Tagged Surprise Bills

Analysis: Who Profits From Steep Medical Bills? The People Tasked With Fixing Them.

Every politician condemns the phenomenon of “surprise” medical bills.

Last week, two committees in the House were marking up new surprise billing legislation. One of the few policy proposals President Donald Trump brought up in this year’s State of the Union address was his 2019 executive order targeting “balance bills.” In the Democratic debates, candidates have railed against such medical bills, and during commercial breaks, back-to-back ads from groups representing doctors and insurers proclaimed how much the health care sector also abhors this uniquely American form of patient extortion.

Patients, of course, hate surprise bills most of all. Typical scenarios: A patient having a heart attack is taken by ambulance to the nearest hospital and gets hit with a bill of over $100,000 because that hospital wasn’t in his insurance network. A patient selects an in-network provider for a minor procedure, like a colonoscopy, only to be billed thousands for the out-of-network anesthesiologist and pathologist who participated.

And yet, no one with authority in Washington has done much of anything about it.

Here’s why: Major sectors of the health industry have helped to invent this toxic phenomenon, and none of them want to solve it if it means their particular income stream takes a hit. And they have allies in the capital.

That explains why Trump’s executive order, issued last year, hasn’t resulted in real change. Why bipartisan congressional legislation supported by both the House Energy and Commerce Committee and the Senate Health Committee to shield Americans from surprise medical bills has gone nowhere. And why surprise billing provisions were left out of the end-of-year spending bill in December, which did include major tax relief for many parts of the health care industry.

Surprise bills are just the latest weapons in a decades-long war among the players in the health care industry over who gets to keep the fortunes generated each year from patient illness: $3.6 trillion in 2018.

Here’s how they came to be:

Forty years ago, when many insurers were nonprofit entities and being a doctor wasn’t seen as a particularly good entree into society’s top 1%, billed rates were far lower than they are today, and insurers mostly just paid them. Premiums were low or paid by an employer. Patients paid little or nothing in copayments or deductibles.

That’s when a more entrepreneurial streak kicked in. Think about the opportunities: If someone is paying you whatever you ask, why not ask for more?

Commercial insurers as well as Blue Cross Blue Shield plans, some of which had converted to for-profit status by 2000, began to push back on escalating fees from providers, demanding discounts.

Hospitals and doctors argued about who got to keep different streams of revenue they were paid. Doctors began to form their own companies and built their own outpatient surgery centers to capture payments for themselves.

So today your hospital and doctor and insurer — all claiming to coordinate care for your health — are often in a three-way competition for your money.

As the battle for revenue has heated up, each side has added weapons to capture more: Hospitals added facility fees and infusion charges. Insurers levied ever-rising copayments and deductibles. Most important, they limited the networks of providers to those that would accept the rates they were willing to pay.

Surprise bills are the latest tactic: When providers decided that an insurer’s contracted payment offerings were too meager, they stopped participating in the insurer’s network; either they walked away or the insurer left them out. In some cases, physicians decided not to participate in any networks at all. That way, they could charge whatever they wanted when they got involved in patient care and bill the patient directly. For their part, insurers didn’t really care if those practitioners demanding more money left.

And, for a time, all sides were basically fine with this arrangement.

But as the scope and the scale of surprise bills have grown in the past five years, more people have experienced these costly, unpleasant surprises. With accumulating bad publicity, they have become impossible to ignore. It was hard to defend a patient stuck with over $500,000 in surprise bills for 14 weeks of dialysis. Or the $10,000 bill from the out-of-network pediatrician who tends to newborns in intensive care. How about the counties where no ambulance companies participate in insurance, so every ambulance ride costs hundreds or even thousands of dollars?

These practices are an obvious outrage. But no one in the health care sector wants to unilaterally make the type of big concessions that would change them. Insurers want to pay a fixed rate. Doctors and hospitals prefer what they call “baseball-style arbitration,” where a reasonable charge is determined by mediation. Both camps have lined up sympathetic politicians for their point of view.

So, nothing has changed at the federal level, even though it’s hard to imagine another issue for which there is such widespread consensus. Two-thirds of Americans say they are worried about being able to afford an unexpected medical bill — more than any other household expense. Nearly 8 in 10 Americans say they want federal legislation to protect patients against surprise bills.

States are passing their own surprise billing laws, though they lack power since much of insurance is regulated at a national level.

Now members of Congress have yet another chance to tackle this obvious injustice. Will they listen to hospitals, doctors, insurers? Or, in this election year, will they finally heed their voter-patients?

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We (Heart) Health Policy Poets

Who says health policy can’t be fun? Experts lit up Twitter in recent days with valentine messages about topics ranging from drug prices and surprise medical bills to the Affordable Care Act and Kaiser Health News. Here are some of our favorites.

Robert Longyear:

Hey, don’t break my heart. I don’t have prior authorization!

Joanne Kenen:

Roses are red
Podcast at Kaiser.
We hope ‘What the Health?’
Makes you wiser.

→KHN’s ‘What The Health?’: Live from D.C. With Rep. Donna Shalala

Laura Marston:

One vial a week
Keeps me alive
Used to cost $20
Now it’s $275.

Joshua Israel:

The red roses are ready
The champagne is still chilling.
I love you more than private equity
Loves surprise medical billing.

Avery Stewart:

Our love is like a hospital bill: no one understands it.

Tara Straw:

Roses are red
And given with love
You don’t need a web-broker
Because we’ve got HealthCare.gov.

Sarah Gollust:

Will it be your place or mine?
We have to make choices, my Valentine.
Should we expand benefits or reduce costs?
Health policy, like love, requires tradeoffs.

Ariel Cohen:

Roses are red,
Violets are blue,
Stop panicking about coronavirus,
You’re more likely to get the flu.

Meril Pothen:

The White House is red
But some states are blue
So health policy by litigation
Is all that we do.

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KHN’s ‘What The Health?’: Live from D.C. With Rep. Donna Shalala


Can’t see the audio player? Click here to listen on SoundCloud.


President Donald Trump’s proposed budget for the fiscal year that begins in October proposes big cuts to popular programs, including Medicaid and the National Institutes of Health. Although those cuts are unlikely to be enacted by Congress, both Republicans and Democrats are likely to use the budget blueprint as a campaign issue.

Meanwhile, several House committees this week relaunched work on legislation to address “surprise” medical bills — unexpected charges from out-of-network providers. And Congress is still trying to come to a bipartisan agreement on how to address drug prices.

Rep. Donna Shalala (D-Fla.) was the special guest for this week’s podcast, taped before a live audience at the Kaiser Family Foundation headquarters in Washington, D.C. Also joining host Julie Rovner of Kaiser Health News were Paige Winfield Cunningham of The Washington Post, Rebecca Adams of CQ Roll Call and Joanne Kenen of Politico.

Among the takeaways from this week’s podcast:

  • One surprise in the president’s budget is a proposal to move tobacco regulation out from under the Food and Drug Administration’s purview. That comes despite a law Congress passed several years ago that specifically named the FDA as the regulator for tobacco.
  • Last year, it seemed clear that Congress and the White House were determined to find a way to protect consumers from surprise medical bills. But heavy lobbying on the issue and deep fissures in pinpointing the best remedy have slowed that effort. Shalala said she thinks Congress will produce a bill this year that will be balanced so that insurers and medical providers have to compromise.
  • Shalala said that in the 21 town meetings she has held in South Florida, no one has asked about efforts to end surprise bills. Most of the health questions focus on high drug prices and out-of-pocket costs. High out-of-pocket costs have been driven by the large number of people shifted into high-deductible insurance plans.
  • Shalala also said she doesn’t expect a plan to import drugs from Canada, endorsed by the Trump administration and some states, to go forward. Drugmakers sell Canada enough medicine to cover the population there, and not consumers in Florida, she added.

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