A new bill sponsored by a local state senator proposes a number of changes supporters say are aimed at protecting patients from surprise bills.
Surprise bills happen when patients are unknowingly seen by an out-of-network provider and then have to pay the difference between what they are charged and what the insurer is willing to pay, which in some cases can be thousands of dollars.
A common example of this is when patients go to an in-network hospital but are treated by a provider who is a contractor, not a hospital employee, and not part of the same insurance networks as the hospital.
About 18 percent of 2017 emergency visits result in at least one out-of-network charge for Ohioans with large employer insurance, according to the Kaiser Family Foundation.
Senate Bill 198, which had its first hearing Oct.9, proposes the state create an arbitration process that would take patients out of the middle, said Ohio Sen. Steve Huffman, R-Tipp City, who is sponsoring the bill along with Sen. Nickie Antonio, D-Lakewood.
Under the current rules, a patient might go for surgery, check ahead of time that the hospital and doctor are both in their insurance network but then two weeks later get a bill from an anesthesiologist that the patient didn’t know wasn’t a hospital employee.
“That’s very unfair to the patient thinking ‘I did my homework. I did what a good consumer is supposed should do to lower my price,” Huffman said.
Under the proposal, when a patient receives unanticipated out-of-network care, instead of billing patients for the amount insurance won’t cover, the provider would work directly with the insurer.
The insurer can either pay the amount, attempt to negotiate, or if the negotiations are unsuccessful, they can go to binding arbitration. For claims under $700, the insurer has to pay the lesser amount of either the provider’s charge or the 80th percentile of all provider charges in the same or similar specialty health care service in that geographic area.
Insurance companies, hospitals and doctors have called surprise billing a problem that needs solving, but have different ideas on how best to solve the problem.
Republicans and Democrats have both called for a policy solution and Congress is also considering a bill that would create an arbitration process to resolve surprise billing disputes. Doctor groups that contract with hospitals — and private equity groups that invest in some of these doctor groups — tend to favor creating arbitration processes as a policy solution to settle billing disputes.
Huffman said the arbitration process in his bill is designed to encourage both sides to propose a reasonable price, because the arbiter picks the proposal that seems most reasonable and doesn’t split the difference. So if a doctor proposed a $100 charge and a health plan only wanted to pay $50, the arbiter would have to pick one of the prices and couldn’t decide $75 was most fair.
In New York, which has an arbitration process, Huffman said sometimes the doctor wins and sometimes the insurance plan wins.
Loren Adler, associate director with the USC-Brookings Schaeffer Initiative for Health Policy, reviewed the bill and said its arbitration proposal would help some patients avoid surprise balance bills, but only by greatly inflating those costs and shifting them into everyone’s health insurance premiums because it ties payment to provider charges. Charges are the sticker price, which Adler said “tend to be extremely high and are largely untethered by market forces.”
“If a bill like this passed into law in Ohio, you’d likely be looking at a few percentage point increase in commercial insurance premiums statewide,” Adler said.
Adler said the precise impact will depend on how arbiters in the state interpret what he called unclear guidance.
“But for bills under $700, the law seems clear that it would require insurers (and, in turn, consumers and employers through premiums) to pay out-of-network providers either their full billed charge (like a list price) or the 80th percentile of charges in the market,” Adler said. “For reference, the 80th percentile of charges in a market tends to be 3 or 4 times higher than average in-network payment rates.”
Adler said he thinks providers will either pull out-of-network to collect higher payments or insurers will start offering higher in-network payment rates since providers will have more leverage.
Miranda Motter, president and CEO of Ohio Association of Health Plans, which represents health insurers, said the group opposes the bill.
“SB 198 does not protect Ohioans from higher health care costs. Rather, the legislation will merely shift surprise medical bills to surprise premium bills,” Motter said.
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