Measures aim to end ‘surprise billing’ for Michigan medical patients

A second bill, sponsored by State Rep. Roger Hauck, R-Mount Pleasant, would require providers to give notice to patients of any out-of-network costs — the anesthesiologist during a knee replacement surgery, for example — at least 14 days before a planned procedure. If the patient does not sign off on the extra costs, the out-of-network provider would have the option of performing the procedure for the higher of two reimbursements —  again, either 150 percent of the Medicare reimbursement rate or the average in-network reimbursement rate the insurer pays.

The bipartisan effort takes “the patients out of the middle,” Hauck said.

The Michigan House Health Policy Committee sent the package to the House Ways and Means Committee Thursday.

An 800-pound gorilla

In Grand Rapids, Mike Grinzinger spent his career in finance.

“Negotiating a bill is not new to me. I realize that sometimes, even if someone is legally correct, you can make a counterargument from a moral standpoint and win,” he said.

In fact, he said, the insurance company ultimately paid some of the contested bills. Another one he paid. On a third, he’s still considering how to proceed.

“But the average person is going to pay the bill, and that’s not right,” he said, adding that some families may not be able to cover the bills at all.

As a conservative, he said, he’s opposed to “overregulation.” But surprise billing is too common; it’s like “fighting an 800-pound gorilla…. I think some regulation is in order.”

Market failure?

Patients in an estimated 18 percent of emergency visits and 16 percent of in-network hospital stays nationally in 2017 received at least one bill with an out-of-network charge, according to a report by the Peterson-Kaiser Health System Tracker, a nonprofit collaborative that tracks U.S. health care trends.

“It’s like going to the orchestra, and then the wind section charges you another ticket after the performance,” said Benjamin Chartock, a second-year doctoral student studying health care and economics at the Wharton School at the University of Pennsylvania.

Chartock, a former economist at the Federal Trade Commission, set out with a fellow economist to study the issue several years ago.

Analyzing medical claims of more than 47 million Americans, they found that roughly 1 in 5 hospital admissions from the emergency room and about 1 in 7 emergency room visits in which the patient was treated and released resulted in a surprise medical bill.

And about 10 percent of patients received surprise medical bills after elective, in-patient admissions.

The issue — what the Brookings Institution calls a “market failure” — has been getting more traction in recent years through media reports and scrutiny by federal and state lawmakers.

“There’s pretty much unanimous agreement that surprise medical bills are bad, and they put patients in the middle, but there’s no consensus about how to go about paying the providers,” Chartock said. “The insurers want to pay very little and the providers want to get paid very much.”

It’s difficult to know how often Michiganders, specifically, receive surprise bills for out-of-network services.

The Michigan Department of Insurance and Financial Services investigates consumer complaints against insurers, but the department doesn’t track surprise billing rates in the state, said Karin Gyger, the department’s manager of insurance policy and research.

Further, consumer advocates have said that many patients either pay the bills, ignore the bills, or persuade the insurers and doctors to negotiate.

Still, among the complaints DIFS received this year:

• A hernia surgery patient whose insurance paid only $328.96 of the bill charged by an out-of-network anesthesiology team, leaving the patient with a $3,125.38 bill.

Wrote the patient: “It would have been quite difficult to ask the anesthesiologist … if they were in my network while I was under anesthesia.”

• A patient who had rotator cuff surgery received anesthesia services that cost $1,655.04, of which the insurer paid just $241.24. Wrote the patient: “I have absolutely no control over/knowledge of anesthesia provider.”
• A traffic accident victim was rushed to the hospital by an ambulance that happened nearby. Wrote the patient: “I was in such a state of shock; I don’t believe I would have been able to compose a phone call to my medical insurance provider to select a company within my network.”

In each of the cases, DIFS ruled it was the patient’s responsibility to pay the bill.

Because patients are bound by their insurance contracts to pay for out-of-network costs, there’s little the state can do, the insurance department’s Gyger told lawmakers in October.

The system leaves an unknown number of MIchiganders surprised by “bills that they cannot afford, often despite their best efforts to follow the terms of their insurance plan,” she said.

California and price caps

Some consumer advocates have looked to California for a solution. There, a surprise billing law prohibits a provider from trying to squeeze patients for the remaining payment. It also sets payments for out-of-network doctors based on what other doctors were being paid for that procedure

Similar, bipartisan efforts were being considered by Congress earlier this year.

Michigan patients can’t wait for Washington, said Jeff Romback, deputy director of the Michigan Association of Health Plans.

Even within MAHP offices staffed by “policy wonks” who presumably know how to navigate the fine print of policy contracts, three of seven staff members have been balance billed, Romback noted.

The change in state law could be “a common-sense fix” to an all-too-common problem, he said.