient and the insurance carrier and they're the
only ones who really have the information as to whether they're
in network or out of network.
Ms. Blunt Rochester. I just want to close by saying I
commend the committee and everybody who are involved with this.
I recall when my husband passed away unexpectedly to receive
bills not when I was living in Delaware. You're already going
through a tough time, and then to be surprised with these kind
of unexpected costs are unacceptable, and I am glad to see in
this committee that we are looking at this, we are taking
leadership and that there is a sense of urgency because people
are counting on us.
Thank you, and I yield back.
Ms. Eshoo. The gentlewoman yields back.
I now would like to recognize the gentleman from Georgia,
Mr. Carter.
Mr. Carter. Thank you, Madam Chair, and thank all of you
for being here. I know it has been a long day. So you're almost
home. Just hang in there.
You know, this is a very complex issue. We all understand
that. But it is a very important issue, and Ms. Wilkes, I want
to thank you for being here today and for your testimony. It's
certainly compelling and certainly something we have to work
with.
Full disclosure--currently, I am the only pharmacist
serving in Congress and I have experienced the wrath, if you
will, of the insurance companies.
At the same time, I understand where they're coming from,
too, and that's what makes it such a complex issue. One of the
things that we deal with, and Dr. Zaafran and Dr. Friedman, I
will tell you that we use the old adage that misery loves
company. I am in misery with you.
So, you know, it is tough. I deal with PBMs and, oh by the
way, what we have in common with PBMs is that they're owned by
the insurance companies.
So, nevertheless, one of the things that we have in
pharmacy, though, is, you know, we have any willing provider
and that is if we're--you know, quite often we are shut out.
Patients don't have a choice. If they come to me and I am out
of network or I am not a member of that network, they can't get
their prescription filled under their insurance. They'd have to
pay for it out of pocket. But some states have laws that say if
you're willing to accept what the insurance company is willing
to pay, then you can participate.
Well, the insurance companies don't want to do that because
then they can't go out and build networks, is what they're
telling me, because if anybody's going to accept it then the
companies--the pharmacies that are agreeing to be in that
network and bidding to be in that network--aren't going to get
the volume that they are anticipating.
It seems to me like this is just the opposite of what the
economics are on why you would not want to be a part of that.
Can you help me out, Dr. Zaafran, as far as the economics of
how that works when you have--when you have the insurance
company paying you out of network like that?
Dr. Zaafran. So what I would first say is, again, in our
organization, Physicians for Fair Coverage, 90 to 95 percent of
us are in network.
We want to be in network. We strive to be in network. We
negotiate with insurance companies to be in network. In many
instances the times we are out of network is when it is a
patient coming from another State or, in some instances, we are
in network with everybody but there may be one specific plan or
one carrier that is not really negotiating with us in good
faith.
Typically, most of them are and we are in network with all
of them. It is in our interest to be in network. The volume,
the cost of providing that service, the cost of billing, the
timeliness of payment from the insurance carrier--these are all
factors that actually strive to make all of us as physicians
want to be in network because it is so much easier.
Mr. Carter. OK.
Well, let me ask you, Dr. Friedman, and by the way, yours
is somewhat of an unusual circumstance. Yours is kind of an
outlier, if you will, because, as you say, you're in Orlando
and you got a lot of people coming but, even more so, why we
should be addressing it. Can you speak to the economics of it?
Dr. Friedman. Well, I think for all emergency providers,
whether you work in Orlando where I work or anywhere else in
the country, we want, as Dr. Zaafran has mentioned and I have
as well, we want to be in network. It is--we want to take care
of patients.
I became an emergency physician to take care of patients. I
didn't take care of--go to medical school to do billing. I,
frankly, didn't think I would ever be in Congress talking about
anything like this. We want to take care of the patients and--
--
Mr. Carter. Right.
Dr. Friedman [continuing]. We want the--we would like the
back end, the business side, to take care of it as well. In
emergency medicine, we have a unique circumstance in that I
can't tell the patient what the cost is going to be.
I don't even know if they have insurance when I take care
of them. So everything happens afterwards. I can't identify the
insurance product.
Sometimes my billing company doesn't know if they're out of
network for a couple of weeks because it is so difficult. I
have a United Healthcare card. Nothing against United
Healthcare, but all it says on there is what my co-pay is.
That's it.
Mr. Carter. Right. Right. And, oh by the way, United
Healthcare owns their own PBM and they also own their own mail
order pharmacy.
Dr. Friedman. Right. But I don't know where I am in network
with that card.
Mr. Carter. Right.
Dr. Friedman. And, you know, if I am in DC. if I try to
find a doctor----
Mr. Carter. Sure.
Dr. Friedman [continuing]. I have no idea.
Mr. Carter. Well, and thank you for that. Now, before--my
time is about up, but Mr. Nickels, I have to tell you, out of
all due respect, sir, the chairlady asked you a question at the
first of this hearing that I thought you tried to dodge; and I
will tell you that whereas I respect the Hospital Association I
do think you have more of a responsibility to be a mediator, if
you will, between the insurance companies and the providing
physicians to try to help them to avoid the surprise billing
that we are seeing.
So I think that is a responsibility that I hope that you
will take--that you all take seriously, and I hope that we can
count on you to do just that.
Mr. Nickels. Definitely. I know the time has expired but I
totally agree with that. We do our best to work the insurers
and the physicians----
Mr. Carter. Well, as I say, I thought you avoided her
question. But nevertheless----
Mr. Nickels. Well, I could--I could try----
Mr. Carter [continue]. And the last thing is one thing
about the Pallone bill that I do like is that they would let
states decide, because we do know that there are states where
it's working what they're trying to do. I hear New York is
working with arbitration, and I hope that we don't precede that
with any legislation that we pass.
And I yield back.
Ms. Eshoo. I thank the gentleman and he yields back.
I just would like to add something to Mr. Nickels. This
business of anti-trust and what the hospital association keeps
referring to it, I think that when you answer members' written
questions that you take another look at this.
I don't understand how anti-trust can be thrown around in
this. But maybe it's because I don't know enough about it.
Mr. Nickels. Be glad to answer that.
Ms. Eshoo. We have--thank you.
Mr. Nickels. I would be glad to answer it. Thank you.
Ms. Eshoo. Is Mr. Sarbanes still here? No? He left? Anyone
else?
Mr. Burgess. Why don't we let Mr. Nickels--are you willing
to speak to that now--the anti-trust issue?
Ms. Eshoo. If he can in a succinct way.
Mr. Nickels. I will do my best. The anti-trust concerns we
raised goes along with so-called network matching where
requirements which is not in the Pallone-Walden bill but I
wanted to mention it because it's in other bills--where there's
an attempt to put a requirement on hospitals to get--to make
the doctors be in network with them, with us, and we believe
that that would raise--I think a physician would be forced to
adhere to a third party contract. Could very easily come after
us on anti-trust grounds. We are more than willing to work with
them to----
Ms. Eshoo. I don't get that. I don't get that. I mean, I
chaired a hospital board of directors. We had--it was our own
county hospital. It was a public hospital. We had docs from the
community that worked there and the contract that we had was
for the ER and those docs. And so I don't know what you mean by
you can't do this, you can't do that. You already have all
these different groups that you contract with.
Mr. Nickels. Right.
Ms. Eshoo. I mean, the out-of-network starts when they're
in your network.
Mr. Nickels. If we employ the docs then that's not a
problem. There is no anti-trust concern of any kind. The
concern is, and again----
Ms. Eshoo. What's the difference between employee and
contract?
Mr. Nickels. Well, if it's contracted then if they work for
us one of the things we do is if we are in a network, you're in
a network. That's required. The issue is we can persuade. We
can try to work with the physicians to get them to do what I
just described. But the issue that concerns us is what if we
try to----
Ms. Eshoo. When was the last time you tried really hard and
it failed?
Mr. Nickels. Say that again. I am sorry.
Ms. Eshoo. When was the last time you tried really hard and
it failed?
Mr. Nickels. I could get you examples of people--my members
who have tried to do that. Again, my view is--our view is we
want those docs----
Ms. Eshoo. And then was there--were there--was there the
threat of anti-trust as a result of trying to work it out?
Mr. Nickels. There have been--I can give you examples where
there has been threatened litigation if you tried to do that. I
can also give you examples of where it worked--where we were
able to persuade the doctors----
Ms. Eshoo. All right. Well, I am going to have several
questions for you. I appreciate it, and now I would like to
recognize the gentleman from Maryland, Mr. Sarbanes, for his
five minutes of questioning.
Mr. Sarbanes. Thank you very much, Madam Chair. Thank you
all for being here much of the day.
Your perspectives, obviously, on this issue are very
valuable. You have got a lot of expertise you have brought to
bear with respect to this issue of surprise billing, and it's
incredible, I guess, but not totally surprising that it's
affecting as many as 1 in 7 patients in America. We all hear
stories from family members and friends of this kind of gotcha
moment that they face.
And the thing is even when patients are trying to
anticipate a situation and do their homework to make sure
they're getting the services in network and so forth, they can
still get caught short and be surprised with medical bills and,
you know, these can total tens of thousands of dollars and it
can wipe somebody out, again, even though they're taking every
precaution that they can--they can manage to do.
And as we heard from Ms. Wilkes, the impact of those bills,
the examples of how devastating it can be to patients and their
families is very sobering.
I am glad we are here talking about different kinds of
responses to this problem and solutions. I am sort to attracted
to the No Surprises Act right now because I think it achieves
that balance in a way that works best for patients, which is
the perspective I am bringing to bear for the most part here,
and it would take them out of the middle of these out-of-
network payment processes, set that benchmark rate for out-of-
network payments, as you know, to resolve payment disputes
between providers and insurers.
Maryland, the State I represent, has chosen to address the
surprise billing through this benchmark approach and in 2011
implemented that system which requires out-of-network bills to
be sent to insurers and not to patients and define a formula
that could be used for those out-of-network payments.
The goal was to reduce patients' financial burden while
still paying providers at an adequate rate and maintaining
network adequacy.
To monitor the success of the benchmark plan, the Maryland
Health Care Commission was looking at out-of-pocket costs,
reimbursement rates before and after the implementation of the
law to see what the effect would be.
Ms. McAndrew, would you agree that the rates agreed to
between providers and insurers for medical services are in fact
a consumer issue and would setting a benchmark rate for out-of-
pocket costs go a good way towards protecting patients from
unexpected and exorbitant medical bills?
Ms. McAndrew. Thank you very much for question. We
absolutely do believe the rate between insurers and providers
is a consumer issue. Consumers, of course, ultimately do bear
the costs of healthcare and they bear them both out of pocket,
which has been the crux of our discussion today, but they also
bear them in their premiums.
And so if the legislation to affect surprise bills
ultimately inflates healthcare costs in the system, that will
affect consumers' premiums.
And so we do prefer a benchmark methodology. We believe
that is what will ultimately lower costs the most for
consumers. Other methods can be better than the status quo but
they can have less of an effect on lowering costs for
consumers, and costs are rising and rising. We see that voters
care about that more than anything else about healthcare, and
so it's important to us as patient advocates.
Mr. Sarbanes. Well, that's certainly my perspective. As a
matter of fact, the Maryland Health Care Commission from its
study found that in three years after implementation of the
benchmark system the total amount of out-of-network payments
decreased from 20 percent to 11 percent, and those patients
that had still had out-of-network charges saw their total
spending decrease as well. So I think it shows the benefits of
that.
Some groups have expressed concerns that setting a
benchmark rate could lead to providers leaving networks and the
networks shrinking over time. Have you seen evidence of like a
dramatic negative effect that way or not really?
Ms. McAndrew. We have absolutely not seen evidence that
benchmark rates will cause problems in networks. Our colleagues
in California who have worked very deeply on the implementation
of this law have not reported any such effects.
I would caution making any conclusions about the California
law since it's so early. But I think you have also presented
very strong evidence from the State of Maryland, and I would
also, you know, acknowledge that the reason this law is being
implemented is because right now people can make very large
amounts of money by going out of network through balance
billing. And so once that's no longer possible that is a very
big deterrent for remaining out of network. And so I think that
will have a very positive effect on networks.
Mr. Sarbanes. Well, I appreciate that and what you just
said certainly aligns well with the experience in Maryland
because, again, from the study that was done and the monitoring
the Maryland Health Care Commission found that although out-of-
network payments decreased, as you would expect, in the three
years after a benchmark was set, overall provider participation
in those networks did now show a decline. So I think there's a
lot of promise there in terms of the response we need to see to
this surprise billing issue.
With that, I yield back my time. I thank the panel.
Ms. Eshoo. The gentleman yields back, and I think that is
it. I don't see any other members on either side.
On behalf of all the members of the subcommittee, I want to
thank the witnesses. You have been patient. You have been here
since before 10:00. It is now--well, you have been here for
four hours, and we are very grateful to you.
You have had to field some tough questions but that makes
for a good hearing. None of it is personal and we have to--I
always first try to remind myself that there has to be a great
deal of friction wave action to--for the sand in the shell to
produce a pearl.
Now, the pearl we are looking for is good solid legislation
for consumers in the country. So that friction in terms of
tough questions and testing each case the best we know how, the
best we can, is to benefit the American people. So we all thank
you.
I want to remind members, whoever is left in the room, that
pursuant to committee rules they have 10 business days to
submit additional questions for the record to be answered by
the witnesses who have appeared.
I ask each witness to respond promptly--we need that in
terms of our considerations here--to any such questions that
you may receive. So I don't think any of you are going to
purposely drag your feet, but I think it's worth underscoring
that we would like a timely response.
Now, I would like to ask unanimous consent to enter into
the record the following: a statement from the National
Observation Stays Coalition, statement from the American
Medical Association, a statement from the College of American
Pathologists, a statement from the Association of American
Medical Colleges, a statement from the American College of
Radiology, a statement from Blue Cross Blue Shield Association,
from the Partnership for Employer-Sponsored Coverage, from the
American Federation of State, County, and Municipal Employees,
a statement from AARP, and from Business Group on Health, SEIU,
United Healthcare Workers West, and Blue Shield of California.
So I ask unanimous consent to enter this into the record. I
hear no objections.
Ms. Eshoo. And at this time, with your--with all of our
thanks, the subcommittee is adjourned.
[Whereupon, at 2:00 p.m., the committee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]