All emergency physicians should know about a critically important issue before Congress and take action to protect our patients: legislation to prevent surprise out-of-network bills. One of the most prominent bills under consideration is sponsored by Sen. Lamar Alexander (R-TN) and Sen. Patty Murray (D-WA), but it is dangerously flawed.
I applaud the effort to take patients out of the conflict between physicians and insurance companies. Emergency physicians have no desire to pursue patients aggressively for out-of-pocket costs. We already carry huge charity burden; only a minority of our patients pay anything out-of-pocket. I am sure that most of us would be happy to waive all balance billing if insurers would pay us fairly for the care we give their clients, our patients, and if existing regulations were changed so that we couldn't be charged with insurance fraud for waiving out-of-pocket charges.
This bill and others like it, however, reflect several misunderstandings of the surprise bill problem, and they have dangerous flaws that should be corrected before they become law.
First, this is not a market failure, as Sen. Alexander called it. There hasn't been a free market for health care in the United States for more than half a century. More specific to emergency care, there hasn't been a free market since passage of the Emergency Medical Treatment and Active Labor Act (EMTALA) in 1986.
By mandating that emergency physicians and hospitals take care of everyone who comes to the ED regardless of insurance status or ability to pay for that care, EMTALA made EDs and those who work in them our nation's medical safety net. Unfortunately, Congress chose not to fund that federal mandate, and it remains unfunded to this day, putting a huge charity burden on hospitals and emergency physicians.
Emergency physicians are proud to be our country's medical safety net and enthusiastic about taking on this important mission, but insurers know we are legally obligated to take care of their clients—our patients—first and seek payment later. It isn't a free market when a seller is legally obligated to give away a product and then hope for payment later at a rate largely determined by the buyer.
Secondly, contrary to Sen. Alexander's public statements, his bill does indeed give government the power to set rates. If S.1895 becomes law as it stands, the out-of-network rate for emergency care will be capped at the 50th percentile of the insurer's local in-network rate. This would eliminate any reason insurers currently have to negotiate fair contracts to get emergency physician groups into network. Why would they want us in-network at all when there is no penalty to insurers for leaving physicians and hospitals out-of-network, such as having to pay the higher usual and customary rate instead of a discounted in-network rate?
Capping out-of-network rates has another horrible but less obvious effect: It gives insurers a strong new incentive to reduce in-network rates because this would lower the 50th percentile that the bill establishes as the out-of-network rate. S.1895 gives insurers the power to unilaterally set payment rates for emergency care, care we are federally mandated to provide. The insurance industry can decide for itself what it is going to pay for emergency medical care, so it will steadily pay less and less, driving emergency physician groups out of business and leading to more hospital closures, especially small community and rural hospitals.
Only a small minority of ED patients have commercial health insurance, often just 20-25 percent. Hospitals and emergency physician groups depend on that minority of privately insured patients to stay alive. Medicaid payments don't come close to covering the cost of keeping an ED open and running, and we only break even on Medicare. It is the cross-subsidy from privately insured patients that funds our charity mission, America's medical safety net. S.1895 and similar bills give insurers the power to eliminate that cross-subsidy and stop funding EMTALA-mandated care, so government will have to start providing that funding or the medical safety net will unravel.
The vast majority of emergency physician groups badly want to be in-network with insurers. That encourages more insured patients to use our services and results in faster and more reliable payment for those services, lowering our overhead costs. It also means fewer complaints from our patients and hospital administrators and less chance that a competing emergency physician group or staffing corporation will take over our ED contract.
Why do we sometimes choose to remain out-of-network? Unless a hospital or emergency physician group is part of a large regional or national chain or the hospital provides services not available at other local hospitals, they have little bargaining clout with insurers. Insurers often demand such severe discounts from small medical groups and hospitals that being in-network is financially impossible. When that happens, our only alternative is to stay out-of-network and bill at the higher usual-and-customary rate.
S.1895 and similar bills would eliminate that alternative. Unfortunately, insurers sometimes deliberately exclude emergency physicians and hospitals, intentionally narrowing their networks so they can shift more of the cost of care onto patients. I know of only one example of a medical group deliberately staying out-of-network as a routine business practice so that it could gouge insurers and patients, and that was one of the nation's largest physician staffing corporations, owned by stockholders rather than physicians. It is extremely rare for a physician-owned emergency medicine group to stay out-of-network except as a last resort.
Banning balance billing of patients for emergency care is a worthy goal, but a ban on billing an insurance company at more than the 50th percentile of its in-network rate would be disastrous. If the medical safety net is to be preserved, any such cap must be high enough to give insurers a reason to negotiate in good faith and to offer emergency physicians and hospitals reasonable terms to be in-network. Any such cap should also be based on an independent database of charges that isn't controlled by the insurance industry, such as FAIR Health (www.fairhealth.org), rather than an insurer's in-network rate. The 80th percentile has been suggested, and some states have already adopted that as their out-of-network benchmark.
The American Academy of Emergency Medicine, Physicians for Fair Coverage, the American College of Emergency Physicians, and the American Medical Association, and others have been working for many months to make sure our nation's medical safety net isn't defunded and destroyed in the process of protecting patients from unexpected out-of-pocket charges for emergency care, but it is time for all emergency physicians to contact their senators and representatives and educate them on the unique responsibilities, burdens, and vulnerabilities of emergency physicians and emergency departments before it is too late. It is likely that some bill on this issue will pass in September or October. Helpful resources may be found at http://bit.ly/2Y4ZszY and http://bit.ly/2LJrAls.