Chances are you or someone you know has received a surprise medical bill for thousands of dollars after an emergency room visit. The stats are staggering: One in five emergency room visits results in a surprise medical bill.
The most common instance of surprise medical billing is when a patient goes to an in-network hospital but receives treatment from a non-hospital-based physician, such as an ER doctor, pathologist or radiologist, who is not in network. The problem is not that the physician receives no reimbursement, but that he or she doesn’t receive the full amount of the bill. Since they are not under contract, they can balance bill the patient. Patients have no control over whether these physicians are in network and are at the mercy of whatever physician happens to be on call at the hospital during their visit.
The patient who thought that he or she was doing everything right by staying in-network is suddenly hit with a significant bill — often one that’s not affordable. Unaffordable medical bills are the No. 1 reason for bankruptcy in America.
Doctors who purposely stay out of network want to blame insurance companies for surprise medical bills. The vast majority of health plans do cover patients’ out-of-network costs, they just do not pay as much toward the claims as they would if a physician were in network — usually about 30% less with a higher out-of-pocket maximum.
Sen. Lamar Alexander detailed a real-life Tennessee story in which a child had a bicycle accident, went to an in-network hospital and the family paid its $150 in-network emergency room visit copay. However, weeks later they received an $1,800 surprise medical bill because one of the doctors at the in-network hospital was actually out of the network.
Thankfully, Alexander is sponsoring legislation to end the abusive practice of surprise medical billing. His bill would implement a median benchmark pricing model. Doctors who refuse to go in network would receive the median market price. It’s important to note that this is not a government-set rate but rather a rate that is set by the free market and that moves as market prices change.
Others advocate for a government-set price or a lengthy attorney-driven arbitration process. Arbitration can take a long time and does not address the underlying practice of surprise medical billing. Arbitration does not foster a positive doctor-patient relationship and will add needless cost and delays that will only frustrate patients.
“Under the bill, providers who don’t join insurance networks would be paid the median, or middle, amount set in each local market,” Alexander said. “The Congressional Budget Office estimates this approach would save taxpayers $25 billion over the next 10 years. This legislation does not allow the federal government to set rates. Nor can insurance companies unilaterally set rates. The market will set a price that reflects the cost of providing care in that area.”
The reality is that some physicians have chosen to stay outside of the networks to maximize their revenues. Yale researchers Zach Cooper and Fiona Scott Morton found out-of-network physicians charge an average of 798% of what they receive for a Medicare patient, while in-network physicians are paid at 297% of Medicare.
Alexander’s bill would introduce a patient-centered free market approach to the issue of surprise billing where out-of-network doctors would be paid fairly based on the median market rates. This approach protects patients and utilizes a market-based approach to determine the median price.
Gregg Lawrence is a Williamson County Commissioner for the Fourth District and is president of Healthmart Corporate Benefits.