The Arizona Medical Association (ArMA) is considering a state ballot measure to remove a key provision of the No Surprises Act (NSA), in order to boost fees of out-of-network physicians. The NSA is a federal law protecting patients from surprise medical bills, which went into effect January 2022. Balance billing is the term in industry parlance for surprise medical bills. Balance billing occurs when out-of-network physicians (who patients could not avoid) charge fees higher than what their health plans reimburse. Prior to the NSA, patients were responsible for any portion of out-of-network fees their insurers did not pay. The ArMA does not wish to gut so-called patient protections. However, the ballot measure would result in higher fees and higher premiums for consumers nonetheless. More on this below.
Surprise medical bills are unfair to patients and health plans alike. Health plans try to steer patients to providers who have agreed to specific terms and have negotiated fee agreements with a network. Selecting network providers reduces patient cost-sharing and in some health plans out-of-network care is not covered at all. Thus, patients have a strong financial incentive to seek care within their network.
Yet, when presenting at an emergency room (ER) patients are in no position to question the network affiliation of the ER physician who treats them. Patients also have no control over the choice of their anesthesiologist, their assistant surgeon, their radiologist or their pathologist. Patients are unlikely to meet these physicians prior to care and therefore have little if any opportunity to inquire about network affiliation or fees. As a result, patients have no realistic way to decline the services of these doctors. These unique circumstances are what make surprise medical bills possible. It is due to a type of market failure. For markets to work properly, consumers need the ability to fire vendors who provide poor customer service or charge fees above market rates. The NSA was designed to not only protect patients from surprise medical bills, but also created a process to arbitrate fee disputes among payers and providers.
According to the Kaiser Family Foundation, the NSA protects consumers in several ways:
- requiring private health plans to cover these out-of-network claims and apply in-network cost sharing. The law applies to both job-based and non-group plans, including grandfathered plans.
- prohibiting doctors, hospitals, and other covered providers from billing patients more than in-network cost sharing amount for surprise medical bills.
The NSA also establishes a process for determining the payment amount for surprise, out-of-network medical bills, starting with negotiations between plans and providers and, if negotiations don’t succeed, an independent dispute resolution (IDR) process.
The IDR process is a form of baseball-style arbitration. In the event a health plan, hospital and physician cannot agree on a fair price, an independent reviewer has the power to decide. Each side makes their best offer and the arbitrator decides whose offer to accept. This dispute resolution process was a carefully crafted compromise designed to encourage good faith bargaining during fee disputes. The NSA doesn’t dictate what physicians can charge. Nor does it force doctors to work for less than market rates. The NSA merely removes the perverse incentive for physicians to shun networks in order to charge fees many times those of doctors who affiliate with networks.
The ArMA ballot measure press release sounds rather innocuous. It claims:
- Oversight is needed of claims denials with penalties for payers for improper claim adjudication;
- Payers should be prohibited from investing disputed payments while the dispute resolution is ongoing, thereby removing the incentive to drag out negotiations and withhold legitimate payments;
- Arizona state law should codify the patient protections in the No Surprises Act;
- Payers should not operate hidden profit arrangements like charging “shared savings” fees on out of network claims; and
- Transparency in the role of insurance in healthcare costs and administrative burdens is needed.
At first glance there appears little to disagree with. But according to a copy of the ballot language obtained by Stat News, the ballot measure would “strip out a key part of the federal arbitration process” of the NSA and “drastically tilt the scales in their favor during behind-the-scenes billing negotiations in the state — with consumers ultimately picking up the tab.”
Stat News reports the ballot measure is tabled for the time being while the ArMA negotiates with insurance groups on a compromise. However, Stat News warns that if this ballot measure is successful, it could serve as a blueprint for other states to gut provisions in the NSA by removing provisions to ensure both parties negotiate in good faith.
2 thoughts on “Can Medical Associations Gut the No Surprises Act?”
I think I disagree with Devon on this one.
There is no question that patients should be shielded from surprise medical bills. But the only reason the problem arises in the first place is that both hospitals and insurance companies have been getting away with false advertising.
As I argued at Forbes, we should take an “FTC approach.” Humana should not be able to claim a hospital is in its network if some providers who practice there are not in the network. Also, the hospital should not be able to claim it is in Humana’s network if that is not 100% correct.
If we prohibited false advertising, Humana and the hospital would quickly come to some agreement on how to resolve the problem. That would result in some slightly higher insurance premiums. But that is a lot better than surprise bills that can total thousands of dollars.
The problem with the federal legislation is that it requires arbitrators to “benchmark” in-network fees in resolving disputes. That would encourage insurers to pay less to in-network providers. If it loses doctors who refuse to accept the lower fees, those doctors will still have to accept those fees if they try to bill independently.
With an “FTC approach” that bans false advertising, there would be no need for arbitration. But if arbitration is to be imposed, there should be no benchmarking at all. The arbitrator should be free to consider in-network and out-of-network fees in arriving at a compensation decision.
Devon, you write, “Selecting network providers reduces patient cost-sharing and in some health plans, out-of-network care is not covered at all.” I think you mean to say that in every single Obamacare HMO if the consumer goes out of network it is a non-covered expense.