Is New York’s “Surprise Bill” Law a Model for Federal Legislation? Yes and No.

There’s a big fight brewing in DC. No, not the one between the “Squad” and President Trump, which will likely be forgotten as soon as the outrage addicts need a new fix. The fight we’re talking about will have a much greater impact on Americans and is occuring between insurers and hospitals over various proposals to combat “surprise bills.”

The bottom line: as these behemoths clash, patients and physicians — those who need medical care, and those who deliver it — are set to be further marginalized.


We interrupt this blog post for a quick, but important, Action Alert: The bill furthest along at the moment is the Senate HELP bill, S 1895, which is now eligible for a vote on the Senate floor after passing through committee on July 8. A favorable (but unrealistic) CBO score has also been issued, increasing its chances for a vote. CALL BOTH OF YOUR U.S. SENATORS and tell them to VOTE NO on S 1895 if it comes up for a vote. The fastest way to reach your Senators is by calling the Capitol Switchboard at (202) 224-3121.


A review of the the major problems with S 1895, and others like it, can be found here, here, here, and here. S 1895, while containing potentially a few helpful provisions, is for the most part, putting band-aids on top of existing failed cancerous policies — band-aids that will exacerbate the disease instead of excising the tumor causing it. Not to mention that insurance-company controlled “unsurprise bills” may be a significantly bigger problem than surprise bills, as disintermediator Dave Chase explains. In addition the bill imposes system-wide rules to address a problem that is not as widespread as advertised. “The cost of surprise bills is a small portion of all health care spending…,” reports the CBO in its score of the bill.

In the physician community, some are suggesting that legislation like S 1895 would be acceptable if arbitration provisions are included. There is also a suggestion that a competing bill over on the House side, HR 3502 (Ruiz/Roe) is the compromise bill that can be supported, because it includes an arbitration option, and is modeled after New York’s heralded surprise billing regulations. [Update: similar arbitration provisions have now also been added to the House E&C legislation (HR 3630) addressing surprise bills.]

As state regulation of market transactions go, NY’s surprise billing law seems to cut a reasonable path. It prohibits abuses by hospitals without swinging the pendulum too far in favor of insurers. It permits a reasonable level of flexibility for patients and physicians to interact on mutually agreeable terms.

But does HR 3502 really mirror NY statue? Both do allow for arbitration, but aside from that the similarities meaningfully end.

Here are some key differences:

1) The NY law kicks in only with charges above 120% of the Usual and Customary, defined to mean “the eightieth percentile of all charges for the particular health care service.” That’s a pretty high bar that helps contain overregulation.
https://www.nysenate.gov/legislation/laws/FIS/602
https://www.nysenate.gov/legislation/laws/FIS/603

Conversely, HR3502 sets a benchmark price at “the commercially reasonable rate, as determined by the plan or issuer.” That is drastically one-sided in favor of insurers and likely unconstitutional, argues a former U.S. Solicitor General.

Yes arbitration may help provide relief from this extreme price setting to hospitals, and health systems, and “Wall Street-owned doctor groups” who can afford the expense, but arbitration is not a meaningful option for small or independent practices in many cases. 

2) Also the NY law defines “Surprise Bill” in a way that allows patients and physicians some ability to voluntarily opt out of limitations, if both parties desire, i.e.: “a surprise bill shall not mean a bill received for health care services when a participating physician is available and the insured has elected to obtain services from a non-participating physician….” And under the NY law, patients have to take an affirmative step to trigger a prohibition on balance billing: ” When an insured assigns benefits for a surprise bill in writing to a non-participating physician that knows the insured is insured under a health care plan, the non-participating physician shall not bill the insured except for any applicable copayment, coinsurance or deductible that would be owed if the insured utilized a participating physician.” https://www.nysenate.gov/legislation/laws/FIS/608

HR 3502, on the other hand, makes no provisions for patients and physicians voluntarily opting out of the provisions of the legislation, and in fact levies fines and penalties on physicians who don’t comply: “if such nonparticipating provider holds such individual liable for a payment amount for such an item or service furnished by such provider that is more than the cost-sharing amount for such item or service … such provider shall be subject … to a civil money penalty of not more than an amount determined appropriate by the Secretary for each specified claim.
https://www.congress.gov/bill/116th-congress/house-bill/3502/text

So back to the question posed in the title of this post, is the NY surprise billing law a model for federal legislation? If it were actually being followed as a model, the answer might be “yes.” But given the existing bills on the table in DC, the answer is “no.” NY law is being followed as a model in name only, not in practice.

Ultimately, the phenomenon of surprise bills signals a more fundamental problem: past failed policies that tilt the playing field in favor third party payment and punish direct payment limit patient options and are impeding market forces from squeezing out costs that line the pockets of administrators and middlemen who add minimal or no value. It is past time to level the playing field and unleash innovations that will allow those who care for patients the freedom provide an abundance of lower cost, high-quality options.

President Trump’s Salute to Patients Promises Welcome Changes, But Special Interests Attack

The week before President Trump’s Independence Day “Salute to America” he gave a welcome Salute to Patients when he signed Executive Order 13877, “Improving Price and Quality Transparency in American Healthcare To Put Patients First.”

As free market champion Dr. Keith Smith of the Surgery Center of Oklahoma puts it, the “healthcare industry price gougers wore out their welcome” and were “kicked to the curb by President Trump.”

What does the order do? Its first priority is to end “opaque pricing structures,” that “benefit powerful special interest groups, such as large hospital systems and insurance companies,” but, “generally leave patients and taxpayers worse off than would a more transparent system.”

But there’s more: the order also aims to “enhance patients’ control over their own healthcare resources” by removing failed policies that impede patients from choosing to enroll in affordable Direct Primary Care practices or alternatives to big insurance like Health Care Sharing Ministries.

The bottom line is increasing patient freedom and choice is the centerpiece of President Trump’s order. However, make no mistake, it is also put a target squarely on the middlemen who have for too long taken advantage of backroom deals made with government cronies. And the middlemen are already fighting back with a vengeance and working to undermine the order.

Underestimating the special interests’ power to stop the good changes is not an option. Just last week the Pharmacy Benefits Manager (PBM) cartel killed a White House proposal that would begin to unwind corrupt kickbacks that result in out of control price hikes for life saving drugs through disingenuous propaganda that lower prices would somehow raise premiums.

And the fake news campaigns about the Transparency Order are already underway.

Thankfully physicians like Chad Savage, MD are debunking the industry lies:

No price transparency will not lead to higher prices. “This is akin to saying the best way to get a good price on a new Sony TV is to have no idea what it costs. If someone said that to you, you would rightly reject any future advice from that individual,” explains Dr. Savage.

Marni Jamison of the Association of Independent Doctors exposes another tactic of those who oppose transparency:

The cronies are “lawyering and lobbying up, busily working to undermine, narrow and water down the order. They are not going to give up the hundreds of billions of excess dollars flowing their way easily,” she writes and shares examples of weasel words insurers and mega health systems will attempt to use to corrupt the outcome.

Middlemen’s fingerprints are already evident on the order itself to some extent. For example the “Health Quality Roadmap” provisions empower the use of failed quality metrics that are already driving up the cost of care with out any benefit to outcomes. “Practitioners who practice according to the needs of their individual patients, not according to some standardized protocol approved by a third party whose only focus may be efficiency and cost-cutting, may be penalized,” warns Twila Brase of the Citizens’ Council for Health Freedom and award-winning author of Big Brother in the Exam Room. AAPS, while overall supportive of the order, flagged provisions as potentially harmful to privacy rights and urged that “patients’ right to consent to use of their data must also be respected.”

Winning these battles for patients and those who care for them will not be easy! But nothing worthwhile ever is. So let’s all Salute President Trump for taking these bold steps by stepping to help him fend off the special interests trying to thwart his welcome orders.

Amazon Rx: a cure for supply chain kickbacks or just another poison pill?

Amazon is throwing its hat into the pharmacy business and Bob Campbell, MD of Physicians Against Drug Shortages weighs in on what this could mean:

The Amazon folks do not show their cards. When this began it was called the 1492 Project before it was reported by the press. I have asked them directly are you trying to undercut the GPO/PBM supply chain or do you just want to get in on the kickbacks? They didn’t say then and they don’t say now.

Some insights…they hired a ton of people from the GPO industry presumably to understand the supply chain dynamics.

Their initial focus was the hospital supply chain but they subsequently backed down from that publicly due to the “special relationships” of GPO and Hospital entities. Now their focus is the outpatient pharmaceuticals.

I have maintained that Amazon is the only non governmental entity with the scale and resources to create a parallel competitive marketplace as an alternative to the normal anticompetitive market. Still they will never dominate only survive and carve out a niche. The easier more lucrative approach would be to collect kickbacks. Amazon is different enough they may do the right thing. The Bezos model is your margin is our opportunity. The 43% Kickback rate in outpatient Pharma plus the usual participant margins makes for a fat gross margin to target.

Until Amazon says what they are really up to we can only speculate.

Do You Really Want A Unique Patient ID?

The House just passed a bill that eliminates the prohibition on the use of federal funding to assign all Americans a unique medical identifier. Former Congressman Ron Paul, M.D., got that prohibition enacted in 1998.

            The identifier is supposed to improve “efficiency”—of what? Government surveillance of all Americans? The agenda of government-favored special interests, who might want to silence persons with political views they don’t like? Persons who might see you as a threat to their success in business, academia, or other ventures?

            What might be in your record? A prescription for Valium or other drug prescribed during a distressing life crisis? This could be a psychiatric “red flag” causing denial of your gun rights. A diagnosis of a sexually transmitted disease? An admission that you had a temper tantrum or used an illegal drug at a party? Could this derail a job application or cause you to lose child custody or foreclose a political career?

            Can you be honest with your doctor if anything in the record might someday be used against you?

            “Make no mistake. The [patient identifier] would be the end of privacy and the foundation of a national health data system,” warns Twila Brase, president of the Citizens’ Council for Health Freedom and author of Big Brother in the Exam Room.

            The damaging information in the record might not even be yours. A hurried data-entry person might have clicked the wrong item on a drop-down menu or even cut-and-pasted something from another patient’s electronic health record.

            The prohibition on funding for the unique identifier needs to be restored, states the Association of American Physicians and Surgeons (AAPS).

Further information:

       

Insurance Networks are a Bug, Not a Feature: Practicing Physicians Ask Senate HELP Committee to Protect Patient and Physician Choice

The Senate HELP Committee, led by Chairman Lamar Alexander and Ranking Member Patty Murray, have asked for feedback on the draft of an ambitious “Lower Healthcare Costs Act of 2019.”

Tuesday, June 4, Practicing Physicians of America (PPA) will present, in Washington DC, a memo co-authored by PPA co-founder Marion Mass, MD and Vice President for Health Policy Craig M. Wax, DO.

The memo begins:

Writing on behalf of Practicing Physicians of America (PPA), we are grateful for and commend the HELP Committee’s efforts to introduce legislation aimed at reducing the varied costs of healthcare services and insurance by increasing the transparency of pricing across this sector of the economy.

It is our position that allowing market competition, with its attendant disciplines and efficiencies, can become the self-sustaining model for the delivery of medical services in the United States. Therefore, with the Lower Healthcare Costs Act of 2019 now under discussion, we offer comments and recommendations beginning on the next page.

Read the full memo at: https://ip4pi.files.wordpress.com/2019/06/ppasenatelhca060319.pdf

Or click on the image below:

Surprise medical billing is an insurance network problem not a federal government problem.

Ophthalmologist Jane Hughes, MD of San Antonio writes in:

Let’s all get on the same page about one thing. Surprise medical billing is not a federal government problem.

It is a contractual problem between the insurance company and the insured patient, largely because no one reads the fine print. It is also the direct result of networks.

There are steps that states can take that would largely solve the surprise billing that insurance has perpetrated and one step is mandatory price transparency.

On a federal level issues that are their purview involve Medicare/Medicaid. Mandatory price transparency and a concomitant rule that regardless of who is paying, the charge for the identical service or product at the same facility by or from the identical provider must be the same.

This is not price fixing as each entity decides the fee for product or service rendered. Just like a gallon of milk at a specific grocery store is the same regardless of credit card used, cash, or food stamps.

Gee, what a novel idea…