The Dirty Secret Exposed: Balance Billing is Big Business | Mercer US

The Dirty Secret Exposed: Balance Billing is Big Business

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The Dirty Secret Exposed: Balance Billing is Big Business
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Calendar19 September 2019

As Congress wrestles with how to address the growing problem of “surprise” medical bills, breaking news the past week turned a spotlight on a little known fact:  Private equity-backed physician staffing firms are driving surprise medical bills and are behind a massive ad campaign opposing employer-supported legislation to protect consumers.  

Under the business model of the physician staffing firms in question, the firm typically provides services to hospitals while not participating in any provider networks.  They set their own prices for services and aggressively balance bill the patient after the insurance company processes the claim.  A recent Kaiser Health News article showed that when these firms entered a market, out-of-network billing rates went up between 81 and 90 percentage points. While this practice clearly provides big financial benefits to these firms -- and the hospitals that have revenue-sharing arrangements with them -- it’s often a severe hardship for patients, even when they have the most robust employer coverage available.

On Capitol Hill, there are two major proposals that have gained traction in the House and Senate. The employer-backed Senate bill would prohibit balance billing and set benchmark payment rates for out-of-network services based on the median in-network rate in the area where the care was provided.  The House bill also would set a benchmark payment rate but offer providers an arbitration "backstop" allowing an arbiter to step in to negotiate a new rate in some cases.

The debate is far from over, though, with providers and hospitals pushing hard for a more arbitration-centered approach.  Employers and insurance companies argue that arbitration is expensive, takes too long, puts financial stress on the patient, and is not transparent – and that, in effect, this approach would enshrine the strategy of eschewing network participation and balance billing patients. 

But a group called Doctor Patient Unity -- funded by private equity firms – is waging a campaign-style effort to move Congress, pouring more than $28 million into a series of recent ads. Until last week, the group had not disclosed their staff or funders, running the campaign with so-called “dark money.”  Key House lawmakers this week sent bipartisan letters to the leaders of three private equity firms seeking answers to questions about what physician staffing companies they have invested in, their revenues and their involvement in the companies, among other things.

The Coalition Against Surprise Medical Billing, whose members include the ERISA Industry Committee, the American Benefits Council and other employer groups, as well as insurers, continues to drive home the point with lawmakers that employers are the biggest stakeholders in this battle, and that surprise billing undermines the vital goal of providing quality, affordable employer-sponsored health care benefits.

The importance of that message was underscored yesterday when The Hill reported on a memo from President Trump’s campaign pollster, noting that “An overwhelming majority of voters in each state agree emergency care should be covered by health insurance companies regardless of network.” The memo added that “Any policy to address this issue that appears to side with the insurance companies could backfire because they are seen as the problem.”

If you ever needed an example of why it is important for lawmakers and voters to hear the voice of the employers and business community, this is it.  We provide and pay the majority of the cost of health care benefits for 181 million Americans, which is 54% of the population.  The real facts need to be known.

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