Surprise Medical Bills

The Federal Cure for Surprise Medical Billing is Worse Than the Disease


As I write this on the evening of December 27, 2020, Congress’s buffet of public spending (H.R. 133) includes federal unemployment relief, $600 grants to eligible individuals, hundreds of billions in new PPP loans, and billions in relief to foreign nations. 

You, doctor, weren’t so lucky. 

Included in the potpourri is the latest “cure” for surprise medical billing, the “No Surprises Act”. If my analysis is correct, the cure will lead to a death spiral in both out-of-network and in-network reimbursement. 

For background on the concept, see my March 9, 2020 post, Let’s Find the Cure for Surprise Physician Services Stealing.

First, in what’s probably a surprise to the American Hospital Association, the No Surprises Act broadens the concept of “out-of-network” to include, in emergency services context, both hospitals and physicians. 

If a payor covers services in an emergency department of a hospital or in an independent freestanding emergency department, that is, a freestanding E.R. that is not part of a hospital, then the payor must pay the facility and the physicians (ah, the question is how much) for emergency and related services, whether or not delivered via the E.D.

Although HHS is supposed to develop regulations, the payment amount is linked to the “median” contracted rate, including cost-sharing amounts, recognized by the payor in the same market. If the payor and provider do not agree on the payment as determined by the payor, there’s a mandated “independent dispute resolution process” by which a third party sets the amount. There appears to have been no consideration of the fact that it might cost more than the disputed amount to participate in the dispute resolution process.

There does appear to be deference in the new law (if enacted) to the facility’s or physician’s state’s “surprise billing” law. 

Not satisfied with mandating a rate to be be paid to those who didn’t agree to, or were never offered, a contract with a payor, the No Surprises Act repeats the process with regard to out-of-network physicians who do not give notice and obtain consent before treating patients at an in-network facility.

If and when (more likely when) H.R. 133 becomes law, we’ll revisit the subject and provide more detail.

In the meantime consider this: If there’s a way for payors to put their fingers on the scale of the median rate, such as by (as payors appear to be doing) threatening to toss out of network/actually tossing out of network physician groups that won’t cut their supposed “high end” rates, they’ll do it. As the median lowers, the median will continue to lower. Crap reimbursement today will become high reimbursement tomorrow. 

Remember, the overall bill, H.R. 133, continues to hand out fiat printed money at a rate that I don’t believe has ever before been seen. The inevitable result is rampant inflation. Combine that with low, lower and lowest reimbursement and, before we know it, we’ll be at single payor as the solution enacted under the Surprise There Were No Physicians Willing to Work But Now We’re Forcing Them To Act. 

Hey, it’s all for the greater good. 

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