The politics of surprise billing legislation

Tomato Queen asked a good question in comments yesterday on my post about a proposed national all payer claims database:

Why is this being done now? Is it a shiny object to distract? I see it’s bi-partisan, and am deeply suspicious, esp as it sounds like two good ideas, one for the customers, the other for the kids in the back room, are appearing in the same bill. How the hell did that happen?

I think we need to look at the political incentives in broad strokes after we look at recent health policy history.

Post-2009 Medicaid and the individual market coverage expansions are highly polarized health policy pursuits on the Hill. The parties don’t agree on fundamental values therefore any movement in any direction is a slog.

However, Congress has shown that it is more than willing to work on a bipartisan and somewhat technocratic basis on non-Medicaid and non-individual market coverage health policy options on a repeated basis since March 23, 2010. The big bills that have gone through have been PDUFA 5 which changed how the Food and Drug Administration (FDA) considers evidence and approves drugs, MACRA which re-authorized CHIP and permanantly got rid of the Sustainable Growth Rate formula that was an ongoing and recurring farce. 21st Century Cures Act again changed and quicken the FDA approval process for new drugs.

Congress can act on health policy and they have acted on health policy. Yesterday, Dylan Scott at Vox looked at some of the major players involved in the bipartisan surprise billing talks and dueling bill drafts:

The Alexander-Murray proposal joins several others that have already been introduced: a recently released House bill from Reps. Frank Pallone (D-NJ) and Greg Walden (R-OR); another Senate bill by Sens. Bill Cassidy (R-LA) and Maggie Hassan (D-NH) released last week; yet another House proposal from Rep. Raul Ruiz (D-CA) and Phil Roe (R-TN) that came out on Thursday. Rep. Lloyd Doggett (D-TX) also introduced a bill back in January. Congress really is serious about doing something on surprise bills.

The notable thing about all of these bills is that the lead sponsors (or at least their senior policy staff) can easily and readily count to eleven with their shoes on when it comes to health policy. These bills are being introduced and championed by people with significant knowledge, interest and most importantly, control of several critical legislative chokepoints. If there is an agreement among these stakeholders, there is a clear pathway through the Hill.

So that brings us back to the basic question of WHY?

The surprise billing mainly falls on people who are not on government health programs. Medicaid recipients have no money for the surprise billers to chase, and Medicare has strong rules to protect and limit the size of surprise shocks. Surprise billing is a problem for people who get their insurance primarily through employers. Surprise billing is also an individual market problem but it is a much smaller problem.

If surprise billing is primarily a problem for people with insurance through their employers, it is primarily a problem for people who have moderate or higher income and are over the age of thirty. Another way of characterizing a population with moderate or higher income and over the age of thirty is “likely voters”.

All of the bills under discussion hold the patient harmless for any cost sharing above normal in-network rates. This makes the insurance as experienced by a patient far more valuable and far less confusing/anxiety inducing. Politicians of any party like to make likely voters happy if they can plausibly claim credit for the reason of happiness. Politicians also like to make their likely voters happy if there aren’t too many hard trade-offs and hard fought pay-fors.

This is the simple and somewhat crass explanation.

The slightly more complex version is that the health finance markets are kludgy at best. Eliminating or at least reducing a segment of the market which is currently an informational and contractual blackhole of doom helps the markets perform slightly better. There is no viable minimum winning coalition that wants to nationalize all US healthcare facilities so making the markets work slightly better is a common area of agreement among both parties (the question is usually what market and what is “better”? and whose rentier interests are gouged).

The All Payer Claim Database (APCD) segment falls into the same bucket. The healthcare markets are a massive informational black hole. An APCD with complete information could at least help us see the event horizon better and plan around it. If there is better negotiations due to better information that leads to lower price levels, it solves or at least contributes to solving a major federal policy problem without much risk or effort on the part of the current and future Congresses.






22 replies
  1. 1
    stinger says:

    I agree 100% with the simple crass explanation, and with the more complex one too, as far as I understand it. I am most heartened to see

    The healthcare markets are a massive informational black hole.

    coming from someone with your level of expertise. I’m glad someone who thoroughly “gets it” understands where most of us are at!

    I became Medicare eligible last birthday, but have stayed employed in part to remain with my employer’s health plans. I don’t know if they are great, middling, or poor, but I basically get two choices, and that’s that. Meanwhile, the week I turned 64 I began receiving a barrage of snail mail from ??? I don’t even know who they are — people offering insurance? people offering to help me choose insurance? for free? for a cost? national? local? It’s a nightmare just to contemplate, and I’m putting off the time when I’ll have to figure it all out and choose.

  2. 2
    TomatoQueen says:

    Oooo look what I did. And I even understand the response. Thank you very much.

  3. 3
    TomatoQueen says:

    @stinger: Erm. when did you become Medicare eligible exactly? You’re making me think you’ve missed the sign-up window, which is x number of days either side of your birthday. If you don’t sign up by the end of the window, then you will be paying a penalty on top of your premium for the rest of your life and no I am not kidding.

  4. 4
    The Moar You Know says:

    Surprise billing is a problem for people who get their insurance primarily through employers.

    It sure is. Scripps here in San Diego decided to form a subunit of emergency room doctors, and it wasn’t covered. Not by any insurer. I got hit with a multi-thousand dollar bill following a visit a few months ago. Thankfully, the CEO of the small company I work for did 20 years at Blue Cross, knows insurance cold, decided to take a day to help me (that’s the crucial part, people in general don’t have access to anyone who can advocate for them like this!) called the right legal person, read them the portion of their agreement with the insurer (UHC) that prevents the hospital from doing what they did, then called the appropriate legal person at UHC and reported the violation of their terms, and Scripps cut me a full refund check within two days.

    This never happens to regular folks. There is no way for someone who doesn’t work in that industry to even know where to start appealing something like this. I was incredibly fortunate. If we’re going to continue down this route of private health care insurance in the United States, consumers will need advocates if they don’t want to be robbed blind. And those advocates are not there. They never will be.

    Anecdata: the CEO of the company is a full-bore Trumper, and even she is adamant that America needs to institute single-payer and should have done so years ago – she thought Obamacare was an outrage not because of any of the bullshit reasons the GOP tossed around, but because it gave massive amounts of cash to already insanely profitable insurers. That is an argument with merit. I wonder how many on the GOP side are of a similar mindset.

  5. 5
    Sab says:

    @TomatoQueen: Employer insurance coverage is an exception to late payment penalty, so stinger is okay for now.

  6. 6
    stinger says:

    @TomatoQueen: I signed up for Part A, but otherwise have remained insured under my employer. I got PLENTY of warnings about that, too, along with the bucketful of commercial offerings! You’ll see, some day, if you are under 64!

    ETA: And thank you for your question to David that triggered this post!

  7. 7
    TomatoQueen says:

    @stinger: It looms…ever closer. Isn’t one’s old age spozed to be the time of maturity, wisdom, reflection, and contemplation? Cos all I’m getting at 63 and a bit is a sort of teeth-clenched rage panic in slow motion.

  8. 8

    @TomatoQueen: It was a damn good question.

  9. 9
    VOR says:

    @The Moar You Know: I had a procedure done at an in-network facility. Their imaging was outsourced to an in-network 3rd party. But the 3rd party messed up my insurance information so I got a large out of network bill. The hospital got it right, but the group running imaging inside the hospital fouled it up. I corrected the 3rd party’s information and the claim was paid at in-network rates by my insurer. Then about 18 months later (i.e. different fiscal year) the exact same thing happened again – same 3rd party, same primary facility, same insurance, billed to the same wrong policy information. Makes me wonder if that little mistake was intentional. I wonder how many people just think it was supposed to be that way and pay the out-of-network rate. Is it profitable to be intentionally incompetent with billing?

  10. 10

    “If surprise billing is primarily a problem for people with insurance through their employers, it is primarily a problem for people who have moderate or higher income and are over the age of thirty. Another way of characterizing a population with moderate or higher income and over the age of thirty is ‘likely voters.”

    Isn’t another way of characterizing this group “mostly white?”

  11. 11

    @stinger:

    I’m glad someone who thoroughly “gets it” understands where most of us are at!

    My general feeling is that the more people know about the healthcare market, the more disfunctional they see it as being. The only people who claim our healthcare pricing problems could be solved by everyone being better shoppers are ones who otherwise display shocking ignorance of the way the healthcare system works. It’s a somewhat overused description, but our healthcare pricing approaches fractal badness. As you look at each part in more detail, you see more and more problems until it appears that each part is fully as bad as the system as a whole.

  12. 12

    @stinger:

    You’ll see, some day, if you are under 64!

    Some of us who are under 64 already know. For some reason*, the big databases marketing companies use to determine who to target have wildly incorrect data about me. They think I’m over 65 and married rather than under 50 and single. As a result, my imaginary wife Evelyn and I are constantly barraged with ads for hearing aids, medicare plans, and all the other junk mail crap retired people get.

    *ETA: probably related to my name being reasonably common.

  13. 13
    Mark Regan says:

    You’re right about surprise billing not being much of a problem for people who get insurance through Medicaid, but the basic reason is not that people on Medicaid have no money (although that’s also generally true) but that Medicaid has regulations ruling out balance billing, so the amount Medicaid pays is the amount providers have to accept.

  14. 14
    Liam Yore says:

    Longtime lurker here – ER doc who has fought the balance billing fight in our state for over a decade (WA, in which a balance billing prohibition was just signed into law this very week). The momentum has been building to this for years and years. It used to be that this was a very small problem affecting very few patients. But after the ACA passed, it became a lot more visible. The advent of high deductible health plans meant that when a patient came to an ER they often were on the hook for much more than they expected (whether the ER was in network or not – not so much a balance bill but a surprise bill), and the proliferation of narrow networks meant that a lot more patients were impacted by unexpected out of network bills. Local media, and increasingly, national media, picked it up and ran stories about the poor consumers caught in the middle (fair) and the greedy doctors sending these awful bills (hmmm). Vox ran an excellent series. So in more and more states this became an annual issue for legislators. Academics like Zach Cooper at Yale and Loren Adler at Health Affairs were very influential in bringing this ti a more national audience, as were organizations like KFF and Brookings. The need for federal legislation is the ERISA loophole. States can only ban balance bills that originate from state-regulated, fully-insured plans. They cannot regulate ERISA plans, which compose some 60-ish percent of the commercial market. Therefore a federal solution is needed.

    As to the “why now?” I guess I would say that we’ve reached a tipping point. Enough states have enacted their limited bans on balance billing (some well designed, some not so much) but are frustrated that there remains a huge loophole and finally the momentum has broken through to get something done in Congress. It also helps that Lamar Alexander is not running for re-election and very much wants to accomplish this as a ‘legacy’ item.

  15. 15
    Raoul says:

    @VOR: That intentional incompetence happening more than a few times could start to look like fraud.

    On a broader note, I am thankful that my outpatient surgery some years ago didn’t have any surprise bills, but I was on the lookout (in part because of hanging out around here). I had spoken on the phone with a clinic rep trying to get some estimates of cost before the event, and it was pretty squirrely. I was at least through my high deductible by then (which means I’d spent a lot on Dr visits and P.T. before having my knee ‘scoped).

    But, indeed it shouldn’t be like this. Black holes of information allow outrageous market deformations. I do wonder what the current ‘surprise billing’ profiteers will figure out to try to protect their income streams if one of these bills becomes law?

    eta: If the ‘surprise’ things legit cost what they cost, then OK. But why the out of network skulduggery? To avoid negotiated rates, of course. But allowing this set of kludges to accrete seems in part to be a hospital or medical system problem. Anyway, I sure hope it gets fixed!

  16. 16

    @Raoul:

    But allowing this set of kludges to accrete seems in part to be a hospital or medical system problem.

    I think this gets at the real problem with our healthcare “system”: it is a massive accretion of kludges and work-arounds rather than an actual system. Occasionally you’ll get to some part that was actually designed and operated as a system (like the VA) and they seem to operate much more efficiently than the rest of the mess. Unfortunately, there are so many entrenched interests that it’s very hard to reform anything rather than just apply another layer of patches.

  17. 17
    Barbara says:

    @Liam Yore: You don’t necessarily have to regulate ERISA plans to get at balance billing. It’s the doctors that send the bills, and states have plenary authority to ban balance billing (as in, enact economic legislation) directed at health care providers.

    There are also a plethora of practice types and hospitals that have made non-participation in insurance plans a business strategy, which works because of the asymmetrical information that often attends these transactions. The state could require hospitals to inform all patients undergoing elective surgery whether any physician will be out of network, inform them of what the bill would be, and get a signed consent agreeing to the charge. This is what mechanics do. In other words, it’s not just market power at work here, it is the ease with which various players in the health care sector can impose costs on individuals. If you add a lot of friction and bother to the process, plus the chance the patient will find someone else, business models would change.

  18. 18
    lurker3000 says:

    Does this bill affect people on ACA with EPOs? It is laid out clearly that they pay nothing for out of network, but you can’t control who does anesthesia at an in-network hospital. In KS all the ACA BCBS plans are now EPO. The only other company massively raised prices (although they are a good company and with good insurance, out of my range), so I think lots of people took the BCBS option. Dumb question I know. Don’t understand most health insurance stuff and it gives me a headache to try.

  19. 19
    Emily68 says:

    @Liam Yore:
    Here’s a brief cheat sheet concerning the Washington bill that was signed into law by Jay Inslee just this week.
    https://www.insurance.wa.gov/sites/default/files/documents/Chart%20of%20%202019%20surprise%20billing%20law.pdf

  20. 20
    Liam Yore says:

    @Barbara: First of all, I agree that physicians or hospitals (Zuckerberg Gen in SF, looking at you) which have a general practice of non-contracting are … well let’s just say scum. That’s a pretty shitty business practice.

    Having said that, if WA tried to ban balance billing for care provided to patients covered by ERISA plans (ostensibly legal as they can regulate physician business practices) we were ready to litigate. If the federal government requires I see a patient regardless of ability to pay (EMTALA), and if the federal government regulates the insurance that patient has, then state authorities probably don’t have authority to regulate the interaction between care provider and insurer. It’s never been tested in federal court and who knows what the outcome would have been. The WA law carved out ERISA plans (though oddly allowed them to “opt in” to regulation. Weird. Which industry has ever volunteered to be regulated?) and it may all be moot soon as Cassidy and Murray and Lamar Alexander are pushing a balance billing law that will regulate ERISA plans. We shall see,

  21. 21
    Liam Yore says:

    @Emily68:

    Emily,

    I do appreciate the reference. Having said that, I was intimately involved in crafting the bill that passed, and probably could recite entire sections from memory. What I will say, as an ER doctor, is this: This bill is awesome for protecting patients (which we ER doctors are super in favor of); it seems to be a perfect compromise, in that we and the hospitals and the insurers all kinda hate it, but I think we hate it a little less than the insurers (yay! a win!); it appears to favor a status quo, under which neither doctors or insurers will have a major advantage. and in a regulated system, that is maybe the best thing we could ask for.

  22. 22
    Emily68 says:

    @Liam Yore: Thanks for your reply. I actually had never heard of this bill until just last week when I saw photos of the signing ceremony on Facebook. I’m glad to hear that even if the bill isn’t perfect, it makes things better.

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