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Why New York Is At The Center Of The Debate Over How To Fight Surprise Medical Bills
By
Caroline Lewis
Published Dec 16, 2019
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By
Caroline Lewis
Published Dec 16, 2019
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As long as the health care system remains brutally complex and price estimates don’t have to be accurate, there will be a wide variety of situations in which patients are not-so-delightfully surprised by their medical bills. But federal lawmakers are coming to a bipartisan consensus that there is one kind of surprise medical bill they cannot abide: those that arrive after a patient unexpectedly receives out-of-network care.
This can happen, say, when a patient goes to a hospital that’s in their insurance network but is seen by a doctor who is not in their network. Often insurers won’t cover the full amount that an out-of-network health care provider wants to charge, leading the provider to bill the patient for the difference—which can be exorbitant.
Congress inched a little bit closer last week to passing legislation to make sure the burden of unexpected out-of-network costs doesn’t fall on patients. But just days later, there were reports that the legislation was unlikely to pass this year. The problem is, while everyone says they want to protect patients, there’s still a debate raging about the best way to go about doing that: the New York way or the California way.
New York passed legislation to combat surprise billing in 2014 and a few other states, including California, followed suit. Unlike California, New York has come up with an approach to surprise billing that doesn’t anger hospitals and doctors. But in keeping everyone happy, the state may be missing an opportunity to further drive down health costs.
Overall, the stats in New York are good: Out-of-network billing decreased 34 percent between when the law took effect in March 2015 and the end of 2018, according to a report from the state Department of Financial Services. If patients do receive surprise out-of-network bills, they now have a way to contest them.
Under state law, a patient who has unexpectedly or unknowingly received out-of-network care should only have to pony up what they would have paid if the care was in-network. It’s then up to their insurer and health care provider to work out how much more the insurer will pay. To help them do that, New York created a baseball-style arbitration process, in which each party says the amount they think should be paid and an independent arbitrator picks one.
An analysis from the USC-Brookings Schaeffer Initiative for Health Policy argues that arbitrators are ultimately landing on rates at the high end of the spectrum, potentially driving up the overall cost of care. But DFS says it hasn’t found evidence of this, noting that health plans haven’t cited the surprise billing law as a reason for increasing the monthly premiums they charge members (they find plenty of other reasons to increase premiums every year). DFS instead estimates that the law has actually saved consumers some $400 million so far.
There is another approach to resolving these billing disputes, though. In California, instead of using arbitration, the surprise billing law simply requires insurers to pay set rates for out-of-network care that are based on the cost of in-network care in the area. Doctors and hospitals hate this approach, since in-network rates are typically lower. They have argued to Congress that, if adopted at the national level, it will unfairly limit their bargaining power with insurers and ultimately reduce patient access to care. The USC-Brookings Schaeffer Initiative for Health Policy says all that’s been found so far in California is a trend towards greater participation in insurance networks, but added that more research is needed to understand the long-term effects.
Key committees in the U.S. House and Senate announced last Sunday that they had reached an agreement on an approach to surprise billing that would combine arbitration and rate setting, reserving arbitration for more costly bills. New York hospital and doctor groups were quick to rail against it.
“The billion-dollar health insurance industry must have been really good this year to have been given this holiday gift from Representative [Frank] Pallone (D, NJ) and Senator [Lamar] Alexander (R, TN),” said Dr. Art Fougner, president of the Medical Society of the State of New York, in a statement.
The Greater New York Hospital Association, which does extensive lobbying in Washington, D.C. and Albany, echoed this sentiment, saying in a statement that the group “strongly supports protecting consumers from surprise medical bills, but the latest proposal includes needless provisions that benefit for-profit insurers while severely harming hospitals and physicians.”
The fact that hospitals are against the bill has also given New York Senate Democratic Leader Chuck Schumer and other federal lawmakers pause, the Hill reported.
Consumer advocate Elisabeth Benjamin, who serves as vice president of health initiatives at the Community Service Society of New York and was instrumental in getting surprise billing legislation passed here, said she supports a Congressional version of the bill that includes benchmark prices rather than just arbitration.
“We consumers think that’s fantastic,” Benjamin said.
Regardless of what happens at the federal level, Benjamin says New York still has work to do to improve consumer protections here. The state has closed some of the loopholes that were present in the 2014 surprise billing law (somehow, out-of-network bills resulting from trips to the emergency room were initially left out entirely and that was only rectified this year). But gaps remain. For instance, patients can still be on the hook for out-of-network bills they get sent because they received incorrect information from their insurer or health care provider about what was in-network; a bill currently pending in the state legislature seeks to address that.
If New Yorkers want help fighting a surprise medical bill, they can contact Community Health Advocates, a project of the Community Service Society, online for help, or call 1-888-614-5400.
You can also contribute to #PriceCheckNYC, a new community health cost sharing project that we've partnered with WNYC and research company ClearHealthCosts on. You can share information about what you've paid for medical services as well as search for the cost of a given medical procedure at different health care providers in your area, or just email us at [email protected]. We're taking information and tips for future reporting.
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pricechecknyc
health care
healthcare reform
Caroline Lewis
Caroline Lewis is on the health care beat for WNYC and Gothamist. She has covered COVID, a nurses' strike, the overdose crisis and New York’s marijuana legalization effort, and spent a year investigating patients' medical bills. She always wants to hear about how everyday New Yorkers experience the health system. Got a tip? Email [email protected].
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Gothamist is funded by sponsors and member donations
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