Balancing the Bills – Policy Solutions to Address Surprise Billing

12:00 p.m. – 12:10 p.m.     Welcome and Introductions

• Sarah J. Dash, MPH
  President and Chief Executive Officer, Alliance for Health Policy
  @allhealthpolicy
• Mark Miller, Ph.D.
  Executive Vice President of Health Care, Arnold Ventures
  @Arnold_Ventures

12:10 p.m. – 12:45 p.m.     Panelist Opening Remarks

• Al Bingham, FSA, MAAA
  Senior Consulting Actuary, Wakely Consulting Group
  @WakelyCG

• Jack Hoadley, Ph.D., M.A.
  Research Professor Emeritus,
  Georgetown University Health Policy Institute 
• Frederick Isasi, J.D., MPH
  Executive Director, Families USA
  @FrederickIsasi
• Moderator: Sarah Kliff
  Investigative Reporter, The New York Times
  @sarahkliff

12:45 p.m. – 1:30 p.m.       Question and Answer Session

(Note: This is an unedited transcript. Please refer to the event video for direct quotes.) SARAH DASH:  Good afternoon everybody.  Great to see a full house.  Welcome.  I’m Sarah Dash; I’m President and CEO of the Alliance for Health Policy, and for those who are not familiar with us, we are a resource for policymakers, the policy making community, we are non-partisan and we’re really hear to promote knowledge and understanding of health policy issues.  So we’re thrilled to have you here.

We’re here today to talk about surprise billing, which has emerged as a key concern for American voters and the public and here on Capital Hill.  So I’m not going to belabor it, because we have a fantastic lineup of speakers here to explain the nuances of the problem, the issue, and policy considerations that are being debated as we speak.

Before we get started, I just want to make a couple quick housekeeping notes.  Please make sure, before you leave, to fill out your blue evaluation form because we care about outcomes here at the Alliance.  And be thinking about the questions you want to ask, you can write them down on your cards.  You can stand up at one of two mics or you can tweet them to hashtag #allhealthlive.

Without further ado, I want to thank Arnold Ventures for their support, for making today’s briefing possible.  I’m going to invite Mark Miller, who’s the Executive Vice President of Healthcare here to make a couple welcoming remarks, and then we’ll go ahead and introduce our panel.  Thanks.

MARK MILLER:  So just a couple things:  First of all, I’d like to thank Sarah and the Alliance.  I think these are very good outlets for the work that we sponsor.  And just so you know who we are, Arnold Ventures is a philanthropy; we do research and produce policy. We’re trying to support both the Hill, the administration and the states.  We have a lot of different areas we work on:  Criminal justice, education, which I know nothing about.  Also, healthcare and we’re very deeply involved in the drug pricing issue right now.  Also in the ad network issue, which is what this is all about.  So if any of that appeals to you and you’d like to talk to us about it, we’re happy to talk to you about that and we can connect you to grantees and people that we’re funding in order to get information for you.

Today, we’re going to talk about out-of-network billing, the result of market concentration on the part of particular specialties and the entry of private equity firms.  I think this raises costs for all of our commercial premiums as well as puts patients — can create a burden for the patient.  And I think the thing that’s disturbing about this issue is, even if you have insurance, you are completely exposed in this situation.  You can go into an in-network hospital and get hit with an in-network anesthesiology bill.

Just a couple of things I’d like you to keep in mind as you listen to this.  I think you’ll hear that there’s a lot of variability in this practice across hospitals and geography.  That there are certain specialties this is concentrated in:  Emergency room physicians, anesthesiologists, and radiologists.  And in the ambulance setting, both ground and air.  I’d like you to keep in mind that emergency room physicians and anesthesiologists and radiologists make between $350,000 and $420,000 a year.  And in-network are generally paid 200 to 400 percent above what Medicare pays.  And out-of-network get between 450 and 800 percent of what Medicare pays.  I think some of the work that’s going on in the Hill between (indiscernible) and Energy in Commerce is probably headed in the right direction.  By looking at caps, the caps allow these providers to decide whether they want to be in-network or out-of-network.  They can still negotiate, but at last caps the most egregious practices.  So with that in mind, I’ll turn it back over to Sarah.

SARAH DASH:  Thanks, Mark.  I’m pleased today to have a guest moderator for today’s panel, Sarah Kliff.   Sarah has been doing a tremendous amount of reporting on emergency bills with Vox Media, which really brought some national attention to this issue.  She reviewed more than 2000 patient’s medical records and I think we’ll start us off sharing a couple of those perspectives.  She recently joined The New York Times as an investigative reporter, so I can’t think of anybody better to moderate today’s session.  Welcome, Sarah.  And then I’m going to go ahead and introduce the rest of our panel.

You’ll hear from Jack Hoadley, he’s a research professor emirates at the Georgetown University Health Policy Institute.  He retired, supposedly, in 2017, but he continues to conduct research on a part time basis.  In his 35 year health policy career, Jack has completed six years as a commissioner of the Medicare Payment Advisory Commission, MedPAC, and held staff positions at HHS, MedPAC, the Physician Payment Review Commission, and the National Health Policy Forum.

Next, we’ll hear from Frederick Isasi, he’s the Executive Director of Families USA.  Prior to joining Families, he held positions with the National Governor’s Association, Center for Best Practices, the Advisory Board, and as a Senior Legislative Council for Healthcare on both the Finance Committee and the Help Committee.  So you can ask him after how that was.  And finally, we’ll hear from Al Bingham.

Al is a Senior Consulting Actuary at Wakley Consulting Group.  Prior to joining Wakley in 2016, Al was Director of the Office of Special Initiatives and Pricing, and the Center for Consumer Information and Insurance Oversight, CCIIO, at the Centers for Medicare and Medicaid Services, CMS.  I’m trying to win health policy acronym BINGO.  And has also held positions of Kaiser Permanente, the American Academy of Actuaries, and the Health Practice Council.

So I want to ask our panel to join us up on stage.  Come on up.  Speak into your mics.  Again, remember to be thinking about questions.  By the way, how many people know of somebody who has ever had a surprise bill?  Raise your hand.  Wow.  Okay, so just to show how much on the top of mind this issue is.  So I’m going to turn it over to Sarah.  Thanks.

SARAH KLIFF:   Hi, thank you, everybody so much for being here.  Thank you to the Alliance for putting this on, what is a pretty important topic that a lot of you here in the room are working on.  As Sarah mentioned, my background is reading a lot of surprise medical bills and learning about what those look like.  So before we dive into a lot of the numbers in the policy, I was going to just tell you a little bit about three patients I spoke with who really spoke to me, and gave me a sense of what the surprise billing issue looks like across the United States, and what it means on the person to person level.   The first is a guy named Scott Cohan and he kind of had the really classic surprise emergency bill.  If that is a thing.  He is someone who was attacked in downtown Austin, left unconscious, brought by an ambulance to a hospital and when he woke up in the hospital, the first thing he did, he told me, was he hopped on his phone and tried to figure out if the hospital was in his network.  Which I think is only something you do in the United States.  He found out it was, he felt relived and he went about getting his care.  But it turns out he needed emergency jaw surgery, and the jaw surgeon who staffed that emergency room was not in-network with any of the insurance companies in the Austin area.  He ended up with an $80,000 bill that was only resolved when I called the surgeon to ask about that bill.

The other patient who I think about a lot is a woman named Nina Dang. She wrote me an email about her bill, where she had been in a bike accident in San Francisco, was taken to Zuckerberg San Francisco General by ambulance, received care.  She had broken her arm and eventually needed surgery on it.  A few weeks later she gets a bill for $20,000.  It turns out that Zuckerberg San Francisco General was not in-network with any health insurance companies.  And she did not realize that while she was in the ambulance being brought there.  They’ve since changed some of those policies and gone to network.  California was trying to do some surprise billing regulation based on some of the reporting that I and others have been doing, but it looks like that legislation isn’t going to pass this year.

The third patient and probably the patient I think about the most is a woman named Lindsay Clark.  She submitted a bill to this database I was working on for about a year at Vox, and she told me this story about an emergency room visit that didn’t happen.  She was at home with her young daughter, Lily, who is two years old.  And if you have had a toddler, you know two-year-old’s like to put all sorts of things in their mouth.  And Lily ended up eating some Dramamine pills that she wasn’t supposed to.  So Lindsay, her mom, called the Poison Control hotline and said, what should I do?  And they said, well, take her to the emergency room, there’s a possibility of overdose, you want a professional to monitor her.  And Lindsay is thinking in her head:  I don’t know if I can afford this.  Because she has an outstanding $1200 visit bill from her last emergency room visit.  A surprise bill like the type we’re talking about today.  So what she decides to do is she drives to the emergency room, but she doesn’t actually go inside.  She puts the Little Mermaid on the little screen in the mini van and she thinks, okay, I’m going to watch my daughter, and I’m close enough to run her into the emergency room if something bad happens.  But if not, I just can’t afford — she told me that she was thinking in her mind:  I just don’t know how much this costs.  I don’t know what will be in-network, what won’t be in-network.  I can’t afford to take that gamble.  Luckily, Lily was fine.  They ended up after a few hours, after watching Little Mermaid, they just ended up driving home.  But I think it spoke to me.

You know, all of these stories really paint you a picture of where patients are incredibly vulnerable to these type of bills.  I think that is the key thing I learned in all the reporting I’ve been doing on emergency room billing.  Patients are really vulnerable.  And I think today we’re here to talk about some policy solutions that might make patients a little bit less vulnerable.  So with that, I will turn things over to our first presentation, to professor Hoadley, who is going to tell us about some of those solutions.

JACK HOADLEY:  Thank you.  So I want to talk about some of the numbers, as Sarah told you, we’ve got the flavor of what happens to people in these situations.  And I’m going to try to put a little more data on it, but there are some problems with trying to measure surprise billing.  First of all, to use that third story that you told, that’s not going to show up in anybody’s database because it was a non-event.  So I think you always have to take the numbers with a lot of context as to what’s really going on.  And of course, there are surprise bills that don’t fall into this category, and I often talk about the fact, we can all get a surprise bill if we didn’t realize how expensive a particular procedure might be or we didn’t understand our deductible.  Those are surprises.

But here, we’re talking about the specific kinds of surprise bills that occur when you see an out-of-network provider in circumstances that you really can’t control.  So usually emergency circumstances or other situations where you start out with an in-network hospital, an in-network surgeon, but then somebody else like the anesthesiologist treats you that’s out-of-network.  And the data that we have tries to measure the share of visits that have a potential surprise bill.  In other words, there is some kind of an out-of-network claim that shows up in the situation.  And with this particular analysis by (indiscernible), they suggested about 51 percent of the time with ambulance services, you have the potential for an out-of-network bill.  With emergency situations, 20 percent in-patient, 14 percent out-patient, regular elective in-patient care 9 percent.  So even though that last category is a lot smaller, it’s still a pretty substantial array of cases.  Now again, this is a potential surprise bill if things are settled, if the doctor agrees not to charge, if there is an informal negotiation that occurs.  That may not always get picked up in these numbers.  But this gives you sort of the frame to work with.

Kaiser Family Foundation recently put out a report with a similar kind of analysis on claims with a national rate of 18 percent for emergency visits.  But what you can see here is that this can vary a lot.  And what I find striking in this slide is that this includes a lot of the states like California, New York, Texas, New Jersey, that have high rates of out-of-network bills where they do have a state law that helps to deal with it.  So this may mean the people in those particular states face the potential for an out-of-network bill, but are protected from that by state law, or maybe not depending on the circumstances, and I’ll come back to that.  But it also includes the high states like Kansas, Tennessee, Ohio and Oregon, that don’t have particularly any state law going on.  So you’ve got these different kinds of situations depending on the state.  It’s also true that rates seem to be somewhat lower in rural areas and higher in urban areas.  But there’s a lot of texture that we really need to understand about this.

This is an interesting one, because it talks about the situation in Texas where at least one of Sarah’s examples was from.  And it was an analysis done of how many times does the hospital participate in a particular insurance network, but the ER docs, or some of the other docs in that hospital, practicing in that hospital, are not in-network. And the first set of bars there is for the ER physicians and for three different insurance plans.  These are situations where the hospital is in-network with Blue Cross, Humana, United, but the percentage of times when there is not a single in-network doctor in their emergency room.  And you see that’s as high as 63 percent with one of these plans.  And so once you’re in the emergency room in that situation, you’re guaranteed to have an out-of-network bill.  Again, whether it might be resolved informally or not.

Mark alluded to some of the financial impacts here.  This, I think, really illustrates that further.  So on average, on the right hand bar, physicians in commercial insurance get paid about 128 percent of Medicare.  Again, we know that Medicare is lower.  That commercial insurance tends to be a bit higher.  But look at the three specialties that are the most common for out-of-network billing:  Radiology, emergency physicians, and anesthesiologists.  The average contracted rate, the in-network rate for these physicians, is successively 200 percent of Medicare, 300 and 344 percent of Medicare.  So this is the ripple effect.  This is the effect of the fact that these physicians can get patients without being part of networks, and so they have the freedom to have higher rates, which in turn affects our overall health costs and in turn affects healthcare premiums.

So what are the elements of protecting consumers?  We are going to hear more of that as we go through this panel and in the discussion.  But I think it’s important to sort of highlight what are the main things.  The very first thing that normally everybody agrees on is to protect the consumer by basically treating the situation as if it was in-network.  To limit the consumer to pay no more than normal cost sharing and to prohibit providers from sending them a balanced bill for whatever amount they prefer to charge, over and above what the insurance company pays.  So that’s the core of protecting the consumer.  Furthermore, it’s suggesting that that should occur in both emergency settings and those in-network settings in the in-network hospital where you’ve arranged for your in-network physician, your surgeon, but somebody else like the anesthesiologist turned out to be out-of-network.  So laws need to deal with both of those situations.  They also need to deal with all types of insurance.  And then to make sure that there’s no real spillover to the patient, there needs to be a mechanism in laws to make sure there’s a way to determine how the physician will be paid.   And in a lot of ways, the simplest and cleanest way to do that is to set a payment standard.  A payment standard that is viewed as adequate.  You can do that based on Medicare and in some ways that’s the most external standard.  You can do a percentage of Medicare.  Others, like the Health Bill and the Energy in Commerce Bill use a rate based on what the insurer normally pays in-network.  So again, another potential standard.  Some states have looked at a charge base system that can be more problematic because it can be more inflationary in the charges that physicians use are well above what insurance typically pays.   Another thing that we’ve seen in states is a dispute resolution process.  One that says both the provider and the insurer get to suggest what they want to pay and then let the arbitrator pick one amount or the other.  Normally it’s what’s called final offer arbitration, where again, the arbitrator picks one or the other amount and doesn’t split the difference.  And one of the reasons this can be popular is that it allows both sides to kind of have their say.  But it is a more administratively complex and a costlier process than just setting a rate.  States that have used this have found that it does encourage informal negotiations, and so that’s one of the ways to think about it.  We can get more back to the pros and cons of these in Q&A.  And as a political compromise, there’s also the potential to combine these methods.  To set a rate standard, to use something like a Medicare rate as the initial standard, but for certain cases, allow people to go to arbitration.  Maybe the circumstances of that particular case were more complex, or required a different kind of specialty.  And then you could have a more limited set of cases go to an arbitration.  Often states that have done this have suggested some kind of a more informal negotiation before you get to formal arbitration, again, as a way to try to settle most cases without going to the extra administrative process of arbitration.

And then finally, another alternative is to go with a method that would require hospital charges all to be bundled together.  Both the physicians you see in the hospital, and the hospital charge.  And that’s been viewed by some as a more convenient mechanism for consumers and a potential way to really lock down the charges and not have anything billed outside of that.  But it’s a more disruptive way to the current status quo.  And so it hasn’t really gained much traction.

There have been a lot of states that have addressed this and this our newest update.  We’ll actually be publishing this either later today or in the next day or two.  But you’re getting an advanced look at it.  And you can see here, there are now 13 states that have what we consider comprehensive protections.  They do all the kinds of things I talked about before.  And in another 14 states that have at least some protection, but is not as comprehensive.  And I think one of the nice things about this map is that you see it’s a mixture of what we think of as red states and blue states.  There are different parts of the country. And they do use a variety of solutions.  The newest states to join this map have been Washington and Nevada, and then Colorado, New Mexico and Texas just this year improved what they’ve done and moved themselves to the comprehensive status, where they had a less comprehensive approach before.

Then finally, as sort of like, why are we talking about this as a federal issue?  Well, there are a number of gaps that people raised about what states can do.  The first of those is on that map you saw 23 states that were shaded white; 23 states where there is no law.  And so a federal law would make sure that there is a standard across the country and doesn’t have to wait for each state to decide to act.  Secondly, and maybe most importantly, states don’t have jurisdiction over the self-funded plans.  And something like 60 percent of people with employer provided insurance are in those self-funded plans.  Usually large employer plans.  And those are subject to only federal regulation under the ERISA law, and states are precluded from being able to address those.  So when those states address balanced billing for their states, they were not able to do so for the self-funded plans.

A third gap in what states can do is the Air Ambulance.  Mark mentioned that as an issue as well.  Air Ambulance is something that states are explicitly prohibited from addressing by the Airline Deregulation Act.  And so for any kind of means of addressing the Air Ambulance issue, and while that’s not something that hits a lot of people, when it does, it’s a pretty big price tag.  It’s something else for the federal government.  And then one we’ve hearing about a little more lately is services that are received in another state from your home state.  And so when Washington State passed their law, they said, well, what if somebody from Washington is getting a service across the river in Oregon?  And they actually call for some (indiscernible) in that situation.  But it’s really only a federal law that could take care of that.

And then the last point I’ll make about federal role, is how do you sort of intersect what states are already doing with federal law?  And there has been a lot of provisions to the federal proposals that we’ve seen to defer to state laws.  And I think there’s again, some more detail to be thought through on that, and something we can come back in questions.  So with that, I’ll stop.

SARAH KLIFF:  Great, thank you so much.  And now we’ll hear from Frederick Isasi, who is the Executive Director at Families USA.

FREDERICK ISASI:  Thank you so much, Sarah.  Thank you so much, Jack.  We’ve got some national heroes here on the stage, it’s great to be up here with them.  So I’m going to — a lot of my presentation just sort of reinforces what Jack just talked about, so I will move fairly quickly.  For those of you who are not familiar with Families USA — I think most everybody in the room probably is — we are a leading non-partisan national voice for healthcare consumers.  Our mission is to ensure the best help in healthcare, are equally accessible to every living soul in our country.  Period.  We are funded through philanthropy.  We only work on behalf of the interest of families across the country.  We’ve worked for almost 40 years.  We work on the state level, so we’re actually working in some states right now trying to change laws around surprise billing, prescription drugs, other things.  And then we’ve worked here in D.C. for a very long time.  And we’ve got some staff here.  Hey, staff, wave your hands so people can see who you are.  The smartest person on this issue that I know is Claire right there.  She just waved.  We’ve got some terrific staff.  We are here to help you in any way we can, reach out any time.  We literally are here to serve your interests, so just come talk to us whenever you need to.

I will cover three things:  The problem, impact on families, and then some key principles.  And they occur when consumers are charged through no fault of their own.  So we are not talking about an instance where a consumer says, you know, I really want to go to this doctor, I know they are out-of-network, let me figure that out.  This is where you’ve done everything you could to make sure you’re in-network.  Let me give you two really clear examples.  One of course is:  Your insurance company.  One of the ways they market you is they say:  Guess what, GW Hospital is in-network, right?  And often this happens with the employer.  They will sit down and they will build their networks and they will kind of market that to say, you should enroll in Blue Cross/Blue Shield because we’ve got great networks.  Georgetown Hospital is in-network, right?  You are out biking, you hurt your leg, you go to the emergency room, you’re like, I know GW is in-network.  You go there, you get care, and you find out the entire emergency department, all of the doctors working in the emergency room, are actually not employees of the hospital and they are under a totally different contract and they are out-of-network.  That’s what we are talking about.

Another example would be:  You need to get surgery.  Let’s say I had to get arthroscopic surgery on my knee from a skiing accident.  I went and found my surgeon, thought he was going to do a great job, he’s in-network, the hospital is in-network, you go get your care.  In the middle of surgery, he has to run a little test to make sure he’s gotten everything he needed to get, right?  It could be an imagining scan, it could be a lab test.  And he sends it out, it comes back, you get your care and you leave.  And then you find out that radiological exam, or laboratory services, is out-of-network.  It’s a little bit preposterous.  And I will say, I’ve done a lot of work in previous life in industry, working on these negotiations.  The thought that insurance companies and providers think it’s reasonable to not reach agreement and then just sort of leave it up to the consumer to figure this out on their own is totally unconscionable.  And that is why we are here.  Because it is not fair for insurance companies to say that GW Hospital is in-network, but there are no ER docs there you can go see.  That’s a totally unreasonable position and it’s unreasonable for GW Hospital to say that they are in-network, and know that their physicians are out-of-network.  That’s what we’re trying to solve here.  It’s totally bipartisan.  I testified in the House and we had Republican legislatures who when they were in the Texas House, worked on this issue.  This is not a Democratic and Republican issue; it’s totally bipartisan.

More stats:  One in five emergency department visits and about 20 percent of lab services and nearly seven out of ten air ambulances are out-of-network.  This is kind of a dot diagram of the prevalence.  As you can see it’s ER, anesthesiology, emergency services, and on this thing, like, labs, radiology, anesthesiology, they are often referred to as auto-referrals, meaning you as a consumer don’t pick who your anesthesiologist is.  You pick your surgeon, you pick your hospital.  You don’t pick your anesthesiologist.  So there is no competition and there’s no market.  And when they say:  I’m not negotiating and I’m going to come back and charge whatever I can, that is a distorted market.  They are leveraging a distortion to get a price that is not competitive. They are just leveraging their ability because it’s an auto-referral.  You are not selecting them.

Financial impact varies greatly.  On average it’s about $600, but it can be as high as $20,000.  In particularly, Air Ambulances can be devastating.  $10,000 for a ride.  This is a chart of all the different — it’s public opinion, and the first one is:  How worried people are about medical bills.  And I just want to make a point and you can see everything from housing to utilities.  The number one issue that Americans are concerned about is unexpected medical bills.  In fact, in this country today, the American Psychological Association did a survey.  They found more people are worried about the cost that they will incur if they get sick, than actually getting sick.  I’m more worried about having to pay for the cancer, than I am getting cancer.  And that’s really what this is about.

Let me tell you a really quick story.  This is Soneji; she testified a couple of weeks ago.  She’s the woman with the brown hair in the corner there.  She’s from Englewood, Colorado.  Do we have any Coloradoans in the audience?  No?  Okay.  So she lives just south of Denver in a little, kind of storybook town.  That’s her husband, Nathan, her two beautiful daughters and then her youngest son, Thomas.  They live in this little town, Englewood.  It’s about 30,000 people, known for its parks, for its reservoir, for it’s water parks.  It’s got the largest mall in Colorado.  With the birth of Thomas’s second — the sister that’s closest to him, which is the young one with the glasses, they received a surprise medical bill.  So when Soneji got pregnant with Thomas, she and her husband, Nathan, were like, we’re going to get this right this time.  So they talked to their insurer several times.  They talked to their doctor, they worked through the whole thing.  They were all set.  The pregnancy came to term, she started going into labor.  Here we go.  They got off for the hospital.  She starts to give birth to Thomas, and then everything starts going wrong.  By the time he was delivered as a tiny infant, he was in crisis.  He was bleeding out.  And they discovered that he was born with hemophilia.  And he was very, very close to dying.  And so they immediately rushed from the delivery room to the NICU, to the Neonatal Intensive Care Unit in the hospital, which was just down the hall.  They were terrified.  Their little baby was like, gasping for life.  And after a lot of uncertainty, he began to stabilize, he turned the corner, eventually she could take him home.  They had that moment where she could take him in her arms, take him home, and they could start their life together as a family.  So it was a beautiful story of our healthcare system actually working.  But then a couple months later, the joy turned to misery in that they received a hospital bill for $50,000.  As you know, almost half of Americans have less than $400 in savings, right?  So a $50,000 hospital bill just blows apart your entire life.  The insurance company, before they went in, they had worked through every detail and they said:  Your cost share will be $250.  Turned out the insurance company was wrong because it was $250 per person and little Thomas counted as a person, so it was actually $500.  But that was going to be their maximum out-of-pocket, was $500.  They found out that the NICU, that was literally 50 feet away from the delivery room, was out-of-network.  And this what Soneji says — basically what happened was, they refused to pay the bill.  They went through enormous amounts of  trouble.  There insurance company could do nothing for them.  Eventually, this was settled through a class action lawsuit because they were not the first family this had happened to.  But their credit was completely ruined and they are still digging out from the fact that their credit was ruined, over a decade later.  Soneji says:  When you are told that your baby is bleeding out and his body lacks the ability to stop bleeding and that he needs immediate specialized treatment, your first reaction isn’t:  Gee, I wonder if this is in-network.  Your first reaction is:  By all means, do whatever it takes to help my baby.  I would have never have thought to check if the NICU, just 50 or so steps from the room I gave birth in, was in-network.  I think any reasonable person would assume it would be, because it seems reckless and cruel to me that it would not.  So that’s what we’re talking about here.

Going on, we have a few principles that are very much like Jack’s.  The first one is:  Hold the consumer harmless.  As I said, the last person in this whole scenario who knows what’s going on, is the consumer.  The hospital knows, the insurer knows, the provider knows, the person doesn’t know.  They need to be held harmless.  So in emergencies and in in-network facilities, balanced billing should be completely prohibited.  Balanced billing has to be protected across all provider types and not just emergency services.  But whenever you’re in that in-network dynamic.  For out-of-network care, individuals shouldn’t incur, due to no fault of their own, they should not pay more towards their care than they would have in in-network cost sharing.  Cost sharing amounts should count towards the consumers and network out-of-pocket maximum, so make sure you are aligning everything.  If I paid this money for this bill, even though it was out-of-network, it counts towards my out-of-pocket maximum.  Provider types when a consumer may reasonably choose to go out-of-network such as office space care, surprise billing protection should trigger, unless the provider has informed the patient seven days in advance of such service, and the provider’s network status with an estimate of cost and obtain patient consent.  As you guys know — I mean, who here has tried to figure out if a provider was in-network, in their life?  Raise your hand.  How many people felt like that went really smoothly?  Keep your hand up.  So we have to make sure that if you’re trying and you get bad information, you are held harmless.

Two, and this is really important.  It’s not just about  your out-of-pocket experience.  It’s also about your premium costs.  So this shouldn’t be an excuse for providers to charge astronomical amounts of money.  There is a lot of discussion going on right now.  Should it be arbitration?  Should it be average and network rate?  Should it be Medicare?  Family’s position is very clear.  We are supportive of all three approaches.  We think that average in-network rate is the right answer.  But the one thing for sure is, the fact that providers and insurers can agree, should not be stopping Congress right now.  Congress needs to act.  So don’t let that issue stop us from getting this done.

And then three, coordination between state and federal laws, as you guys have heard, you know, the vast majority of Americans get their healthcare through employer sponsored coverage.  So for those of us who do, whatever our states have done doesn’t protect us.  It’s only Congress that can act to protect us.  So we need Congress to act.  We would say use a HIPAA model.  So if the state has passed stronger laws, let the state law pre-empt.  But if the state hasn’t passed any laws, the federal law has authority.  And then as I mentioned, make sure ERISA is covered.  And that’s it for me, I will turn it over to Al.

AL BINGHAM:  Thank you.  Good afternoon.  A pleasure for me to be here today.  I will put the disclaimer about this — my views here are not necessarily those of Wakley’s.   I also want to thank a could of my colleagues with whom I’m studying this issue right now under some research.  We are not totally finished yet, but we have researched at least a small piece of that, and that’s mainly what I’m going to be speaking about today.  We’ll go right onto it.

I have come up with about four categories.  We can probably debate how many there are.  These are all areas where you can see out-of-network bills.  The one that I’m going to focus on, which is really in my opinion, the smallest, is the in-network surprise — what I call the in-network surprise, which you’ve heard a lot about so far.  And I think that’s really what you see a lot of in media and what people talk about.  But all of these can certainly involve balance billing.  All of these are contributing to increased healthcare cost to the extent that the providers and the insurance companies are not under a negotiated rate, unless it’s negotiated after the fact.  It’s not under a contractual rate.  I will come back to talk about some of these in a bit.

Insurance companies have put together networks for a number of reasons.  Part of it is to help control costs and also to control cost increases through the contracts that they have with providers.  Usually, almost always, the benefits that someone has when they purchase one of these plans, or are covered under one of these plans, have incentives to use in-network.  And they can be fairly substantial.  As you’ve heard the examples of today, the surprise occurs when someone’s done everything they were supposed to do.  Including once or twice to myself.  They get this bill usually, as you say, two months or so after the fact.  Not expecting it.  And all of a sudden it’s a whole lot more than they researched on the cost-sharing.  So we’re talking about people who have actually intentionally done what they thought was the right thing to do to minimize their out-of-pocket cost.  Then they get this bill and even after the insurance company maybe has negotiated or paid up, reached a customary charge, or however they managed to do it.  There’s potentially balanced billing to go along with whatever cost-sharing there was under the allowed cost.  As we talked about, it’s usually a situation where it’s the hospital has a contract or maybe it’s the out patient facility has a contract with the insurance company, but the providers do not.

Now, how prevalent is this?  You’ve seen some statistics already.  Another article I read just last week says that even these types of physicians that were on the previous slide, are only about less than 16 percent, and not all of those are going to be out-of-network.  But we have access to a national database of claims data.  It’s the IBM Watson Health Market Scan Data.  Now, it is insurance claims data.  So it is somewhat limited.  It has — a lot of it is self-insured, but it’s going to include allowed cost.  So allowed costs of what’s ultimately been negotiated or paid or determined to be allowed and adjudicated by the insurance company.  But part of this database allows — it has an indicator as to whether the claim was in-network or out-of-network.  So we went through and looked at out-of-network physician claims — and this allowed costs, not paid amounts, but out-of-network physician claims that were associated or that the timing was such that it was obviously associated with an in-network facility stay or visit.  And you can see the numbers are pretty small as a total percent of all allowed costs.  But that doesn’t mean it’s not an issue, because even though the totals are small, these are averages and in these averages you’ve got some systems where essentially there are no out-of-network costs.  You go to — I’m pretty sure this is true — you go to a Kaiser facility in California and you are not going to have an out-of-network surprise bill.  Even though sometimes in Kaiser coverage you do see them if you go to a certain emergency room or something.  So it’s a pretty small percentage of all costs.  So providers in general are not going to be taking a huge hit when you’re talking about fixing this problem.  And premiums for this part of the surprise bills are not going to change that much, although they do change some.  And when you start adding in the other pieces, as you’ll see, it’s going to be not an insignificant impact on premiums.

Now, as I said, there’s some considerations.  This varies tremendously by issuer and type of issuer.  And even by network.  And even for certain types of issuers, it might vary within a state.  Within areas of a state.  And because as you saw, there are some states that have a huge percentage of facilities where say, the emergency room physicians are not in-network, not under contract.  They may be under contract with the hospital but not with the hospital’s insurance companies.  It not just varies within a state, but there are certain parts of the country where this is far more prevalent, as you saw on the slide earlier.  But there are large differences in out-of-network costs and you saw some of the statistics that my colleagues here have shown you.  And the distribution is big.  There is not one number and averages can be real deceiving here.  So even though it’s not a significant percentage of total costs in our system, assuming that this data base represents our system, which it doesn’t, it’s not universal.  But there is obviously significant cost to the enrollees.

Addressing this, the in-network surprise, is not going to have a huge impact on average premiums.  It may have a very big impact on some premiums.  You saw that slide that said for one issuer it was huge.  Whereas a couple of other issuers in the measured state did not have as much of this issue.  So it could be big when you get away from averages.  But when you start adding in the other pieces — the ambulance, the air ambulance, the out-of-network piece — just going to an out-of-network provider, which by the way I think I neglected to mentioned, sometimes you go to an out-of-network provider and they refer you to say, an imaging facility, which is also out-of-network and maybe partially owned by that provider.  It’s been reported that some of the proposals that are running around out there, and that you all are considering, could have as much as a two percent premium savings when you add all of this together.  And from what I can tell so far, that’s — I could easily see that.

Now, I’m not going to get into what you should be doing, but there are some ways to solve this.  I mean, some things I’ve heard personally are discussions around requiring that any hospital that has contracted physicians, any time they sign a contract with insurance company, then that contract would have to be including those contracted physicians.  And then you’ve also heard about the other pieces — the percentages of Medicare, the median or average in-network reimbursement or arbitration.  Any of those would go a long way toward fixing this.  Arbitration probably less certainty, certainly, for the enrollee.  But any of this would be a help.  So with that, I guess I’ll turn it back to Sarah.

SARAH KLIFF:  All right, thank you very much all of you for your remarks.  So we’re going to get started with some questions.  I obviously have many of my own.  Would love to hear yours as well.  You all have green cards in the middle of your table.  You can write questions on those.  I believe there’s also two microphones on the sides close to the back if you want to stand up and ask your question.  And you could also tweet your questions with the hashtag #allhealthlive and people are keeping an eye out for whatever comes in that way.  And with those green cards, I believe people should be coming around to collect those.  Sarah is over there and happy to come do some green card delivery.

So I’m going to bring it back, probably start with you, Jack, about some of the state laws that you spoke about.  I was curious, are there ones — as Congress is thinking about this, obviously looking for as much information as they can — are there certain states or approaches you think have been especially successful?  And what are the key lessons you would take away from how to make these work, or potential pitfalls they run into that federal legislation could avoid?

JACK HOADLEY:  So that’s a great question and it’s one we get asked a lot.  And part of the challenge is that a lot of these state laws have only a very short shelf life.  They’ve only been passed in the last couple of years, or they have been modified.  Texas, for example, has had a law in the books for a decade, but they’ve modified it a series of times, including this most recent session.   So when you try to look at what’s been the experience in a state like Texas or California, it’s challenging because of the recency of doing things.  There are things we can learn.  I think one is that states have crafted different solutions to fit the circumstances in their states.  So markets vary.  There is different amount of power with insurers in some states, with providers in other states, and to the extent that all of this problem is about market failure.  Obviously in an ideal circumstance, networks would be adequately inclusive, and there would be circumstances that the physicians that practice in hospital A would also belong to the same insurance networks as hospital A.  But where the market fails, that’s where we see these efforts.  And so states have looked at their particular circumstances and have tried to deal with it.  A couple of things I would mention:  One is, some states early on looked at the possibly of having sort of an informed consent model.  If we tell you about the possibly that you might get balance billed, and if you sign something that says, yes, I understand that’s a possibility, then it’s okay.   Then you go on and get the balanced bill.  The problem states have realized with that is that it becomes one of those many pieces of paper you sign when you encounter the healthcare system.  It’s one on a clipboard and you’re told:  Sign all of these eight places.  And you’re not going to be able to understand that, let alone if you’re already being admitted to the hospital that morning.  It’s a little late to do that shopping for oh, is my anesthesiologist in-network?   I think states have also seen more of the problems with solutions that set rates based on charges because that tends to be inflationary.  Charges can be several multiples of what insurers typically pay or what Medicare pays.  And so a charge-based system tends to create higher rates and doesn’t have the sort of cost savings effects.  Some of my colleagues did a study of the New York State approach and I think have found that things have worked pretty well there.  And I think that that’s what you tend to hear.  When you talk to stake holders, as a whole, these things are fixing the problem in the sense of addressing the concerns that consumers have, except for all of the obvious gaps that we’ve already talked about.

FREDERICK ISASI:   And of course, it wouldn’t address the self-insured plans.

JACK HOADLEY:  That’s right.

FREDERICK ISASI:  So for most Americans who get their coverage through their large employer, we’re all of us just hanging out there right now until Congress acts.  I will say, this idea that a patient can be informed ahead of time, you might get a surprise.  Well, just think about it, in Soneji’s case, she would have gotten a piece of paper that I’m sure said something like — as a former lawyer for hospitals, something like:  I understand that there are services provided in this institution that may be out-of-network, and I’m willing to assume financial liability for those services.  Do you honestly think that Soneji — she would have thought, well, if I want to get a facelift, I will have to pay for that out-of-network.  But a NICU?  A NICU in a hospital that’s providing obstetrics and gynecology?  Really?  So that feels like a giant loophole.  It doesn’t address the problem at all.  And the second thing I was going to say, on charges, just remember a charge — it’s all very confusing because there’s charges and price, and totally pay and all of that sort of stuff.  Charges is in essence — when you go to TJ Maxx, and they have manufactured suggested retail price — the MSRP — it’s a made up price that they are putting on this pair of underwear, right?  Like, oh, I should be paying $50 for it, but they are only charging me $10.  What a deal.  That’s what they are talking about.  It’s their manufactured suggested retail price for my anesthesiology services.  That’s a preposterous place for us to start to try to find a reasonable price to pay.

SARAH KLIFF:  I remember actually — I had a baby about a year ago, and when I was there, I was trying to avoid signing the paperwork.  It did not work out in my favor.  I did not end up with any surprise bills, but while you’re in labor, it’s a very hard time to negotiate around paperwork.

So we’ve got a lot of questions — thank you so much for everyone who’s sending them up here, I’m reading through all of them.  And we have a handful about the actual kind of heart of the policy solution.  How do you figure out what is a fair price when an insurance company and hospital don’t agree?  I’m going to read you guys two versions of that question, and I would love to hear your answers.  One is, what are the pros and cons of benchmark rates or arbitration as potential policy solutions?  Another is:  Can you speak to some of the concerns with rate setting and how the various legislative proposals address this?

JACK HOADLEY:   I can start on that.  I mean, I think the pros and cons are numerous and for rate setting, I think the best feature is that it’s a clean number, we know what it is, it gets you to the point, if it’s set correctly — and again, rate setting that was set based on 80 percent of charges, which has been used in some cases, is not necessarily going to get you these results.  But rate setting that’s set based on 125 or 140 percent of Medicare or based on the in-network rates, some of the things we’ve seen out there can get you not just to a rate that’s clear and understandable, and therefore easy to administer, but also one that does not lead to healthcare cost inflation and could even lead to savings.  And in many cases, would lead to savings.  The problems with rate setting have been more in the reaction of stakeholders.  Providers have objected to rate setting, I think, partly because they feel like it’s a starting point towards overall kind of government rate setting and something that therefore they are not happy with.  Obviously, rate setting, and my example of charges if done badly, could have other kids of adverse effects.  If I said, rate setting was at 25 percent of in-network rates, that could create problems in the other direction.

With arbitration, I think the biggest concern is that it is more administratively burdensome process then a rate setting.  It does require parties to come to the table.  There is some cost involved with that.  I think there are ways to keep that cost somewhat under control, but none the less, there is a cost.  People have talked about costs in the range of $600 to $1000 per case.  And of course if you were talking about a $100 charge, that’s not going to be appropriate.  But in a way, that’s what should minimize the use of rates of arbitration, if it were seen there coupled as sort of an appeals process for relatively infrequent use.  So I think you can really get into a lot of those issue over the different advantages and disadvantages.  A lot of it depends on the circumstances and whether you’re trying to come up with what you think is the best solution, all else being equal, versus something that gets to the point that we’ve already heard made up here.  We’ve got to get to the point of trying to solve this problem for consumers.  So if we get into the art of the political, that’s where you start to look at give and take among some of these different approaches.

FREDERICK ISASI:  I was just going to say, really important, this issue of not being to reach an agreement between the insurer and the provider is literally the reason we have balanced billing.  It cannot be the reason that Congress doesn’t act.  We have got to get past — this is why you guys all work for your bosses.  I mean, this is the point of having elected officials.  We’ve got to settle this and move on.  America’s families cannot get a $50,000 bill when they deliver a baby.  That’s not anyway to provide financial security to our families, right?  In terms of the concern here is, as you guys probably know, the negotiation between insurers and provider is one of the most intense sort of highly scrutinized negotiations you can imagine.  I was part of this in a previous life a little bit.  And the concern is, you set a rate at a certain place, and you put your thumb on the scale towards either the insurer or the provider and that’s the concern, right?  And so there’s three main approaches you’ve heard about.  One is, it’s kind of a bundled payment approach.  I’m going to pay a hospital — like, if I show up at a hospital to get surgery, I’m going to give the hospital one payment.  The hospital can pay the surgeon, the hospital can pay the anesthesiologist, the hospital can pay the laboratory services.  That’s the economist’s favorite.  It’s very clean, it’s very elegant, but it’s a whole new way of doing business that can be a little bit hard to get going.

The second one is this idea of all for arbitration.  So just let the parties come in and fight it out and it’s baseball style, so I’m not going to split the difference.  Whoever has (indiscernible) approach, that’s what I’m going to give you.  And the third is:  Let’s just pick a rate.  And the beauty about picking a rate is, everybody knows in advance this is the situation.  There is no surprise.  There is no fight at the end about what the payment rate is.  We favor that, because we think it’s the easiest to enforce.  We will make sure that families actually don’t get stuck with a crazy bill.  However, I will say this:  When setting the rate, there is a few different approaches.  There are charges, which like I said, is crazy.  The manufactured suggested retail price becomes the price.  That’s insane.  The second is set using Medicare benchmark, right?  120 percent of Medicare.  Medicare is right now the only place we see in this country where people actually try to figure out cost and then set a payment based on that.   But then the third is one that’s more market specific and that’s where we’ve landed, which is the median in-network rate.  So sort of, what’s the average that’s getting negotiated by the providers in this community.  And that’s what we favor.  I will say, if you think about the statistics that Jack put up there; in Texas, what they found was if  you were in United Healthcare, 40 percent of the ER visits were going to be out-of-network, potentially.  If you were in Blue Cross/Blue Shield, only 18 percent.  And if you on Humana, it was 62 percent.  Now that to me is a warning sign.  We care about both sides of this.  We want to make sure people have access.  What does it mean for Humana to say that they have adequate networks in Texas, but only 37 percent of the emergency rooms are actually in-network.  So there are two sides to this argument.  We think the most elegant, simple solution is that median in-network rate, which is responsive to the individual market in which it’s being negotiated.

AL BINGHAM:  And I would say that you look at arbitration and unless the fix also sets something like in-network cost sharing for the enrollee, the enrollee still doesn’t know how much they are going to pay, right?  And so you haven’t really totally solved the surprise bill issue — at least the in-network surprise that as I call it.  I would agree, a charge-based system is problematic.  One of the things I mentioned is that in-network provider rates have often times a limit on how much they change from year to year.  There is no such control over — or no such control or limit when you talk about charges.  And so when we’re trying to do things about healthcare cost increases, a charge-based system is not going to help solve that.

JACK HOADLEY:   Let me just mention, one thing that Texas did in the new law they passed this year, is ensure that if a higher amount is established in arbitration process, the patient’s co-insurance, if they have a percentage-based co-insurance, would still be based on the original in-network rate.  So there are these tweaks that states have found.  I think that’s another place for some of the lessons.

FREDERICK ISASI:   And I think that’s important.  Incredibly important.  It’s one of our principles.  Incredibly important that if you thought you were network, you have an in-network experience with regard to your cost sharing.  And it applies against your limits.  You have an in-network experience as an enrollee.

JACK HOADLEY:  I will also give a plug to — we just posted this morning on Health Affairs blog and something that does write up more about the pros and cons of these different approaches.  So I will refer you to that.

SARAH KLIFF:  Let me ask:  You’ve talked a lot about the possibility of some kind of rating setting, and a few questions have certainly come in about some of the challenges with that.  If you have more questions, feel free to write them down and they will be handed up to me, or there are also two microphones if anyone is brave enough to ask their question in person.  I’m happy with the green cards as well.  So a few people are asking a little bit about how a rate setting mechanism would work.  One comment that we received is:  Physicians would say that limiting reimbursement to average in-network costs would discourage insurance companies from negotiating in good faith with physicians.

Another question is that:  Is it expected providers impacted will raise rates across the board, maybe look for new ways to make revenue if they have some kind of these restricts put on their billing practices?  How do you think about how having these contracted rates; how those impact the negotiations between insurance company and hospital, and doctor?

AL BINGHAM:  That one surprises me a little bit.  To have an average or median in-network rate, there has to have been negotiations and contracts with in-network providers.  For example, in-network emergency department providers.  So I don’t know that it would discourage the negotiation, because the whole emphasis or the incentive is to bring as much of the care in-network as possible.  So I may not understand the question, but it doesn’t seem to me that it would discourage the negotiation at all.

FREDERICK ISASI:  I don’t think you’re misunderstanding the question.  I think this is what we keep hearing from particularly ER docs who are the ones who are most impacted by this.  Think about what they are saying.  Let’s say I’m in Texas where 37 percent — in Humana — only 37 percent of the ER care is being provided in-network.  So a bunch of it is out-of-network and I can charge whatever I want.  By using the median network rate, what you’re doing is you’re internalizing those costs now in the negotiation.  Remember, it’s median, so there’s folks who negotiate higher and there’s folks who negotiate lower.  So instead of those doctors just sitting outside the negotiation and just charging whatever they want, they have to come in and negotiate.  And that’s going to create a price that actually reflects the needs of that community.  I will say — and you see this in the Health Committee Bill, we need to know what the networks are.  We have to make sure that there is adequate networks that consumers are getting good information about who is in and out-of-network.  Those are all pieces that all have to fit together.  And we are ready to fight with the ER docs if for example, the networks aren’t adequate.  So it’s not just set a payment rate that represents the median in-network rate, but it’s also make sure that there is real robust networks that allow individuals to have access to the services that they need.

JACK HOADLEY:  And one of the things you’ve seen, I think both in some of the federal proposals and certainly in some of the state laws, is linking some of these different solutions — benchmark rates or whatever, to other sort of transparency and network adequacy and network information.  So you saw provisions in the Senate Help Bill and the Energy in Commerce Bill to make sure that network direct, provider directors are accurate.  Now, it’s not always as easy as just saying they must be accurate as actually translating that, but it’s at least pushing that discussion in the right directions, and some states have linked this specifically to network adequacy requirements.  So I think this is a multi-piece kind of thing.  We can sort of fix this issue, address some of these things.  It doesn’t mean there is increased attention on guaranteeing that networks are adequate.  That people know who is in-network.  And one of the challenges is the fact that it is hard.  We’ve already talked about this.  It is hard to find out for sure if somebody is in-network.  Oh, I take Blue Cross.  Oh, do you take this version of Blue Cross?  Oh, well, I’m not sure, let me go look it up.  Oh, no, it turns out we don’t take that version, we only take this version.  And that’s the challenge that people face.

SARAH KLIFF:  So one conversation I had in my reporting a little while ago that I’m reminded of — and this was in reporting the story about Scott Cohan, the person who went into the Austin hospital and ended up with an $8,000 out-of-network bill from his surgeon who it turns out was an oral surgeon, wasn’t in-network with any — he just did not contract with health insurance plans.  When I talk to a hospital about this, their perspective was look, there aren’t a ton of oral surgeons in the world, we need someone to staff our emergency room and one of the ways we get someone in there is we let them bill how they would like to bill.  He was posing the question to me:  Well, do you think it would be better if we just didn’t have an oral surgeon on staff here?  So an argument I have heard a lot from hospitals in my reporting is that we need to have these services.  We feel like we don’t have leverage.  What do you think about concerns of erosion of access to services?

FREDERICK ISASI:  Listen, if there’s any group in this nation who cares more about access, it’s families, right?  So we are 100 percent on board with that concern.  Here is the thing:  For a hospital to say that — I mean, basically what they’re saying is:  We can’t figure it out with the oral surgeon, so when you go get your service, we’ll figure out what happens, and you’re going to get stuck with a terrible bill.  The point is, they should be forced to sit down with that oral surgeon and have the conversation and negotiate.  Have him or her come in as a network provider, and then we know what the costs are and you have protections.  The thought that the only way you can staff is by letting it be the wild west where people can charge whatever they want, is preposterous.  There is no reason why that same surgeon, they couldn’t sit down and negotiate.  And by the way, it is a market in that sense, and eventually a price where you attract more surgeons and more people show up and — what they are basically saying is I’m a hospital and I want to be able to provide oral healthcare surgeries, but I’m not going to be responsible for actually making sure that we have a provider that can do it.  That’s a preposterous position for a hospital to be in.  And by the way, an emergency room?  An entire emergency room? A NICU?  There is a business model behind this, in many cases.  Like, having a NICU be out-of-network is basically saying, we figured something out, it’s an auto-referral.  When that baby is born in crisis, you get to take care of them without anyone making any choices.  That’s an auto-referral and I’m going to charge whatever I want.  That is a business model.  That is not about access.  That’s about a business model.

SARAH KLIFF:  But do you think there is a fair worry about the oral surgeon saying, you know what, I have a booming out patient practice, this just isn’t lucrative.  And is that an okay outcome if there isn’t an oral surgeon there sending $8,000 bills?  Because I think about it from the provider side, the incentive isn’t quite as strong to work in the hospital when you can bill whatever you like to bill.

FREDERICK ISASI:  Except that we know that that provider showed up to practice in the hospital because she did or he did, right?  So there is a price that is available that will attract that provider in the hospital.  Let’s force the much more sophisticated negotiator to go through that process and not just have the consumer at the whim of whatever the surgeon decides.  And by the way, in Denver — in the Denver area, when they looked into another case of surprise billing, they found 120 homes in that area that all had liens on them, by ER physicians who’d gone through a collection agency and were basically trying to take people’s homes away from them for paying their bill.  This is crazy.

JACK HOADLEY:   Yeah, I mean, I think one of the things you have to remember, is how this issue has evolved over the years.  Hospitals — and Frederick was just talking about this — have made a business strategy — not the hospitals, the physician groups.  So groups like MCare, that have come in and done hospitals a service by saying:  We’re going to staff your hospital’s emergency department.  You’re not going to be the one that’s on the line to go out there and make sure you have 24/7 coverage.  So that’s nice; that’s a good business relationship.  But the problem is, a lot of that has been premised on companies like MCare who make their business model based on out-of-network billing.  They know that they can get this extra revenue by billing the patients beyond what insurers will pay.  And a slide that I’ve used in some talks, but I didn’t fit it in here, shows that hospitals have gone from zero out-of-network bills to 100 percent, like a lightbulb turning on, as soon as they bring in this company.   And I think what’s important in the oral surgeon case, and the NICU case, and these other kinds of cases, is to remember, these are emergency services.  This is not the market working — if I want to go in and have oral surgery on something that’s discretionary, I want to get a knee replacement, I can go out and shop for surgeons.  A market will develop, prices will develop, those things can happen.  But in an emergency, that all goes away.  I come in, I’m brought in by the ambulance, the baby is sent to the NICU, the oral surgeon gets pulled in, in the emergency, to deal with the situation.  If it’s a situation where that oral surgeon can wait a month to happen, or the surgery can wait a month, then you could go around and do business and shop and then you can make a different set of arguments.  But when it’s happening under no control of your own, that’s why this is a policy issue that feels like — and yes, there is a real concern about access implications.  And I think we do need to talk through what different rate formulas and things will mean for access.  But in the end, we’ve got to make sure that a patient is not being caught in a cross fire in these situations that they are just coming in to get the care when the emergency happens, and doing all the subsequent things that happen to them; the NICU case, ER case, whatever it may be.

AUDIENCE MEMBER:   Hi, Joyce Freidan with Med Page Today.  In all of this discussion, is there any way to talk about what is happening now with all of these out-of-network charges — are 100 percent of them getting paid?  I mean, I know Frederick mentioned the woman who is still digging out of bankruptcy — are some of these getting settled?  Are there any statistics on how out-of-network billing, how successful it is now?

JACK HOADLEY:  It’s tough to have those kinds of statistics, because a lot of the settlements, you know — Al talked about looking at the insurance claims.  Well, whether something gets sent to a collection agency, whether there is an agreement between the provider and the patient on how much they are going to collect of the balance bill.  Whether that’s done amicably, whether that’s being done through a collection agent, is not something that generally shows up in the insurance claims.  And so we’re really changed to try to come up — I think one of the kind of case that gets settled the most often is when he get in the media. So when Sarah starts writing about it and asks questions — if you start writing about it and ask questions, there’s a good chance it would get settled.

FREDERICK ISASI:  We should all have Sarah (indiscernible).

SARAH KLIFF:  It’s not a very scalable solution.

JACK HOADLEY:   Exactly, it’s not a scalable solution.  And in the old days — I like to say that if we were looking back a couple of decades, almost all of these cases got settled.  But local insurers knew the local hospitals, knew the local doctors.  The guys settled it — it was all guys then, right?  They settled it on the golf course or over a drink in the bar.  Let’s just take care it, we’ll split the difference.  That was nice when that worked.  That doesn’t work today.  So I think as the relationships between insurers and providers have become more contentious — yeah, a lot of cases still do get settled.  I talked to somebody about sort of how things have played out in Texas.  A lot of the cases that have come in, go to some kind of informal discussion and people work things out.  They get a sense of what a reasonable rate is going to be, what an arbitration might lead to, what the rate setting rates, and they say, hey, let’s agree on this.  I’ll go 10 percent above that.  Let’s just get it done and get it over with.  Sure, those happen a lot. But can we count that that’s 10 percent of the time, or 90 percent of the time, that’s what’s more challenging.

AL BINGHAM:  Yeah, and it’s going to vary by (indiscernible) too, so you’re right.  I mean, let me give you an example:  A lot of issuers will — let’s say someone is out of state and they go to an emergency room, they get admitted to the hospital from the emergency room.  A lot of issuers will, as soon as they hear about that, begin calling up the provider, the hospital, and starting to negotiate the payment.  So ultimately, a lot of these things do get — there are payments made, but that doesn’t necessarily mean that you won’t have a situation where the enrollee, the patient, then gets additional billing.  Then you get into things like what you just talked about, with the housing liens and whatnot.

JACK HOADLEY:  Also, with the self-insured companies, I know people who get surprise bills, the go through their employer for their insurance, call up the HR department, maybe the HR department figures out how — because they want to protect their employee, but they may do that by paying the full charge.  And then that gets added back into the premium the next year.  So sometimes they get settled, the consumer gets protected from that bill and doesn’t end up paying that $20,000 bill, but guess what?  If the self-insured company is paying that amount, that’s going to be one of the factors that’s factored into premiums next year.  So there’s just a lot layers.

SARAH KLIFF:  We talked a little bit less about arbitration as a policy solution and I know you all know New York has had its law in the books for a few years.  I believe New Jersey’s law is pretty similar.  Tell me a little bit about how you think about that as a possible solution.  And we did have one question of:  Is there some kind of hybrid or rate setting, arbitration, working together approach?  Is that something that you all think could be a potentially positive solution?

JACK HOADLEY:   I mean, there are arbitration systems in effect, and New York, as you say, is probably the one that has had the most publicity.  New Jersey’s is newer.  There’s a couple of the new states that just passed laws and include arbitration components.  Florida has one, Illinois has one, and a few other states. Texas has one as well.  You know, what the people who’ve — in the states that have developed those say, their biggest hope for these systems is that almost no cases actually make it all the way to arbitration.  That it becomes an incentive to work out a more informal deal.  And the experience — and again, some of these states — New Jersey’s is so new that we just don’t know much yet.  But in New York where we do know a little more, my colleagues have put out a paper recently on it.  Only a couple thousand cases in the first several years have made it all the way to arbitration.  They’ve been settled fairly equally between the two sides.  A number of them have been settled through some other kind of mechanism and never go all the way to the end.  Again, that’s kind of the goal, but it does involve a cost each time.  So that’s — and we’ve talked before about the pros and cons.  The notion of a hybrid approach might not be my first choice of a solution.  A solid, simple arbitration based on a reasonable standard might still be the best way to go.  But as the politics plays out, whether in the States or here in D.C., people have looked to hybrids as a way to sort of get to “yes”, get to an answer that can get something passed.

And so we’ve seen recently in Washington State and Colorado, putting together different means of hybrids.  So you start with a rate standard — in Colorado they use something similar to what’s been talked about here.  An in-network rate as the standard.  Then they allow sort of an appeals process to go to arbitration in some cases.  They’ve just passed that, so I can’t tell you how often.  And you’ve got to remember that in Colorado they had an old law that it was up to the insurer to hold the patient harmless, even if that meant paying full charges.  And so they are bringing this down to a much more sensible rate standard that’s based on in-network rates, but gave providers the ability to appeal that rate.  And some have suggested to me that if you have that kind of an appeal style arbitration, you set up in a way that says, hey, the final answer could be lower or higher than the rate standards set.  You’re not guaranteed to get a higher rate because that creates an incentive for — let’s take it, because what do we have to lose?  Well, you have to lose the cost of doing it, but you also might, if you set this up correctly, have the possibility that the arbitrator says:  No, actually the insurer suggested that there’s this lower rate even in what he original standard that might make sense here, and I think that’s the one to go with here.  So it’s like when  you were in school and the teacher said:  I’ll look at your exam again, but I might find a lower score as well as a higher — that was always my trick when I taught.  I will look at your exam again, but no guarantee you end up gaining points,  you might actually lose points.  A lot of people said, don’t bother.

SARAH KLIFF:  I don’t know if I’d sign up for that course.  We have about ten minutes left.  I’m going to make one last call, if anyone has any burning questions, to write them down, come up to our microphones.  We’ll try and squeeze them in.  One question I got, which is actually a question I have wondered as a reporter:  In the Senate and House proposals on surprise billing, why aren’t ground ambulances included?  Any thoughts on that particular space?  I know you showed that slide showing that 51 percent of ground ambulances are associated with an out-of-network bill.  And it seems like air ambulances were just added into the Senate legislation. Anything different about those two policy areas?

JACK HOADLEY:  I think one difference that we’ve talked about is that air ambulances, you know, states are pre-empted from acting.  So that’s been an incentive for I think for the feds to go in and put that in their bills.  With ground ambulances, and we’ve been trying to go back and look at what’s going on in the state laws, and we think at most two or three states have addressed this at all.  I need to go back and look more carefully at those and see what they’ve actually done really does regulate it, or whether it’s something a little lesser on that.  I think one of the reasons states have not tackled this and perhaps this applies to the federal law as well, is a lot of ambulance services are delivered by local government agency.  So you get your ambulance through the city, through the county.  So it may be just more challenging.  It’s a different kind of system to work with and I think to some extent, states have said, maybe first of all prove that there’s a problem and then we’ll come back and deal with it separately.  Florida actually took a fairly extensive look and I might refer you to report that the Office of the Insurance Consumer Advocate put out in Florida, which at least raises the issue, talks about some of the things you can do.  I think the solutions can certainly look like they do with other services.  You can talk about a rate setting issue and a ban on balanced billing.  I think probably more than anything else, it just felt like a different area with some different players involved, and people said, let’s deal with the rest of this first and then we’ll come back to that.

AUDIENCE MEMBER:   Hi, my name is Amanda Hunt, and I’m a policy analyst at Altarum’s Healthcare Value Hub.  And one of the things that I very seldomly hear in these conversations, and I think Dr. Hoadley you just mentioned it, is state established offices of the consumer advocate.  Connecticut in particular is an example that we have looked at very closely.  And they have kind of these functions:  They provide direct assistance to consumers when they are having problems with any type of insurance whatsoever; and then they also advocate to the state legislature on their behalf.  And so I’m wondering if you’ve heard of any other states that might have an appetite for this kind of solution?

FREDERICK ISASI:  Are you suggesting in lieu of protections against balanced billing?   AUDIENCE MEMBER:  Not in lieu of, but in addition to.  I very rarely hear that mentioned as additional solution.

JACK HOADLEY:   Yeah, I mean, Florida — it has been an interesting office, and I’ve talked to those folks a number of times and they do play that sort of dual role you talk about.  They can take individual complaints and they also, in the case of their original concerns about balanced billing, surprise billing, they did a year-long effort to sort of look into the problem and they were the ones that sort of sent the proposed solutions to the legislature, and the legislature of course took it and tweaked it and did other things to it.  And they’ve done the same thing with the ground transport.  And so I think they can play an important role.  I think the challenge sort of — a role as an advocate within the government to try to push for things makes a lot of sense.  The role of sort of dealing with the typical consumer’s problem is pretty limited because most consumers don’t know these things exist.  Most consumers, when I talk about these things to any kind of a consumer audience or through the media, is one of the things you can do when you hit these problems is you can go back to your insurance company, you can go back to your provider and see what they’re willing to do for you.  You can go to your state insurance department.  But I dare say that the average consumer is barely aware, if at all, that there even is a state insurance department, and certainly doesn’t think of it as a place to go for help.

FREDERICK ISASI:   That’s where I was going to go.  In my experience, on a state level with these kind of groups, they are usually the ones calling for this legislation.  They are the ones who are sort of saying:  This is out of control, consumers need legal protection.  It’s not just our advocacy, but the legal protections themselves.

SARAH KLIFF:  Let me ask another question we got from our audience that I’m sure is one some of you in congressional offices might be hearing.  The question is:  While the percentage of Medicare that these specialty physicians charge seems high, a more sympathetic argument is that these physicians are compensating for uncompensated care that they provide, especially in an emergency in ambulatory settings.  How important is this to consider?

JACK HOADLEY:  I mean, it’s certainly part of the calculation.  First of all, there are a lot of other mechanisms to deal with that problem, you know, getting Medicaid expansion and other kinds of things that reduces the number of people that come in without insurance, obviously, is a more direct way of fixing those issues than sort of building the cost in for these people.  I mean, that’s why this is a political process, to think about exactly what the rate standard is.  You can take these political factors into account.  But the idea that they’re paid for on the back of the consumer is the thing that I think all of us agree isn’t the appropriate process.  I think when Medicare establishes its fee schedule, it’s looking at a lot of the aspects of what’s going on and the notion that physicians and other specialties are getting paid in an average of 128 percent of Medicare when they’re dealing with their negotiated insurance rates.  And yet, these specialties are up at 300 and higher percent of Medicare and their charges are well above that.  Charges may be up in the 600, 700, 800 percent of Medicare range — suggests that something is wrong.  I’m hard pressed to think that the additional amount of uncompensated care they are getting makes that kind of numerical difference.

FREDERICK ISASI:  I want to say I really appreciate the question.  We care deeply about making sure that we don’t have uncompensated care.  We do have a rational system of healthcare.  What we known in this country, is in the last few years, a few things have happened.  We’ve driven down healthcare utilization as a country.  We have less stuff happening, and as a result, we actually are not spending less on healthcare, we’re spending more, because the price of healthcare has gone up so quickly.  So this idea that that’s a reasonable price, the data show it’s exact opposite.  It’s almost a 300 percent increase.  We’re talking about like if you bought your iPhone three years ago and it was $800 and you go now and it’s $2400.  That’s what we’ve seen in healthcare in this country.  It’s remarkable and it’s because of one thing, which is — when we think about a doctor negotiating with an insurance company, we think of like, you know, she walks in the room with the insurance company and the insurance company’s got a green visor on and they are like, this is how much we’re going to pay you.  Listen, I’m no fan on either side here. I’m not trying to — insurance companies have their own problem.  But that’s not the case.  In this country, what has happened is we’ve had massive consolidation.  So hospitals have been consolidated, physicians — the majority of physicians are now employed.  So these are two big businesses negotiating with each other.  And in a lot of markets where the providers have gotten so consolidated, they can just keep increasing the price year over year over year.  That’s the most reasonable explanation for why there is such a big (indiscernible) there.  It’s not uncompensated care is filling — you know, they are trying to fill in the gaps.

AL BINGHAM:   I have to think it’s something more than the uncompensated care argument.  Because as you go back and look at what we’ve found even with insurance data, there definitely are a lot of in-network emergency department physician claims.  So obviously they are — unless the folks have decided that they are practicing in a setting where they are more likely to have uncompensated care, I can’t see that that uncompensated care argument explains it all.  So to me, there has to be more to it than that.

JACK HOADLEY:  I would remind you of that business model we referred to earlier.  The company is staffing emergency rooms statewide anesthesiology practices that basically create their own monopolies.  And so there is a lot of the business —

FREDERICK ISASI:  And you know what they are not doing is providing uncompensated care.

SARAH KLIFF:  You mentioned some of the concentration in the market, and one other question we got is:  Are there any possible solutions that involve increasing competition rather than price fixing for this type of healthcare?  Or is there something different about this particular type of healthcare where more competition (indiscernible)?

FREDERICK ISASI:   It’s a great question.  To my mind, what we want is competition.  We want there to be real negotiation between the insurer and the provider.  When they are out-of-network, it’s literally no competition.  They just set whatever price they want.  If you were to choose the median in-network rate, what you do is you force them to show up and actually negotiate with another sophisticated party to come to price.  That is competition.  Right?  So now the anesthesiologist has an incentive to show up and really fight it out.  Let me be clear, the anesthesiology group that then has an umbrella group on top of it, has a reason to show up and negotiate with that insurance company.  That’s a real negotiation. So creating a benchmark rate, particularly one that is responsive to a market, actually could incentivize competition, not the other way around.

JACK HOADLEY:  And of course we’re trying to solve this particular consumer problem today, we’re not trying to re-write the entire healthcare system in legislation on surprised billing.  We need to have those discussions on another day.  But on the same time, figuring out how the solution to this particular problem either points us generally in the right direction — in other words, if we base this solution on physician charges, we’ll be pointing kind of in the wrong direction.  If we can base this on something like in-network rates, or Medicare rates, we might at least tilt this conversation in the right direction and say that we’ll either get the right kind of negotiation, or allow ourselves on a glide path toward having some of the right kind of conversations later.

SARAH KLIFF:  I will wrap up with one last question that’s a little bit more of politics than policy.  One thing I hear from providers who are concerned about this legislation is they look at the possibility of some kind of benchmark rate, and their mind jumps to single payer, rate regulation, government setting prices.  How do you think about — if this legislation moves forward, do you think it sets a new precedent for more government rate setting or stops there for this one particular area where people just can’t be shoppers?  Does this relate at all to the politics and policy of the single payer question that’s coming up a lot in the democratic primary?

JACK HOADLEY:   I would say, politics is obviously — everything is interconnected and things will relate.  This is a solvable smaller piece of the problem.  Surprise bills are not the bulk of healthcare.  They are the thing that people get scared of, but what people get scared of is a lot of other kinds of health costs; as you talked about.  I think your example, Fred, was people being more concerned about the cost of dealing with cancer than the actual cancer diagnosis.  People are concerned about these surprise bills.  But if we can fix this particular problem, we will have had that one success and then talk about it another day and place sort of whether this goes on and gives us precedence for one solution, whether you are for it or against it.  It goes beyond this.

AL HINGHAM:  I can foresee a scenario where something like the median or average in-network rate, or a percent of Medicare might actually work to bring some of these currently non-network providers into what they are contracting themselves.  So encourage them, perhaps, to go into negotiations and contract with issues and payers as opposed to reverting to the government.

FREDERICK ISASI:  Exactly.  This is absolutely not Medicare for all, and if somebody is raising that concern, do they work for the RDoCs is what I want to ask.  Because it just creates a really scary — it makes something that is very bipartisan, and like I said, in the House we’ve got Texas former state legislatures who are now in Congress who — I worked on this when I was in Texas.  This is a very bipartisan issue.  Medicaid for all is about the notion that the government really takes over healthcare, they set prices — you can’t get healthcare unless it’s through the government, right?  This is not that.  This is literally saying, we want to set a reasonable rate, or show up and negotiate.  To Al’s point, show up and negotiate, establish an in-network rate, and the government is not even involved.  So really, what it is, is trying to force competition in a market where, for example, the anesthesiologists are saying, we opt out and are going to charge whatever we want.  There is no competition.  So this is definitely, definitely not Medicare for all, and I would be very suspicious of folks who are coming to you with that kind of argument.  And the other thing I was going to say to you, in my experience working up here, one of the most powerful influences is the member’s own personal experience in healthcare.  I can’t tell you how many times I’ve been in negotiation and heard members bouncing back and forth about their own experience.  Guys, this is all of us.  We are spending two or three times more than the rest of the world on healthcare.  There is no reason why an individual in this country who is paying for health insurance, paying their premiums every month, should have to worry about getting a $50,000 bill.  That’s what this is about.  And your bosses know it, you know it, I know it.  Please do not let them distract you and get into a space where it becomes so political.  This is an utterly bipartisan issue and it should be.

SARAH KLIFF:  All right, thank you so much.  I think Sarah is going to come up for a few quick, closing remarks.

SARAH DASH:   Just want to thank again, Sarah, Jack, Frederick and Al.  Thank you to our panel.  As you can see, this is a really complicated issue and we could probably talk for a few more hours but we don’t have time.  You do have in your packets contact information for these wonderful folks as well as other experts.  We encourage you to reach out if you want more information about this.  Please fill out your blue evaluation forms and join me in thanking our panel.