Oct 17, 2018

Why ending surprise medical bills is harder than it looks

Illustration: Aïda Amer/Axios

Staggering surprise medical bills are finally getting some scrutiny from policymakers. But to take patients off the hook for those bills, the money has to come from somewhere else — usually from higher insurance premiums or out of doctors’ bottom lines.

The big picture: Getting an unexpected bill for thousands of dollars is a gut-level problem. Yet that problem is a product of the health care system’s complexity, and every potential solution runs into roadblocks from an industry that wants to protect its profits, or skepticism from policy experts or political opposition.

How it works: Surprise hospital bills frequently stem from a practice known as “balance billing.”

  • You go to a hospital that takes your insurance, meaning the insurer and the hospital have agreed on a price for the services you’ll need.
  • But individual doctors within the hospital may not be part of the same insurance network. They’ve never agreed to the insurance company’s prices, so after the insurance company pays them, they send you a bill for the remaining balance — often thousands of dollars.
  • People in emergency situations who get taken to hospitals out of their insurance network can find themselves in a similar situation.

Putting a stop to balance billing requires shifting the cost to someone else or reducing the size of the bill, or both.

"Far and away the biggest challenge is deciding on the 'right price,'" the American Enterprise Institute's Benedic Ippolito said.

  • One idea would be to base out-of-network providers' payments on Medicare's rates. That would cut down on the overall cost of out-of-network care. But providers say those rates are too low.
  • A bill from Sen. Bill Cassidy (R-LA) would require insurance companies to shoulder the burden, which they would then pass on through higher premiums.
  • Under Cassidy’s bill, out-of-network doctors would in many cases get paid more than the in-network price for the same service. Experts fear this could leave doctors and hospitals without much incentive to negotiate with insurance plans at all, driving costs even higher.

Balance billing is especially common for emergency-room care, where patients are often in no position to inquire about their insurance networks.

  • "Standard market forces ... don’t much apply to [emergency] and ancillary physicians," said Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy.
  • In addition to figuring out where to shift the burden of these bills — into insurance premiums or onto doctors — policymakers also have to decide whether to apply that solution broadly, or only to certain areas, like emergency care.
  • "The broader these payment restrictions extend, the more opportunities there are to distort other parts of the market in unintended ways," Ippolito said.

What we're watching: Most state laws so far have stopped short of imposing direct price caps on providers, and they can still adjust to avoid profit losses. But that may be unsustainable.

  • “The emergency room and the out-of-network billing … is the gateway drug to larger price control conversations," said Rodney Whitlock, a former Senate GOP health policy aide.

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 932,605 — Total deaths: 46,809 — Total recoveries: 193,177Map.
  2. U.S.: Total confirmed cases as of 7 p.m. ET: 213,372 — Total deaths: 4,757 — Total recoveries: 8,474Map.
  3. Business updates: Very small businesses are bearing the brunt of the coronavirus job crisis.
  4. World update: Spain’s confirmed cases surpassed 100,000, and the nation saw its biggest daily death toll so far. More than 500 people were reported dead within the last 24 hours in the U.K., per Johns Hopkins.
  5. State updates: Florida and Pennsylvania are the latest states to issue stay-at-home orders — Michigan has more than 9,000 confirmed cases, an increase of 1,200 and 78 new deaths in 24 hours.
  6. Stock market updates: Stocks closed more than 4% lower on Wednesday, continuing a volatile stretch for the stock market amid the coronavirus outbreak.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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World coronavirus updates: Spain's health care system overloaded

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

Two planes with protective equipment arrived to restock Spain’s overloaded public health system on Wednesday as confirmed cases surpassed 100,000 and the nation saw its biggest death toll so far, Reuters reports.

The big picture: COVID-19 cases surged past 900,000 and the global death toll surpassed 45,000 early Wednesday, per Johns Hopkins data. Italy has reported more than 12,000 deaths.

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Guns on display at a store in Manassas, Va. Photo: Yasin Ozturk / Anadolu Agency via Getty

The FBI processed a record 3.7 million gun background checks in March — more than any month previously reported, according to the agency's latest data.

Driving the news: The spike's timing suggests it may be driven at least in part by the coronavirus.