Even as the U.S. struggles with the coronavirus pandemic, fighting “surprise medical bills” remains a public policy battle in Congress. The issue was percolating prior to the public health emergency and now is pushed to the front. Debates about proper solutions are not going away.
The “surprise” refers to charges that patients receive for unscheduled or emergency services from out-of-network providers that their insurance companies choose not to pay or negotiate away ahead of time. Often, patients are unaware that these services will be handled differently until the bill comes to them later.
There was talk on Capitol Hill recently that some lawmakers want to try — yet again — to sneak a price-fixing “solution” to such bills into a fourth stimulus package for the virus-damaged economy. That would be devastating to Medicare and Medicaid programs.
Just about everyone wants to eliminate surprise medical bills — most of all, patients. Regulations in the Affordable Care Act left payment of such bills entirely at the discretion of health insurance companies. Today, there are two competing models to address this issue: the New York model and the California model. Many in Congress appear to be leaning towards the failed California model, which, if enacted federally, would have a devastating impact on Medicare and Medicaid and create a new set of health care problems.
The New York model is market-based. It resolves doctor and insurer payment disputes through a negotiation process known as independent dispute resolution (IDR), or arbitration. In rare cases, there is a fallback mechanism to an appeals body that uses a national database of charges for similar services in a given geographic area. Health insurers, doctors and hospitals mostly agree this model works. While payments to doctors have declined moderately, the system has remained stable. And premiums in New York are growing slower than in other states.
In contrast, the California model implements a price-fixing scheme that essentially declares all related bills from a doctor or hospital null and void. The health insurance company gets to pay a small amount of its choosing — what insurers call their in-network rate. This rate is very similar to the sharply discounted Medicare and Medicaid rates.
Unsurprisingly, patients in California have seen a steady rise in insurance premiums, payments from private health plans have plummeted, and California suffers from an acute shortage of doctors. The state government is even using taxpayer money to recruit and keep doctors in the state because private payments are far too low. It’s easy to see why only the insurance companies are happy with this model; it hands them yet another profit windfall.
If applied nationally, allowing private health insurers to pay the sharply reduced rates given to Medicare and Medicaid patients would have dramatic adverse effects on these programs. According to the Centers for Medicare & Medicaid Services (CMS), there are 63.9 million patients nationwide receiving Medicaid alone. These patients would face a large spike in medical costs.
The robust private health care market always has helped subsidize the rate-controlled Medicare and Medicaid marketplaces. Without this dynamic, there will be much lower quality of care for Medicare and Medicaid patients. Hospitals won’t have the funding to continue the same care to Medicare and Medicaid recipients. Medical specialists won’t be around to cover gaps in emergency room coverage for those most in need. Many patients ultimately will lose their doctors.
Furthermore, Medicare and Medicaid will have to make up the large difference in revenues to hospitals, and government funds to cover these costs might not be available. After all, Congress just spent $2.3 trillion in one week.
This is particularly troubling for underserved communities — for example, the United States’s Hispanic community, 18.3 percent of the country’s population according to the Census Bureau’s latest figures.
Instead, Congress should adopt the model for surprise medical bills that New York adopted, one that will not harm Medicare and Medicaid patients. A bipartisan group of 110 members of the House of Representatives has endorsed this model. Any federal law addressing surprise medical bills should focus on fixing the problem for all patients, and not be enacted at the expense of the elderly and those most vulnerable in our communities.
Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity and prosperity for all Americans. Follow him on Twitter @MarioHLopez.