Why can’t Congress end surprise medical billing?

Many patients recovering from a medical procedure get blindsided by an unexpected extra charge. This unpleasant “surprise” occurs in about 18% of emergency room visits and 16% of inpatient hospital stays. Patients who thought their procedure would be done by someone in their medical insurance network (and therefore covered by that insurance) find that an “out-of-network” physician has been called in. Frequently that doctor has charged more – sometimes several times more – than the amount their insurance would reimburse. Surprise!!! the patient is responsible to pay the extra amount.

Polls have shown that a large majority of voters in both parties supports banning surprise medical billing. So does President Trump. For once, the challenge is not Red/Blue gridlock. Pretty much everybody agrees that patients should never receive a “surprise” bill from a doctor outside their insurance network. Both Democrats and Republicans would like nothing better than to be able to tell their constituents that they took the lead in a successful effort to end surprise medical billing.

But despite this rare bi-partisan support, legislation to ban surprise medical billing is stalled. It may not even come up for a vote in this legislative session. I decided to find out why.

No one will be surprised to learn that the major medical players – doctors, health insurance companies, for-profit hospitals, and pharmaceutical manufacturers – have very powerful lobbies. Facing the prospect of major medical reform in the first year of President Obama’s term, these lobbies combined to make sure that a “public option” would not be part of the Affordable Care Act. This time around, a Coalition against Surprise Medical Billing has pushed legislation that would require out-of-network doctors to bill no more for a procedure than would an in-network doctor.

While such a requirement might seem perfectly reasonable to you and me, it was deeply troubling to many doctors. To some, putting a cap on how much a doctor can be paid for a particular medical procedure smacked of price-fixing, something they considered un-American. Hospitals, who are required by law to treat any patient who arrives at their doorstep, also argue that unless their doctors are allowed to charge somewhat higher fees, they will have no way to make up for the cost of treating patients unable to pay for their care.

The requirement also threatened to take leverage from doctors and give it to insurance companies. Doctors participate in an insurance network largely because it gives them access to patients in the network. In return for that access, they are willing to accept a lower fee than they might otherwise consider adequate. The proposed legislation would presumably eliminate any incentive for a doctor to stay out-of-network, forcing her to accept whatever compensation insurance companies are willing to offer.

If this seems abstract, consider the example of Medicare reimbursement. Doctors who accept Medicare patients (I am one such patient) are reimbursed at rates set by Medicare. Most everyone admits that these reimbursement rates are too low. (One proposed bill, for example, recognizes this by setting standard reimbursements at 125% of Medicare reimbursements.) Doctors will often argue that they could not stay in business if they were required to charge all their patients no more than Medicare rates. So there is good reason for doctors to oppose efforts that would require them to allow someone else to set their fees. Instead, they are lobbying for provisions that would allow an out-of-network doctor who felt she had a good argument for a higher charge to take her case to arbitration (this would be known as an Independent Dispute Resolution or IDR).

Nor should one forget an additional, very practical, consideration: nineteen physicians and dentists presently serve in the House of Representatives, and lobbyists for physician groups generally get a favorable hearing from their professional colleagues.

Just as in the Mad Comics “spy versus spy” cartoons, a “lobbyist versus lobbyist” scenario stalls legislation. Legislators dislike situations where any possible decision will antagonize an influential group of constituents.

In the meantime, an additional complication has arisen. A mysterious new lobbying group, Doctor Patient Unity has arrived on the scene and has begun taking out advertisements targeting individual legislators who were not supporting the doctors. As of last September, the group had already spent more than $28 million on advertisements and TV spots. Where most of this money came from? At first no one knew, but journalists were eventually able to discover that it came not from doctors but from firms owned by hedge funds and private equity companies. These firms and their owners had found that large profits could be made by providing hospitals with emergency room care and other specialized services like radiology, anesthesiology, and pathology. Because the doctors providing those services were out-of-network, the firms could base their business models on the income provided by the “surprise” higher fees, and they spent heavily to preserve the ability to charge those fees. Other doctor groups found this approach excessively greedy and have tried to disavow the activities of Doctor Patient Unity. But legislation remains stalled.

All of this activity has one thing in common: it is driven by considerations that are largely financial. People are making money off healthcare, and the major players are trying to hold on to what they have. How have other industrialized countries found ways to make “for-patient” rather than “for-profit” incentives the primary benchmark of their health care systems? Stay tuned.

Baird Tipson is Co-Chair of Democracy for America’s Health Care Task force. Before he retired, he served as President of two colleges and as Gettysburg College’s first Provost.