ERIC Provides Guidance on Surprise Medical Billing Crisis

February 19, 2019

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Today, ERIC sent a letter to the U.S. Senate addressing the surprise medical billing crisis.

ERIC is committed to working toward proactive solutions to protect patients from unconscionable bills, while preventing efforts to entrench damaging and anticompetitive behavior by select, problematic parts of the health industry, and ensuring that unfair and unnecessary costs are not simply socialized in the form of higher premium costs for everyone.

Surprise medical billing is a problem that is isolated to very specific groups of providers. These providers eschew insurance networks, send egregious balance bills to patients, and seek to collect whatever they can either from a third party like an insurer or a plan sponsor, or directly from the patient who, as a result, may have his or her credit destroyed and/or become financially destitute.

In its letter, ERIC urged lawmakers to address the following situations:

  • Patients who obtain care at an in-network facility and, during the course of care, fall prey to providers who practice at that facility but do not participate in the network
     
  • Patients who receive emergency care
     
  • Patients who are transferred from an in-network facility to the care of an out-of-network provider without informed consent
     
  • Specific medical industries or areas of practice which have nearly monolithically adopted an out-of- network strategy charging sky high prices and extracting the maximum amount of resources out of the medical system

ERIC called for a number of specific policy solutions, including:

  • Congress establishing a federal benchmark rate to be paid by plans and plan sponsors to providers who otherwise would have generated a surprise bill. This benchmark rate should be based upon a percentage of Medicare, or something akin to 80% of a given market’s average in- network allowable amount and should be designed to provide a financial incentive for the provider to participate in the network.
     
  • Congress addressing any physician or medical service provider who is practicing at, or participating in a contractual or other financial agreement with, an in- network facility, should be required to accept the in-network rates for any patient affiliated with that network, for any care at or connected to that facility.
     
  • Congress not crafting legislation that would denigrate and eventually unravel the ability of plan sponsors to construct and maintain high-quality networks.

While hospitals are not the cause of surprise medical bills, they have a significant role to play in bringing these bills to an end. Some or all of the following changes should be undertaken in order to empower hospitals and hold them accountable, both for driving high-value care and for preventing financial devastation for their patients:

  • Require, to the greatest extent possible, that a hospital match in-network patients with in-network providers. It won’t always be possible, but when it is, hospitals should be held accountable for ensuring that, in cases when an in-network provider practices at an in-network facility, that provider should be affirmatively paired with an in-network patient.
     
  • Require hospitals to contract with providers in a way that ensures those providers agree to accept in-network rates when a patient in the hospital’s networks is treated. This change would eliminate a majority of surprise bills. If a provider does not wish to accept a hospital’s in-network rates… there are many other hospitals in the world where that provider can practice.

o   We understand that some state laws may be obstructing the ability of hospitals to either employ physicians directly, or to negotiate network agreements with those physicians – Congress should preempt and invalidate those laws.

  • Ban profit-sharing agreements between in-network hospitals and out-of-network providers or staffing companies. It has been brought to our attention that large amounts of balance bills are generated by outsourced emergency room companies, who have contracts to exclusively operate emergency rooms at for-profit hospitals. This creates a perverse incentive wherein the in-network hospital profits from in- network patients who receive obscene out-of-network emergency room surprise bills. The arrangements may be legal under current law, but they’re unfair and inappropriate, and Congress should ban them.
     
  • Require hospitals to post, prominently, on their website information about the network status of practicing providers. The most important information that is currently not obvious to consumers is whether all (or a large percent) of providers in a given area of practice (such as anesthesiology) who practice at the facility, do not participate in major networks. This will not likely be helpful in emergency situations, but it could at least help patients who are planning care.
     
  • Require that hospitals accept in-network reimbursements for patients referred by a physician who practices at, or has an ownership or profit-sharing interest in, that hospital. ERIC member companies have reported in some cases in-network physicians referring patients to out-of-network facilities, including ones in which the doctors have ownership or profit-sharing interests. This behavior is destructive to the health care system and must be curbed.
     
  • Ban exclusive, profit-sharing, or kickback agreements between hospitals and ambulance or air ambulance providers. It should never be the case that a plan beneficiary has access to an in-network mode of medical transportation, but is steered instead to another transportation provider in the profit interest of the hospital or transportation company. This includes exclusivity agreements for hospital helipads, referral agreements, or any other mode of kickback.

Click here to red ERIC's comments in full.