Michigan Association of Health Plans

Legislation targets surprise medical billing

Legislation coming up for consideration in Lansing aims to alleviate so-called “surprise billing” in health care.

The bipartisan two-bill package represents an effort in Michigan to rein in a practice that has received heightened attention nationally over the last couple of years. The practice often leaves patients stuck with sometimes large medical bills when they unknowingly receive care from a provider who is not in their health insurer’s care network.

“We fundamentally believe that none of our members should be receiving a bill from a provider that they didn’t choose,” said Dominick Pallone, executive director of the Michigan Association of Health Plans (MAHP) that represents 13 health plans in the state that provide health coverage to more than 3.1 million people.

“These are situations where the patient doesn’t choose the provider,” Pallone said. “It’s a problem within our market and it’s something that government needs to get involved in to fix.”

One bill would require a minimum 24-hour notice to patients undergoing non-emergency, elective procedures that a provider involved in their case is not part of their health insurer’s care network. The patient would have to consent in writing to an out-of-network care provider.

The other bill addresses emergency situations and would prohibit an out-of-network doctor or care provider from collecting the difference between what they bill a patient and what the insurance company pays, which can sometimes be a large sum. Under the bill, they could only collect 125 percent of the Medicare rate for their service.

MAHP has been pushing to get the two bills considered this fall in the state Legislature, even as Congress considers bipartisan federal legislation on surprise billing, otherwise known within the health care industry as “balance billing.”

In arguing for the state legislation, Pallone cites a June report by Peterson-Keyser Health System Tracker, a partnership between the Peterson Center on Healthcare and the Kaiser Family Foundation that monitors the U.S. health care system. The report shows 9 percent of Michigan residents who get their health coverage from a large employer and visited an ER in 2017 incurred at least one out-of-network charge.

Among inpatient hospital stays by Michigan residents the same year, 13 percent had an out-of-network bill.

Nationwide, the averages were 18 percent of all ER visits and 16 percent for inpatient stays that involved an out-of-network care provider, according to the Peterson-Keyser Health System Tracker. The organization cites survey data showing nearly four in 10 respondents got an unexpected medical bill in the previous 12 months, and 10 percent said it was from an out-of-network provider.

Gaining momentum

The two bills in the state Legislature are pending in the House Health Policy Committee, which could hold hearings on them in the coming weeks, Pallone said.

“I think we have all the right momentum to really move legislation on this this fall,” he said.

MAHP spent the summer discussing the legislation with lawmakers and has been working on the bills with other health care interests in Lansing, namely the Michigan Health & Hospital Association (MHA) and Michigan State Medical Society.

Neither the MHA nor Medical Society has decided to support the bills, although both favor enacting some form of legislative remedy to curtail surprise billing, especially for egregious situations. Representatives from each organization say that the difference between what an out-of-network care provider charges and what a patient’s health insurers pays should come down to negotiations between those two without the involvement of the patient.

“The payment and the negotiation of that should have nothing to do with the patient,” said Laura Appel, senior vice president and chief innovation officer at the Michigan Health & Hospital Association.

The basic contention each has with the proposed legislation comes from limiting out-of-network care providers from collecting only 125 percent of what Medicare pays for care. That’s below the average rate of 156 percent of Medicare paid in Michigan by private health insurance plans, as identified in a recent Rand Corp. report.

The Medical Society considers that aspect of the proposed legislation as “price fixing, essentially” and “technically the government stepping in and dictating what the price is going to be,” said Christin Nohner, the group’s director of state and federal government relations. A payment cap tied to Medicare could create market disruptions and limit the ability of physicians to negotiate rates with insurers, Nohner said.

“It puts them at a disadvantage with insurers,” she said. “If insurers are able to pay a lower rate for out-of-network services, one could feasibly imagine the networks are going to be narrowing as providers are dropped from those networks.”

That could create issues with the adequacy of insurers’ care networks in a given market and access issues for patients, Nohner said.

The Medical Society worries about lawmakers enacting a solution that “could create a whole set of other issues,” she said.

“Let’s be measured in our response to this. There are problems, but what’s the appropriate solution?” Nohner said. “We support the spirit of the notification and ensuring that patients aren’t balance billed, and we really want to see policy that takes people out of the middle.

“Let the providers and insurance companies sort of work these things out and take the patient out of it.”

Creating dialogue

Some situations involving surprise billing are unintentional, according to Nohner. Occasionally an in-network care provider may get called away from an elective procedure by an emergency and get replaced by an out-of-network doctor, she said.

Pallone at the MAHP agrees that insurers and out-of-network care providers should settle a bill without a patient getting caught in the middle. The MAHP also “is certainly open to conversations” on having a different reimbursement rate in the legislation, Pallone said.

“We ultimately want providers and payers to engage in that negotiation and figure out a rate,” he said. “And when it doesn’t occur, even when they’re out of network, we still want to have that payment arrangement discussion occur. We just need some sort of a backstop, some sort of a default … when you can’t reach a deal.”

The MHA has been involved in what Appel calls “very positive conversations” with the MAHP and lawmakers sponsoring the bills to satisfy its concerns. The MHA “100 percent supports” eliminating surprise billing to patients, Appel said.

However, receiving an unexpected medical bill doesn’t mean it’s the result of treatment by an out-of-network care provider.

Oftentimes, patients are surprised by a medical bill resulting from a high deductible fixed into their health coverage, Appel said. That’s been the case more frequently as employers have transitioned to high-deductible health plans that cost less than low-deductible coverage.

“Sometimes the surprise is their health plan is disappointing and that puts them in a difficult position,” Appel said.

Worsening situation?

Any legislation enacted in Michigan would not affect self-funded employer health plans, which are regulated at the federal level by the Employee Retirement Income Security Act. Two bills are pending in Congress, one in the Senate and the other in the House, to address surprise billing. Each has been passed by committee.

Lacking legislative action at the state or federal level, the MAHP’s Pallone worries surprise billing will only get worse, particularly as private equity investors invest in health care and acquire specialty medical practices.

“We see this rush of private equity in (to health care) and they’re dropping a lot of these specialty providers in facility settings that serve our members and facility settings out of network. They’re doing it intentionally because they see a shortcoming in the market and a shortcoming in state regulation where they can take advantage and balance bill the member,” Pallone said. “They see an opportunity here.”

This article appeared in MiBiz. Read more here.