House E&C Subcommittee Passes Surprise Billing

No Surprises Act (H.R. 3630) legislation prohibits balance billing for out-of-network emergency, ancillary and post-stabilization services, and sets a reference rate for out-of-network payments to providers.

photo of Maria K ToddThe No Surprises Act (H.R. 3630) upends an ill-advised contracting strategy that many provider implemented several years back to remain “out-of-network”, according to our expert-in-chief, Dr Maria Todd of AskMariaTodd™.

The Bill amends Title XXVII of the Public Health Service Act that if fully-enacted will commence in 2021 or later with respect to surprise bills from emergency services in an independent freestanding emergency department (as defined in paragraph (3)(D))’’ after ‘‘emergency department of a hospital. 

It also addresses cost sharing requirements (copayments and deductibles or total out of pocket responsibility due to out-of-network status of the provider(s)) that they not be greater than the requirement that would apply if such services had been provided [in-network].

Todd explains that in many instances across the USA, state network adequacy requirements required that if a patient was transported to a non-network emergency department by ambulance and had no choice due to municipal or EMS/ambulance protocol, the health insurer, not the patient, was responsible for payment of the invoice at the face value of the bill. They could try to negotiate with the provider after the fact, but they could not “cut” the provider’s bill and patients should not have been expected to pay any difference in out- of-pocket amounts from an in-network provider financial responsibility. Then in a huge rogue move, CalPERs declared “NO OUT OF NETWORK coverage whatsoever with state employees. That resulted in a snowball effect as other insurers sold products with zero-out-of-network coverage. At the same time, the rates for in-network providers dropped to points that providers refused to be bullied…err…participate.  So why there’s such a big deal about this HR 3630 is a mystery, unless people weren’t aware of their managed care rights in their state(s). 

This bill has some interesting features from a practicability standpoint. Many providers have no clue where their contracts and the attached rate sheets are. This is true everywhere I go throughout the USA helping them analyze and negotiate their managed care agreements. So the part that appears on the bill on line 15 of page 4 through line 7 of page 5 is going to be an interesting exercise.

Then there’s the part that appears on line 8 of page 5 which states “any cost-sharing payments made by the participant, beneficiary, or enrollee with respect to such emergency services so furnished shall be counted toward any in network deductible or out-of-pocket maximums applied under the plan in the same manner as if such cost-sharing payments were with respect to emergency services furnished by a participating provider and a participating emergency facility; ” is a real victory for consumers. But it will also be a nightmare for health plans who had their actuarial calculations and underwriting modeled differently. “But I suspect they’ll just squeeze the balloon somewhere else in the benefit design and claim responsibilities,” she said. Perhaps that will drive premiums even higher and perhaps deductibles too. All bets are off.

Not later than one year from now, the Secretary will establish a rulemaking procedure under which sponsors and issuers of health plans are audited to ensure that such sponsors and issuers are in compliance with the requirement of applying a median contracted rate that satisfies the definition. 

Todd says with this much turmoil, she’ll probably put off any thoughts of retirement for at least another 4-6 years.

Post stabilization care

Services by a provider or facility to stabilize such individual with respect to an emergency medical condition, the term ‘emergency services’ shall include such items and services in addition to those described in clause (i) that such a provider or facility determines are needed to be furnished to such individual during the visit in which such individual is so stabilized after such stabilization, unless each of the following conditions are met: (I) Such a provider or facility determines such individual is able to
travel using non-medical transportation or non-emergency medical transportation. 

Todd explains that “In the past, the post-stabilization problem was one that the ED staff would be ready to either admit to the hospital or transfer to another hospital that was in-network. The health plan representatives would not answer and the patient tied up an ED bay for hours. If they admitted to the hospital the payer would refuse to pay for the admission and post-stabilization treatment, but wouldn’t move the patient to a participating hospital.” Todd says that back in the 1990s, New York enacted a state law to give plans one hour, nights, days, weekends and holidays to say yes or no. If they didn’t respond timely, they were liable for the bill.  In her managed care contract analysis and negotiation Master Classes and in her client advice, she paraphrased the essence of the New York law and started adding that in to contracts she negotiated for her private consulting clients and they were treated more fairly. She says it is nice to see this finally acknowledged and included in a bill such as this – if only some 25+ years later.

Independent Freestanding Emergency Departments

Freestanding emergency departments have been popping up all over the map. There are several in Denver where Todd used to reside and several in Las Vegas. Investors have called on Todd to vet business plans and pitches for cash to build and establish them for years. The most significant problem was that they couldn’t get managed care plans to contract with them. Under H.R. 3620, they’ll at least be eligible to receive the median contracted rate in the market basket.

The bill reads as follows:

“…and the amount to be paid by the plan or issuer) under such plans in 2019 for the same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished, consistent with the methodology established by the Secretary under section 2(e) of the No Surprises Act, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) over 2019 and 2020;”

“Hey, when you get nothing, or just crust, some berries in the slice of pie yo are served is better than crust only,” Todd quips.

Todd says that there’s also a backup plan in case the plan doesn’t have a way to calculate a median contracted rate for an item or service. If that’s the situation they will be required to rely upon a database that is free of conflicts of interest that has sufficient information reflecting allowed amounts paid to individual healthcare providers for relevant services provided in the applicable geographic region.

And there’s where Todd says that will be able to be such a database — as that’s the business model. No conflicts. No bias. Just data upon which to base real-world decisions. Of course there will be other databases but this one with bundled price surgery will be different than most – including but not limited to Healthcare Blue Book and When the time comes, we’ll have the data and we can de-identify and certify that number for a fee without revealing which provider is paid what amount if the provider does not want the data revealed with a price tied to a name.

Rate Setting by the State

It appears that there is talk of setting rates on page 16, line 1.  The bill refers to a “recognized amount” and is defined as a state set rate that is required to be paid by a health plan regulated by such state in the case of a participant, beneficiary, or enrollee covered under such a plan and receiving such an item or service from a nonparticipating provider or facility. If there isn’t such a state law or a set amount, the amount that is at least the median contracted rate will apply.  Maryland has had a similar rule of law for hospital rates, so we’ll probably be studying Maryland as a use case.

So what does Maria Todd think of the bill overall? “I am impressed with the effort and forethought and reality that went into the drafting of the bill.” As a consumer, I am pleased, and as a managed care contracting professional, I see a solution to many pesky problems that have plagued the industry for DECADES.” She says she also sees where will be ready for this healthcare reform as it was modeled to function in a world with these realities. 

benefits cost containment, consumer, In the news,
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