SB 198 Out-of-Network Health Care Legislation

Uncategorized  |  December 12, 2019
OUT-OF-NETWORK CARE (HuffmanAntonio) – Regarding out-of-network care.
Current Status:  12/11/2019 Senate Insurance and Financial Institutions, (Third Hearing)

SB 198 Out-of-Network Health Care Legislation

Insurance Industry, Chamber Criticize Senate Bill on Surprise Billing

Three insurance organizations and the Ohio Chamber of Commerce provided opponent testimony on SB198 (Huffman-Antonio) on Wednesday, saying the surprise medical billing measure would increase health care costs.

The Senate Insurance and Financial Institutions Committee heard from Miranda Motter, president and CEO of the Ohio Association of Health Plans (OAHP); Jeanette Thornton, senior vice president of product, employer and commercial policy for America’s Health Insurance Plans (AHIP); Marcy Bruckner, vice president of government affairs for the National Association of Health Underwriters (NAHU), also representing the organization’s state chapter, the Ohio Association of Health Underwriters; and Keith Lake, vice president of government affairs for the Ohio Chamber of Commerce. The insurance industry and the Ohio Chamber of Commerce have expressed support for the House’s plan, HB388 (Holmes). (See The Hannah Report, 11/13/19.)

“OAHP opposes SB198 because it does not provide end-to-end protection to Ohioans from surprise out-of-network bills and surprise premium bills. We believe Ohioans need relief from spiraling health costs and cannot afford to pay more for health care,” Motter said. “The bill allows out-of-network doctors to charge whatever they want for their undisclosed out-of-network care. The bill creates financial incentives for doctors to remain out of networks, thereby jeopardizing the cost and quality benefits in-network care provides.”

Motter said her organization opposes balance billing, allowing doctors to charge whatever they want for undisclosed and/or emergency out-of-network care and creating a system where government sets pricing through an arbitration process.

“OAHP does not believe out-of-network doctors should be able to balance a health care consumer when the patient doesn’t have the right to choose that out-of-network care,” she said. “OAHP believes health care consumers should pay a reasonable, market-tested price for undisclosed and/or emergency out-of-network care. OAHP opposes unilateral government setting pricing through a costly, risky arbitration process. This will increase health care costs and serve as the rule rather than the exception.”

Similar points were made by Thornton and Bruckner.

Lake said the rising cost of health care is the top concern for its members, and has been for the last several years.

“Health care costs are already rising at a rate far surpassing inflation. Average annual premiums for employer-sponsored health insurance rose an average of 4.9 percent in 2019, the biggest year-over-year percentage increase since 2011. Premiums have gone up 22 percent in the past five years and 54 percent in the past decade,” Lake said. “Unfortunately, we believe that both of the approaches utilized by SB198 to determine how much providers should be paid by insurers in instances that generate surprise bills would lead to increased health insurance premiums.”

He said the bill’s policy mandating insurers to pay the lesser of the provider’s billed charge or the “80th percentile of all provider charges in the same or similar specialty for the health care service provided in the same geographical area as reported in a benchmarking database maintained by a nonprofit organization specified by the superintendent of insurance” would make the 80th percentile number the rule, as no “responsible fiduciary” would voluntarily agree to pay billed charges.

“Whatever that 80th percentile number actually is for a particular medical service, by definition it’s a number that’s higher than what four-fifths of all providers in the market charge. Under either payment option — billed charges or the 80th percentile — the result is certain to lead to higher costs to insurers and, by extension, to the health insurance premiums paid by Ohio Chamber of Commerce member companies,” Lake said.

Several senators agreed that the 80th percentile number was likely too high, with Chairman Bob Hackett (R-London) saying lawmakers are going to continue to work on that issue.

In response to a question from Sen. Dave Burke (R-Marysville) on why insurers don’t simply require hospitals to contract with provider groups that are also in the same network, protecting the patients through the contract. Thornton said insurance companies would like to do that, but some providers are working under different companies in the same hospital. Motter said in some hospitals, the doctors are acting as independent contractors inside the hospital walls, but the hospital doesn’t have the power to force them to join the same insurance network as the hospital. Motter said because health insurers have “another layer of oversight” that isn’t there for hospitals — network adequacy requirements — the insurers are often at a disadvantage during negotiations. Motter said hospitals could be required to mandate that every provider working in their hospital — as an employee or as an independent contractor with privileges — to take the same insurance.

Hackett said back in the 1990s hospitals would control the situation and tell doctors they couldn’t bill more than a certain amount, so he blames them as well as the health plans for allowing the situation to occur by not insisting on group contracts. Hackett said he’s “not crazy about baseball arbitration” but said he’s not sure forcing the providers to take the network rate will work out well, even though it has been OK in California.

Motter said it is a difficult issue, but said the baseball-style arbitration used in New York has definitely led to higher health care costs. Motter said she prefers HB388, saying it is already a compromise.

Breaking down where most of the “premium dollar” ends up going, Motter told Sen. Louis Blessing (R-Cincinnati) that 23 cents goes to prescription drugs, 22 cents go to hospitals and 21 cents go to doctor care.

Written opponent testimony was provided by Alan Smith, Midwest region director of the R Street Institute; Victoria McCoy, CEO of Associated Employee Benefits LLC; Carly Sternberg of the ERISA Industry Committee; and Lora Miller, director of governmental affairs and public relations for the Ohio Council of Retail Merchants.

Story originally published in The Hannah Report on December 11, 2019.  Copyright 2019 Hannah News Service, Inc.



Providers, Hospital Group Worry House Surprise Billing Proposal Will Upend Contracting

Physician groups and one of central Ohio’s major hospital systems testified Wednesday in opposition to the House’s version of legislation to end surprise billing, saying its laudable elements are overshadowed by flaws that could disrupt their contract negotiations with insurers.

Monica Hueckel, senior director of government relations for the Ohio State Medical Association, said HB388’s (Holmes) mechanism to pay the higher of three amounts — median in-network rate, out-of-network rate or Medicare rate — would essentially set a default payment rate for services. The median in-network rate would almost always be the highest rate, she said.

“We care about the contracting process, and we care about physicians losing the tiny bit of leverage they have,” she said.

Hueckel previously testified in support of a Senate proposal on the topic, SB198 (S. Huffman-Antonio), because of its resemblance to a New York law her association saw as successful. But Hueckel said Wednesday that after receiving competing claims from providers and insurers as to which other state’s system works best, it would be better for all parties to focus on designing a model that will meet the needs of Ohio’s market. (See The Hannah Report, 11/6/19.)

Hueckel said disrupting contracting among doctors and commercial insurers could have the ripple effect of limiting Medicaid patients’ access to service, as doctors rely on commercial payers to make up for the losses they incur under low Medicaid reimbursement rates.

Hueckel also said the proposed 70-30 cost split for arbitration and limiting of arbitration cases to focus only on the accuracy of the median in-network rate makes arbitration a losing proposition for doctors even in cases where they know they’re right.

Rep. Jim Butler (R-Dayton), who backed House efforts to address surprise billing during budget deliberations, asked if the ability to bundle claims under the bill would make arbitration more attractive. Hueckel said it’s possible, but said doctors are often small business owners who might not be able to delay collecting payment until a sufficient number of claims accrue to make bundling economical.

Dr. Anthony Cirillo, representing US Acute Care Solutions, reiterated Hueckel’s concern about the median in-network rate, saying it would become a “single government-mandated benchmark of payment.” Cirillo said his company collects an average of $136 per patient in emergency rooms, which already does not cover costs.

Butler and Rep. Jon Cross (R-Kenton) pressed Cirillo on the ownership stake private equity firm Welsh, Carson, Anderson and Stowe has in his company and whether their involvement was related to surprise billing, noting congressional inquiries on the subject. “Do you contend that Wall Street does not have an effect on what your doctors charge?” Cross asked.

Cirillo said the private equity firm has a minority ownership stake that helped his company to expand into more profitable markets like Florida and Texas to offset the losses experienced in Ohio. He in turn recited the recent stock price and reported profits of UnitedHealthcare, saying he’s confident the returns the private equity firm received doesn’t exceed what that large insurer made.

Cirillo said US Acute Care Solutions has stopped balance billing, because the amount of attention given to the sliver of cases generating balance bills wasn’t worth the money collected.

Dr. Bryan Graham, an emergency physician representing the American College of Emergency Physicians’ Ohio Chapter, emphasized the unique nature of emergency room care, where patients cannot be turned away under federal law. “We can not discuss potential costs or insurance details until patients are screened and stabilized. Patients shouldn’t second guess needed care for fear of a surprise bill,” he said.

Jason Koma, regional director of government affairs and regional development for Mount Carmel, said the hospital system supports efforts to get patients out of the middle of these billing disputes but said hospitals should not be subjected to the mechanisms established in the bills. While surprise billing constitutes a small percentage of medical claims, it is rarer still for hospitals themselves to actually issue such bills, he said, tallying a mere “handful” of claims in the 22 state coverage area of Mount Carmel parent Trinity Health. He said hospitals with claims for emergency services from out-of-network providers typically negotiate directly with insurers or resolve disputes through legal means. “This process should continue,” he said.

During questioning, Koma said Trinity and Mount Carmel are trying to resolve the situation that give rise to surprise billing by encouraging or even requiring providers practicing in their hospitals to be in the same insurance networks as the hospitals themselves.

Rep. Dave Greenspan (R-Westlake) said he was perplexed as to why hospitals could coordinate the health services various independent providers render for a patient, but not the back-end billing involved in that. He likened it to hiring a general contractor or an attorney, whose subcontractors or outside experts would not submit separate bills to the consumer.

Story originally published in The Hannah Report on November 20, 2019.  Copyright 2019 Hannah News Service, Inc.


Health Insurance Groups, Ohio Chamber Back House Plan on Surprise Billing

The House’s plan on out-of-network “surprise” medical billing, HB388 (Holmes), received proponent testimony Wednesday, with the Ohio Chamber of Commerce, Ohio Association of Health Plans (OAHP) and Ohio Association of Health Underwriters (OAHU) appearing before the House Finance Committee.

The Senate’s plan, SB198 (Huffman-Antonio), is different and has received support from the Ohio State Medical Association (OSMA) and other physician groups. (See The Hannah Report, 11/6/19.) In her testimony, OAHP President and CEO Miranda Motter said the Senate plan would essentially codify surprise billing and “only mask” the problem rather than solve it.

Motter called the House’s version a “significant and necessary step toward addressing” rising health care costs, saying data show out-of-network bills occur in around one in five emergency visits and one in 10 elective inpatient visits at in-network hospitals.

This is due to certain types of doctors, such as anesthesiologists, radiologists, pathologists and emergency room doctors, being able to receive a steady volume of patients without being in-network, she explained, often leading to costs around four to six times the Medicare rate.

Motter said certain hospital services are also increasingly being contracted out to firms backed heavily by private equity and venture capital groups that see legislative inaction leading to high profit margins and are lobbying Congress not to address it through federal legislation.

Despite opponent arguments, Motter said there is no evidence legislation similar to HB388 has driven doctors away from other states that enacted it, and in fact California saw an increase of in-network specialty doctors.

There are also advocates for adopting an approach similar to New York, which requires payment of a percentage of billed charges and baseball-style arbitration, but Motter said third-party experts found that provided “limited relief for patients.” She listed examples of services that remained between three and four times the in-network rate, adding that New York also has health care spending per person at a rate 20 percent higher than the national average and is second highest for expenditures.

HB388, on the other hand, would provide “end-to-end protection” from surprise out-of-network and premium bills, Motter said.

Vice Chair Gary Scherer (R-Circleville) said it would seem simple to require in-network hospitals to have all providers there be in-network as well, and Motter said that could be a solution in Ohio as some states have considered it.

In response to a question from Rep. Bob Cupp (R-Lima), she said the types of doctors she’d mentioned generally have guaranteed access to patients without being in-network, though in some areas of Ohio their services may be more limited and so they have more leverage.

Asked by Rep. Jim Butler (R-Dayton) about the effect on insurance premiums, she said it would eliminate many out-of-pocket costs while also exerting downward pressure on health care costs overall, unlike the New York law or SB198.

Rep. James Hoops (R-Napoleon) asked whether there should be anything to watch in terms of federal legislation on the issue. Motter said multiple approaches are being looked at nationally, though some conversations have stalled due to aggressive opposition lobbying.

She additionally said that state laws would not apply for self-insured employers, and added in response to a question from Rep. Bride Sweeney (D-Cleveland) that air ambulance services and associated billing are regulated federally as well. Sweeney had asked about ambulance costs, which Motter said were not a part of HB388 as it is a complex area.

Rep. Scott Lipps (R-Franklin) asked whether a rural patient who had to go to an out-of-network hospital to see an out-of-network doctor could still receive a surprise bill, and Motter said they could as the bill covers those who go to an in-network hospital. Lipps also asked about the level of stakeholder input regarding the bill, which Motter said was a question for the sponsor.

Rep. John Rogers (D-Mentor-On-The-Lake) asked about the input insurance companies provide when someone receives a bill for out-of-network services, and Motter said they try to offer resources but don’t have a contractual relationship with the provider and often don’t know about the bill unless the person who received it notifies them.

Kevin Conrad, vice-legislative chair of OAHU, said that surprise billing is probably the “most frequent, critical problem” for Ohioans with health insurance, and the association regularly hears from members that a client has been negatively affected by the practice in both emergency and non-emergency situations. A Journal of the American Medical Association analysis in August 2019 found the practice is on the rise for both emergency admissions and inpatient visits.

Due to that, he said OAHU supports HB388 because it establishes an appeals process to negotiate reimbursement and does not allow consumers to be billed for the difference between a plan’s reimbursement and the provider’s charge. Out-of-network providers can also negotiate reimbursement directly with the emergency room facility, he said, and arbitration is a last resort.

Keith Lake, vice president of government affairs at the Ohio Chamber, discussed the ramifications of such sudden bills for employers as well as their employees. Over 97 percent of companies with 50 or more employees offer health insurance, Lake said, as do a “sizable” number of smaller companies.

Lake said the Ohio Chamber wants to make sure a solution to the issue protects patients, ensures fair provider compensation and does not drive up health insurance costs, as health care costs are already rising at a rate far greater than inflation.

To avoid an unnecessary increase in premiums, any solution should “establish a reasonable benchmark and avoid the use of arbitration,” Lake said. He did not consider the bill perfect but called it a “workable approach” that will ban balance billing for out-of-network services, limit cost-sharing required of patients to what they would pay for an in-network service and set a reasonable benchmark favoring rates established by the free market.

The third element is accomplished by requiring health plans to reimburse providers in out-of-network situations at the highest of three possible rates: the median contracted rate paid to an in-network provider; the amount currently used to determine payments for out-of-network services; or the amount paid by Medicare. In most cases, the first option will be the highest and so the bill ensures fair payment to providers without discouraging network participation, Lake said.

While the Ohio Chamber would prefer an approach that doesn’t rely on arbitration, he also said the bill would use that as the last resort rather than a primary mechanism to resolve disputes.

Written-only proponent testimony was also submitted by Lisa Rupp, representing herself; Marc Hyden and Eli Lehrer, R Street Institute; Steve Wagner, Universal Health Care Action Network of Ohio; Victoria McCoy, Associated Employee Benefits; Mary Haffenbredl, America’s Health Insurance Plans; and Carly Sternberg, ERISA Industry Committee.

Story originally published in The Hannah Report on November 13, 2019.  Copyright 2019 Hannah News Service, Inc.


Medical Groups Back Senate Surprise Billing Proposal

The Ohio State Medical Association (OSMA) and other physician groups voiced support Wednesday for a Senate proposal to address so-called “surprise billing” of emergency room patients with out-of-network charges, saying a similar model first adopted in New York and now spreading to other states has shown success.

U.S. Acute Care Solutions, the Ohio chapter of the American College of Emergency Physicians (ACEP), Physicians for Fair Coverage (PFC) and Universal Health Care Action Network (UHCAN) of Ohio joined OSMA in testifying to the Senate Insurance and Financial Institutions Committee in favor of SB198 (S. Huffman-Antonio), while numerous others submitted written remarks in support.

Meanwhile, the House introduced a bill Tuesday on the topic, HB388 (Holmes), and it is slated for a first hearing Thursday in the House Finance Committee.

OSMA’s Monica Hueckel, senior director of government relations, said the association has substantially scaled back from proposals it pursued in the past few years and still doesn’t have universal support among physician groups, but felt the need to endorse SB198 “in the spirit of legitimately wanting to do something to protect patients.”

“From the patients’ perspective, they won’t know the different between if they see an in-network or out-of-network physician,” Hueckel said of the system instituted under the bill.

Differences over what can be charged and reimbursed will be settled by insurers and providers, first in a defined negotiation period, then in a “baseball-style” loser-pays arbitration process. The latter is designed to be intentionally unpleasant as a means to encourage negotiations ahead of time. Insurers or providers who go to arbitration and lose a few times should get the hint they’re asking for something unreasonable, Hueckel said.

“You go to arbitration once or twice, that’s going to give you an idea of where you’re both going to be at the end of the day,” she said.

The process would be reserved for claims or bundles of claims totaling $700 or more, though Hueckel later said during committee members’ questioning that OSMA is willing to discuss a different threshold, saying those in Texas and New York are slightly lower.

She said New York has used such a system for a few years, and it’s been successful to the point Colorado, Texas and Washington have adopted similar systems more recently. New York saw a 35 percent increase in contract negotiations and physicians joining insurer networks, Hueckel said.

Sen. Bob Hackett (R-London), chairman of the committee, said he’d like insurers and providers to come together with a list of what they’ll both support, in anticipation of comparisons between SB198 and HB398. Hueckel said a cap included in the House proposal could remove incentives for negotiation. Sen. Steve Huffman (R-Tipp City), joint sponsor of SB198, said the House proposal has “good,” “bad” and “interesting” provisions but cautioned it’s been out too short a time for anyone to fully digest it.

Dr. Anthony Cirillo of U.S. Acute Care Solutions, which employs more than 800 people in Ohio, said the success of the New York system was documented in a 2018 analysis from Yale University, which stated, “Ultimately, this policy disadvantages providers that bill for unreasonably high charges and punishes insurers that offer unreasonably low initial payments. The law also encourages physicians and payers to negotiate independently and avoid arbitration.” New York’s Department of Financial Services found $400 million in savings to consumers since 2015, Cirillo noted.

Dr. Bryan Graham, representing ACEP, said it’s important to take patients out of the middle of billing disputes because of the laws and practicalities of providing care in the emergency room, where anyone who shows up must be treated. “We cannot discuss potential costs or insurance details until patients are screened and stabilized. Patients shouldn’t second guess needed care for fear of a surprise bill. Nor can we expect patients having a medical emergency to research their insurance network before going to the closest ED,” he said.

Sen. Jay Hottinger (R-Newark) asked about the private nature of arbitration results, saying he’d assume making outcomes public would help send a signal and avoid having multiple sets of parties go to arbitration on similar claims.

Hueckel said there are no restrictions on disclosure in the bill itself, but typically contract negotiations and payment rates are held confidential as proprietary information.

Cirillo said in some states results of arbitration are public, and can be used as precedent in future arbitration cases.

Huffman later remarked that payment rates can vary substantially within the markets of a state, so an arbitration result in Cincinnati might not hold in Cleveland.

Sen. Andrew Brenner (R-Powell) said the stated savings of $400 million in New York appears scant in comparison to the tens of billions of dollars in total health care spending. Graham replied the main purpose was to protect consumers and encourage the providers and insurers to settle cost differences among themselves.

Story originally published in The Hannah Report on November 6, 2019.  Copyright 2019 Hannah News Service, Inc.