Hospitals, insurers battle over surprise medical bills

Surprise Billing: Choose Patients Over Profits

Hospitals, insurers battle over surprise medical bills

Every day Americans walk into hospitals, outpatient clinics, and surgical centers thinking they have good health insurance.

They’ve done their research, picked the right plan, paid their premiums, and checked whether the facility was in-network.

It’s only after they receive care that they discover a dark secret in the US health care system: Even if you’re receiving care at an in-network facility, you can get hit with a surprise medical bill from an out-of-network doctor.   

Recent stories about egregious surprise medical bills charged by providers have moved the issue to the forefront of the health care discussion in this country.

Those stories include a teacher in Texas who owed more than $100,000 after having a heart attack; a mom sitting outside the emergency department with her two year old, waiting to see if her child was going to have an adverse drug reaction because she was already facing out-of-network bills; and a radiologist who lost his arm after an accident and was hit with $56,000 bill for the air ambulance ride.

Both the House and the Senate are considering legislation that removes patients from the surprise billing process and requires insurers to pay providers a locally based market rate.

However, recent amendments to the House legislation have watered down the bill and created a loophole, through arbitration, for providers to continue to charge outrageous prices.

Congress should adopt the Senate Health, Education, Labor, and Pensions (HELP) Committee’s approach to set an out-of-network benchmark without arbitration. 

Why Does Surprise Billing Happen?

Here is what we know about surprise billing. One in 10 insured adults have said they’ve received a surprise bill in the past year.

The average surprise bill is more than $600, which is more than 40 percent of families would be able to pay without borrowing or selling something.

Many surprise bills are thousands of dollars, with some greater than 600 percent more than Medicare would have paid for the same service.

Groups of physicians—particularly emergency physicians and anesthesiologists—stay insurance networks, levy outrageously high bills on unsuspecting patients, and maximize their revenue. This is their business model.

These groups of physicians have organized to gain market power, often with the backing of a private equity firm.

They take advantage of the fact that, in most cases, patients do not get to choose them: Ancillary providers such as emergency doctors or anesthesiologists, which patients typically do not choose, are more ly to send a surprise bill.

There is a lot of finger pointing going on in Washington, and the surprise billing debate has been framed as a battle between providers and insurers. But the only people really hurt by surprise billing are patients, and sometimes their employers if they step in to pay the bill. The system is clearly stacked against patients.

Keep in mind that the average family of four in the US makes roughly $60,000 a year, and we are talking about physicians that are highly compensated; for example, emergency physicians were paid an average salary, after expenses, of $352,697 in 2017, while radiologists were paid an average of $488,338.

Who will Congress choose to protect?

The Solution

While states have made attempts to help patients, only Congress has the power to effectively and comprehensively fix surprise out-of-network bills. Congress should make sure patients are protected during ambulance transport, in the emergency department, and when receiving care at a facility in their network from an out-of-network provider.

Everyone, including us, seems to agree that patients should be taken the equation in terms of payment.

Patients should not owe more for a surprise bill in any covered scenario than they would have paid as part of their normal in-network coverage.

At the same time, we should not allow these private equity-backed groups to continue to engage in predatory pricing practices and simply pass the costs on to everyone else’s premiums.

Most importantly, Congress should establish a locally based benchmark to determine the amount an insurer would be required to pay a provider for a surprise bill.

Ideally, we’d set the benchmark at some multiple (for example 125 percent) of what Medicare pays to correct for market failures, but a benchmark tied to median rates negotiated between insurers and providers in a geographic area seems a reasonable compromise.

Under the benchmark approach, providers would receive a local, market-based payment for their services and be limited in their ability to charge patients egregious rates, while insurers would still be responsible for paying their fair share for a patient’s care.

While the Health Care Cost Institute recently found that median in-network rates varied across different states for the specialties most ly to be network, it also found that these rates are fairly similar for rural and urban areas within states, assuaging fears that a local benchmark would have a negative impact on rural access or providers.

Benchmarks are predictable and fair. Depending on how they are designed, benchmarks could create downward pressure broadly on commercial health care prices, encouraging more providers to come in-network.

Setting a benchmark at 125 percent of Medicare would avoid locking in excessive commercial rates indefinitely and slow the rate of future price growth, since the benchmark would be indexed to Medicare.

Congress Should Not Weaken The Benchmark By Adding Binding Arbitration Or Dispute Resolution

As seen in the amendments to the House legislation, arguments that protect market failures, and ultimately harm consumers, appear to be taking hold. Serving patients network should be a rare occurrence and a small part of a provider’s business, which is the case for most providers in the US.

The benchmark approach will end an anticompetitive business model of intentionally staying network to surprise bill patients. It’s confusing why a hospital or in many cases a physician wouldn’t support a benchmark—a guaranteed payment for providing services to someone network.

Congress should be wary of attempts to add arbitration to any bill. 

Arbitration is administratively burdensome and creates uncertainty. A third party would set rates without transparency or oversight, and physicians would ly start with excessively high charges as a baseline for negotiation.

In fact, arbitration could drive providers network over time, if arbitration awards even higher rates. Uncertainty is never good for any market, but in health care it means higher premiums for consumers.

Arbitration is the last-ditch effort to maintain these unethical but profitable business practices. Congress should choose patients over profits.

Congress needs to act on this issue. The legislation advanced by Chairman Lamar Alexander (R-TN) and the HELP Committee is the most effective solution for solving this clear market failure. The House should accept the Senate’s approach, free from arbitration, and allow Congress to send an effective, predictable solution to the president’s desk for approval.

Only Congress can broadly protect individuals in all commercial insurance plans (whether fully or self-insured). Surprise billing is unfair and unjust, and should be eliminated from the US health care system.


TeamHealth supports a ban on surprise medical bills

Hospitals, insurers battle over surprise medical bills

Surprise medical bills occur when patients receive out-of-network care and then receive a bill days or weeks later because their insurer failed to cover the cost of their care. It is a complicated issue that has put patients in the middle of a reimbursement battle between providers and the commercial insurance industry.

Recently, commercial insurance companies have taken great strides to reduce emergency clinician reimbursement by as much as 30%.

Insurers also now routinely shift costs to patients in the form of increasing out-of-pocket charges deductibles, co-insurance and copayments.

This has led to patients receiving large bills from providers that historically were silently reimbursed by commercial insurance, also known as the surprise medical bill.

Today, more than 85% of the care delivered by TeamHealth emergency medicine doctors across the country is in-network with insurance companies. In 2018, TeamHealth provided emergency medical services for 16 million hospital-based emergency department visits.

We deliver care to all patients who seek us out, regardless of their source of insurance, lack of insurance or ability to pay for care they receive. In fact, 75% of our patient encounters are reimbursed by Medicare or Medicaid or the patient is uninsured.

This means 75% of the patient care we deliver is not reimbursed at a level that covers the cost of delivering it.

other emergency medicine providers, we rely on insurance companies to off-set this underfunded and uncompensated care. This arrangement between providers and insurance companies creates a way for all patients to receive emergency care – including the uninsured and indigent, who otherwise would have nowhere else to turn.

Without the commercial insurance industry’s willingness to sustain the cost for underfunded and uncompensated care, the most vulnerable and most acutely sick are left without access to care. In addition, rural communities that often do not have a large number of commercially insured patients face the threat of their local hospitals being forced to close or ration services.

Tell your Congressman to pass H.R. 3502, the Surprise Medical Bills Act, to find a solution that does not undermine our nation’s healthcare delivery system while protecting patient access to vital emergency care services.

Find your Member of Congress

Find your Senators

TeamHealth has been actively engaged with federal lawmakers to develop a legislative solution that protects patients by eliminating surprise medical billing

  • TeamHealth has a longstanding policy against surprise medical billing. Even though insurers frequently ask us to pass the costs on to patients, we simply refuse to engage in that practice.
  • Instead, we opt to take legal action to require insurers to uphold their financial commitments to their own customers because we do not believe that patients should be in the middle of a reimbursement dispute between a provider and an insurance company.

TeamHealth opposes proposed legislation that that gives insurance companies more power and allows them to increase their record-setting profits

  • The outcome to this issue that most insurance companies prefer will significantly hurt your family’s ability to see a doctor and would put many doctors and hospitals (especially those in rural communities) business.
  • Unfortunately, insurance companies prefer a solution that comes with dire consequences: driving payments down to unsustainable levels, higher costs for patients and potentially forcing doctors and hospitals business. The insurance industry is lobbying the federal government aggressively to back a plan that threatens the critical social safety net that is at the core of emergency medicine across America.

There is a big difference in “surprise medical bills” and “out-of-network” bills

  • Surprise medical bills occur when patients receive out-of-network care and then receive a bill days later because their insurance company refused to cover the cost.
  • This most often happens in emergency care, when patients experiencing a medical emergency do not have the opportunity to check to see if the hospital or the physicians are in-network and visit a hospital that is committed to treating all patients regardless of their ability to pay.
  • Surprise medical bills have increased over the years because insurance companies are moving customers to high deductible plans that include high out-of-pocket expenses. This situation is increasing as a function of insurance companies seeking to shift costs to patients via higher out-of-pocket costs.

TeamHealth believes that if passed, the proposed legislation that the insurance companies prefer will produce a number of dire, frightening consequences for providers, hospitals and families across America

  • Rural hospitals may be forced to close or ration care.
  • The number of clinicians who staff America’s emergency departments will decline.
  • The quality of care patients received in our nation’s emergency departments will decline.
  • Costs that insurance companies tell us will go toward lower premiums will in fact be used to increase insurance company profits.
  • As the number of physicians staffing our nation’s emergency rooms declines, overall healthcare expenditures will increase

TeamHealth supports the principles behind H.R. 3502, the Surprise Medical Bills Act, to find a solution to this issue that protects patients to vital emergency care services and does not undermine our nation’s delivery system

  • H.R.3502 includes protections for patients and guarantees that insurance companies are accountable to the government and to their customers. This bill couples a fair interim payment with an impartial, third-party arbitration process known as Independent Dispute Resolution (IDR).
  • IDR is already in place in Texas and New York, two states with very large emergency department volumes, and is working fairly for all parties involved. We believe IDR could work on a national scale to address this important issue.


Stimulus bill to rid patients of

Hospitals, insurers battle over surprise medical bills

People with private health insurance will see the nasty shock of “surprise” medical bills virtually gone, thanks to the coronavirus compromise bill passed by Congress.

The charges that can run from hundreds to tens of thousands of dollars come from doctors and hospitals that are outside the network of a patient's health insurance plan. It's estimated that about 1 in 5 emergency visits and 1 in 6 inpatient admissions will trigger a surprise bill.

Although lawmakers of both parties long agreed that the practice amounted to abusive billing, a lobbying war between doctors and insurers had thwarted a compromise, allowing the impasse to become a symbol of dysfunction in Washington.

“This has been a profoundly distressing pocketbook issue for families for years,” said Karen Pollitz, a health insurance expert with the nonpartisan Kaiser Family Foundation. “Some of these bills are onerous, and they all strike people as completely unfair.”

The compromise would take patients and their families the financial crosshairs by limiting what they can be billed for out-of-network services to a fee that's in-network charges. The amount consumers pay would get counted toward their in-network annual deductible.

Medical bankruptcy, even with insurance 05:12

Insurers and service providers would submit their billing disputes to an independent dispute resolution process, which will follow certain guidelines. The main provisions of the legislation would take effect January 1, 2022.

“Generally speaking, keeping the consumer it and forcing the providers to be the ones to settle is a positive,” said Eagan Kemp, a policy expert with Public Citizen, a liberal advocacy group.

Although states have been moving to curb surprise billing, federal action was needed because states do not have jurisdiction over large employer plans that cover tens of millions of workers and their families.

Key elements

Key elements of the legislation would:

  • Hold patients harmless from surprise bills stemming from emergency medical care. That would apply if the patient is seen at an out-of-network facility, or if they are treated by an out-of-network clinician at an in-network hospital. In either case, the patient could only be billed their plan's in-network rate.
  •  Protect patients admitted to an in-network hospital for a planned procedure when an out-of-network clinician gets involved. This can happen when a surgeon is called in to assist in the operating room, or if the anesthesiologist on duty is not part of the patient's plan.
  • Generally require out-of-network service providers to give patients 72-hour notice of their estimated charges. Patients would have to agree to receive out-of-network care for the hospital or doctor to then bill them.
  • Bar air ambulance services from sending patients surprise bills for more than the in-network cost sharing amount. Air ambulance charges have become a bigger problem in states where patients have to travel long distances to get to the best hospitals. However, ground ambulance services will not face the same restrictions, and the legislation only calls for more study of their billing practices.

The compromise legislation involved two years of work from dozens of lawmakers of both parties and key committees, including Energy and Commerce and Ways and Means in the House, and Health, Education, Labor and Pensions in the Senate.

Hits patients when they're down

Surprise bills hit patients and their families when they are most vulnerable — after a medical emergency or following a complex surgical procedure.

Often patients are able to negotiate lower charges by working with their insurers and the medical provider. But the process usually takes months, adding stress and anxiety.

Sometimes it doesn't work out and the bills are sent to collection agencies.

Doctor on how to avoid surprise medical bills… 06:29

“Our constituents have done everything right at the doctor's office or hospital yet still found themselves stuck with surprise medical bills, sometimes to the tune of tens of thousands of dollars,” said Senators Maggie Hassan, Democrat of New Hampshire,, and Bill Cassidy, Republican of Louisiana. “And frequently, they have to fight these bills at the same time they are facing a medical crisis.”

According to the Kaiser Foundation, 18% of emergency visits lead to at least one out-of-network charge for people covered by large employers, as do 16% of in-network inpatient admissions. New York and Texas have among the highest rates.

The problem is a direct of result of high health care costs. To try to keep premiums in check, insurers set up networks of hospitals and doctors who agree in advance on payment levels.

But some high-demand clinicians, such as emergency room doctors and anesthesiologists, have an incentive to stay at least some networks, trying to maximize their earning power.

That dynamic has grown more complicated as profit-seeking investors buy out medical practices that have greater billing leverage.

A win against insures and providers

Insurers were cool to the compromise, saying the structure of the dispute resolution process could lead to higher payouts that then feed premium increases. Some Democrats had advocated using a predetermined price list to resolve billing disputes, but that struck Republicans and other Democrats as too close to government rate-setting.

“Our for-profit health care system really allows companies to make money in the different gaps of the system,” said Kemp, the health care advocate from Public Citizen. “This is a hopeful day. I thought between the insurers and the providers, there wasn't going to be surprise billing legislation passed.”

Public programs Medicare and Medicaid prohibit or restrict such billing practices.

First published on December 22, 2020 / 10:55 AM

© 2020 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.


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