Surprise Medical Billing Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

The House Ways and Means Committee Is Back At It With a New Surprise Billing Proposal

At the end of last year, I reported that one of the main reasons why a “surprise medical billing” proposal was NOT included in the end-of-year legislative package was because the House Ways and Means (W&Ms) Committee came out with an arbitration ONLY proposal in the 11^th hour, effectively freezing the consensus that was forming around the Senate HELP/House Energy and Commerce (E&C) proposal (which included (1) a benchmark rate up to $750 AND (2) arbitration – with some limitations – for health claims above $750). BUT, instead of resolving the differences between the two competing proposals, House and Senate Leaderships (both Democrat and Republican) decided to “punt” the issue to May 22^nd.
- Analysis: Why May 22^nd? As I also mentioned before the end of last year, the end-of-year legislative package extended a number of expiring provisions under Medicare and Medicaid. These expiring provisions are ALWAYS required to be offset, but – without the Senate HELP’s/E&C’s proposal (which saved $22 billion) – the respective Leaderships did NOT have enough money to extend these provisions long-term. As a result, the respective Leaderships decided to “temporarily” extend the expiring “health extenders” for about 6 months, and then take another run at “extending” these provisions long-term once May 22^nd comes around. The tacit agreement at that time was: By May 22^nd, we will make sure that we get consensus on a “surprise medical billing” proposal, and then we can use the savings that this proposal produces (whatever that may be) to partially “offset” the longer-term extension of these “health extenders.” House Democratic Leadership also indicated that it wanted the May 22^nd package to include provisions to reduce prescription drug prices (which itself, will produce some BIG savings to the government, which can also be used as “offsets”). The White House has signaled its interest in passing drug pricing legislation before the upcoming election too, soooo, the thinking was at the time – maybe-just-maybe – the May 22^nd package could include drug pricing provisions, along with a surprise billing proposal. Fast forward to today: The W&Ms Committee is expected to release the details of a “new and improved” surprise billing proposal at the end of this week or early next week, with the intention of “marking up” the proposal next Wednesday or Thursday. BTW, I do NOT have a lot of details on this “new and improved” surprise billing proposal. BUT, we have heard reports that (1) the proposal is STILL going to be an arbitration ONLY proposal (i.e., no benchmark rate will be included) and (2) the proposal will be “budget neutral.” Why are these two points important? Well first, if the proposal is arbitration ONLY, the hospitals and medical providers will cheer, but that payers (i.e., insurance carriers and self-insured plans) will NOT be supportive. Why won’t the payers be supportive? As I have mentioned to you in the past, arguments have been made that an “arbitration process” is an inefficient way of resolving disputes over out-of-network charges. Inefficient how? Because there is additional money that must be spent when the provider and the payer go to arbitration (e.g., legal fees and/or consultant fees, travel, and even time spent). And this just increases a payer’s (and provider’s) administrative costs in an already bloated health care system. Arguments have also been made that through arbitration, providers still end up getting paid more than what would – and should – be considered “reasonable” compensation. Providers, however, favor arbitration because – unlike a Federally-developed benchmark rate – they feel that arbitration is NOT a one-size-fits-all, arbitrary metric for determining “reasonable” compensation when out-of-network services are provided. Also, the providers feel that their rate of pay will be cut if they are forced to use a benchmark rate as opposed to determining the payment amount based on an arbitration process. The second point noted above (that the W&Ms proposal will be “budget neutral”) is of significant importance because the Congressional Budget Office (CBO) has found that previous arbitration ONLY proposals actually COST the government money. That is NOT a good thing. Especially when the respective House and Senate Leaderships want to use a surprise billing proposal to pay for extending the expiring “health care extenders” long-term. BUT, this last point here begs this question: Even if the W&Ms proposal is “budget neutral,” will the respective Leaderships agree to this arbitration ONLY proposal? After all, even though the forthcoming W&Ms proposal does NOT COST the government money, the forthcoming proposal will NOT SAVE any money either. That complicates the respective Leaderships’ plans to use surprise billing as an “offset” for extending the “health extenders.” BUT, we have seen the respective Leaderships agree to proposals that spend A LOT of money with NO offsets (e.g., full repeal of the Cadillac Tax, HIT Tax, and Device Tax). Why would this time be any different? Last comment: I think one of the wild-cards here is conservative Republicans. What I mean is, conservative Republicans have recently been turning up the volume on the “surprise medical billing” issue, arguing that a Federally-developed benchmark rate is akin to “price setting.” And – they argue – if Republicans were to agree to “price setting” in the surprise billing context, this opens the door to Medicare-for-All. Note, this particular argument won’t have much of an impact in the House because the Democrats can pass a surprise billing proposal with a benchmark rate along party lines (because the Democrats are in the majority). BUT, this argument will have a SIGNIFICANT impact in the Senate because any surprise billing proposal will need 60 votes, and there are a number of conservative Republican Senators who agree with this argument. Stay tuned…

Affordable Care Act (ACA) Update

The ACA In the Courts

The future of the ACA is back in the news. Not only is the ACA being discussed on the campaign trail, at least in the context of whether Medicare-for-All is better than the ACA or whether a Democratic President should simply build on the ACA by pursuing a “public option” – BUT – the ACA is ALSO a hot topic due to some recent decisions (and forthcoming decisions) in the courts.
- Analysis: As I reported at the end of last year, the 5^th Circuit Court of Appeals agreed that the “individual mandate” penalty tax is unconstitutional now that the penalty tax is $0. BUT, the 5^th Circuit sent the case back to the District Court to determine whether ALL of the ACA is unconstitutional. As I explained – at least from my perspective – this essentially starts over the entire process of determining (1) whether the ACA is the law of the land or (2) whether it goes away entirely. And, this “re-do” is going to take a while (probably up to 2 years). Not surprisingly, the full-panel of judges that sit on the 5^th Circuit were asked to “re-hear” the case (in hopes that the full-panel would come to a different decision than the 5^th Circuit’s 3-judge panel). BUT, by a vote of 8 judges to 6 judges, the 5^th Circuit’s full-panel decided AGAINST a re-hearing of the case. This means that the original 3-judge panel decision stands, and it also means that the District Court will re-decide whether ALL of the ACA is unconstitutional (now that the 3-judge panel found that the “individual mandate” penalty tax is itself unconstitutional). Again, this is going to take a while. HOWEVER, the Democratic Attorneys General (AGs) who were defending the ACA in this case petitioned the Supreme Court to intervene, asking the Supreme Court to decide the fate of the ACA sooner rather than later (because – as the Democratic AGs argue – providing certainty as to (1) whether the ACA is the law of the land or (2) whether it should go away entirely is of extreme significance to the American public). Importantly – this past Wednesday (Feb. 5^th) – the Supreme Court said that it will hold an internal meeting on Feb. 21^st to decide (1) whether the Court will take-up the case between now and this coming June or (2) whether the Court will decide to wait to hear the case until AFTER the District Court and 5^th Circuit render their decisions on this “re-do.” Why is any of this important? Well for one, if the Supreme Court does indeed decide to intervene and hear this case, then the Supreme Court will decide the fate of the ACA only months before the Presidential election. A decision one-way-or-another would itself be SIGNIFICANT because it would re-shape the ENTIRE Presidential campaigns. HOWEVER, if the Supreme Court decides to hold off on hearing the case until the case once again makes its way through the judicial process, it will mean that the ACA remains the law of the land for the foreseeable future, period-end-of-story. If I were a betting man (which you know that I am), I do NOT believe that the Supreme Court will take-up this case between now and June. This particular case – and the fate of the ACA – is SOOOOOO politically charged that I do NOT believe the Supreme Court wants to get in the middle of this ongoing political feud if they do not have to (in other words, the Supreme Court can wait until they have no choice but to take-up this case AFTER the District Court and 5^th Circuit rule on the “re-do”). BUT, stranger things have happened, and I have certainly been wrong before. We will obviously find out on Feb. 21^st. Stay tuned…

Campaign 2020 Update

Speaker Pelosi Says: Health Care, Health Care, Health Care

Now that impeachment is over, it is clear that – at least at this particular moment in time – the impeachment proceedings did NOT move the needle for the Democrats in the upcoming election. Maybe that changes between now and November. Maybe not. Recognizing that impeachment did NOT tip-the-scales in favor of the Democrats, Speaker Pelosi is out with a new message for her Democratic colleagues: Let’s make health care “THE” issue in the upcoming election. After all, health care allowed us to regain the majority in the House in the 2018 election. Soooo, let’s hit health care – and the issue of “pre-existing conditions” – in the 2020 election.
- Analysis: As you may know by now, in President Trump’s State of the Union address, the President said that his Administration will “always protect patients with pre-existing conditions.” Democrats – and many others – question this statement. Some Democrats and media outlets have gone so far to say that it is a flat-out lie. I will keep my powder dry on this point, but I will say this: Democrats were none-to-happy to hear this statement from the President. And – at least to me – this statement actually emboldened Democrats to stand-up on the issue of “pre-existing conditions,” almost as if it were a “call to arms.” I believe this is why – in the press conference in advance of the State of the Union address – Speaker Pelosi emphasized that Democrats are going to hit health care hard in the upcoming election (it’s because Speaker Pelosi already read the speech before the State of the Union…and before ripping it up). Even if I am wrong on my impression that the State of the Union address was a “call to arms” for the Democrats, it makes sense for Speaker Pelosi to make health care a top election issue for the following reason: The top issue on the minds of Iowa caucus-goers this past Monday was health care. And, like almost every election, voters have identified health care as their #1 or #2 issue in the upcoming election. Soooo, polling is also driving this increased focus – and these public proclamations – that health care is going to be “THE” issue for Democrats. I raise all of these points to say this: First, this under-scores the point I made above that despite my desire to focus on policy discussions, we are going to be hearing and talking a lot about politics. That’s because if health care is “THE” issue for Democrats – coupled with what is likely to be President Trump’s continued comments about protecting pre-existing conditions – I believe we are going to have a “battle royale” on our hands. The second reason I raise these points is to say this: Unlike some of the Presidential Primary Candidates, Speaker Pelosi and a vast majority of the House Democratic caucus are NOT huge supporters of Medicare-for-All. Rather, Speaker Pelosi and a vast majority of the House Democratic caucus want to preserve – and build on – the ACA. Soooo, it will be interesting to see if the Democratic Presidential Nominee is a full-blown supporter of Medicare-for-All, and if so, how the Nominee’s campaign platform will jive with the campaign strategy that Speaker Pelosi is drawing up on protecting people with pre-existing conditions and building on the ACA. Make no mistake, Medicare-for-All also protects people with pre-existing conditions. BUT, I believe you will hear arguments from Republicans, contending that a government-run health care program will restrict people’s access to care, and if you restrict people’s access to care, aren’t you denying them coverage of their pre-existing condition? I am NOT asking whether you agree or disagree with this argument, and I too am NOT opining one-way-or-another. BUT, I’m just sayin.’ An equally interesting argument on pre-existing conditions that I do tend to agree with is this: It is well-accepted that millions of individuals in the “un-subsidized” individual market have exited the insurance market. For example, the Kaiser Family Foundation has confirmed that 2.5 million individuals exited the individual market in 2018 alone. Look, there are various reasons why these individuals exited the “un-subsidized” individual market, but the main reason is the significant cost of coverage. Now, there are a number of reasons why costs in the “un-subsidized” individual market are so high, but both left-leaning and right-leaning economists – plus CBO – tell us that the ACA’s insurance reforms are one of the reasons for the increased costs. Sooooo, if an individual with a pre-existing condition was previously covered by an individual market plan, but this individual now finds themselves with NO health coverage because they exited the insurance market due to the cost, didn’t the ACA just deny this individual coverage of their pre-existing condition? Again, just sayin.’

Increased Transparency and the Presidential Campaign

In the State of the Union address, the President also touted the Administration’s recent efforts to increase transparency of medical prices and cost-sharing information. The President exclaimed that the new transparency rules “will save families massive amounts of money for substantially better care.” Some media outlets were quick to question this claim, citing claims made by critics of the Administration’s transparency rules who argue that prices will go UP, not down.
- Analysis: Before I provide my thoughts on this question of whether the recently released transparency rules will increase OR decrease costs, I do want to say this: You have heard many of the “talking heads” on TV suggest that the State of the Union address was really a “campaign speech.” From my perspective, there is some truth to this assessment, but at the same time, one of the purposes of the State of the Union is to explain to the American public what policies you – as the President – are putting in place, and you also explain to the American public why you think these new policies will benefit them. On this latter point – at least in my opinion – this is exactly what the President did on Tuesday night. The President told the American public that his Administration is trying to transform our current opaque health care system into one where Americans will be equipped with information, which will allow them to make health care and financial decisions that are best for them and their families. BUT, the President is definitely in “campaign mode.” And as I have said before, I could very well see the proposed transparency regulations that apply to fully-insured and self-insured “group health plans” being finalized in say September, so President Trump can campaign on these changes to the law, which are indeed intended to “save” Americans money. BUT, will the proposed transparency regs that require fully-insured and self-insured “group health plans” to disclose medical prices and cost-sharing information actually save money?

Increased Transparency and Health Care Costs

As stated, critics of the proposed transparency rules that apply to fully-insured and self-insured “group health plans” argue that these new requirements will INCREASE costs. BUT, I am having trouble agreeing with their arguments. Yes, in some cases, costs may go UP. BUT, I also believe there are plenty of other cases where costs will go DOWN. So “on net,” I believe these rules will – in the end – reduce costs, NOT increase them. How?
- Analysis: On the one hand, I see merit in the argument that health care costs could go up if there are a number of different providers in a geographic location. For example, currently, a particular provider in a geographic area may not know the prices other providers in the same geographic area have negotiated with a particular insurance carrier or self-insured plan. And in this case, a provider may be under-charging for a particular medical item or service, while other providers in the area may be over-charging for the same medical item or service. If the provider that is under-charging now knows what other providers in their area are charging – because carriers and plans now have to disclose their negotiated prices – then maybe this provider increases the amount they are charging to be closer to what their competitors are charging. This would definitely increase health care costs. HOWEVER, I question whether providers will engage in this type of behavior. Actually, I believe that providers would instead seek to compete with other providers operating in their area by lowering the amounts they charge for particular medical items and services. My reasoning is based on the following: Providers generate revenue in one of two ways: (1) by charging higher prices for certain medical items and services or (2) by increasing their volume. If, for example, an insurance carrier or a self-insured plan that is contracting with a provider knows that the provider is over-charging for medical items or services, the carrier and the plan are likely going to end their contract with this provider – and instead – contract with a provider that charges more reasonable rates while delivering the same quality of care. In this case, the provider that is over-charging would lose volume, and thus lose revenue. Economics 101 tells me that this over-charging provider would opt to lower its rates so as to maintain (or even increase) the number of lives that are coming through its doors and utilizing its services. To do otherwise would be against the provider’s best financial interests. The end result: A reduction in health care costs. The bottom-line is this: Who knows how the proposed transparency rule is going to affect behavior. As stated, there are reasonable arguments on both sides. BUT, what seals the deal for me on the argument that costs will go DOWN – NOT up – is the data. For example, in cases where an employer voluntarily provided their employees with increased disclosure tools, well-documented data tells us that costs went DOWN for certain medical items or services. I have yet to see data from the critics showing that increased transparency results in costs going UP. As you know, I have an open mind, so if you have the data, please share. Last comment: There is NO doubt in my mind that the President will campaign on increased transparency going forward. Why? Because Americans understand it, and they are LONGING for it. John and Jane Q Public are also LONGING for lower health care costs, and if there is a reasonable argument that increased transparency will lower costs – which there is, and the argument is backed by data – then I do NOT believe that the President can be criticized for touting the Administration’s transparency rules in the State of the Union or anywhere else.