Ezekiel Emanuel is chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania, senior fellow at the Center for American Progress and a venture partner at Oak HC/FT Partners. He served in President Barack Obama’s White House from 2009 to 2011.
Essentially no one in the United States likes surprise medical bills. That’s why Democratic and Republican leaders in both the House and the Senate pulled together common-sense bills earlier this year to curtail the practice.
So why isn’t such legislation a slam dunk? Because special interests — specifically hospitals and the private-equity-backed companies that have largely taken over their emergency rooms — are standing in the way. As lawmakers return to session next week, they should make it a priority to end this abusive tactic.
Studies suggest that surprise billing occurs in 20 percent of emergency-room visits — though the rate could be as high as 42 percent. The practice often happens when certain physicians at a hospital — for example, radiologists or anesthesiologists — issue a separate bill because they do not have a contract with the patients’ insurer regarding charges for specific services, even though the hospital is in network.
Imagine, as my colleague Benjamin Chartock puts it, going to a restaurant and getting a separate, unexpected bill for dessert because the pastry chef did not sign a contract with the owner. Such is the case when patients go to the hospital, where they are “captured” and don’t have the option to choose an in-network physician or to go without health care. This dramatically enhances the bargaining power of those physicians; without a contract, they can charge the infamous chargemaster prices that hospitals assure only foreign billionaires pay.
Frankly, however, doctors are not conniving enough to have figured out this scheme, nor are they responsible for putting it on an industrial scale. Surprise medical bills are the doing of the financial sorcerers at companies such as EmCare and TeamHealth, both owned by private equity firms, which are responsible for outsourced emergency rooms in hundreds of hospitals across the country.
Yale University researchers have found that when these companies take over an emergency room, the frequency of surprise billing skyrockets. For instance, EmCare takeovers of ERs caused a jump in surprise billing by almost 82 percentage points. And when TeamHealth employs the physicians, the frequency of surprise billing increased by 33 percentage points. (After the Yale study was published, EmCare negotiated with insurers to counter the torrent of negative press.)
The legislation making its way through Congress attempts to solve this by getting patients out of the middle, protecting them by charging them no more than typical in-network co-pays. The bills would also establish a fair price for the physicians who are out-of-network. The benchmark price, which would rise with inflation, would be the median in-network rate for the service in the local market where the patient was seen. That means physicians who do not sign contracts with insurers — in hopes of hitting the jackpot with out-of-network patients — would be paid the same as other similar physicians who were not so greedy.
The House — but so far not the Senate — has also proposed an appeals and independent arbitration process if physicians and hospitals are not happy with the benchmark payment. This is a sop to physicians, but it hasn’t kept special interests from spending millions of dollars on lobbying and political ads that target congressional members and portray physicians as poor victims of rapacious insurance companies.
Their complaints are hard to take seriously. Radiologists, anesthesiologists and emergency-room physicians are paid very well. Private insurers on average pay anesthesiologists about 3.5 times what Medicare pays, even while other physicians get on average only 1.3 times Medicare rates from private insurance. The average salary for radiologists is nearly $420,000 per year and for anesthesiologists is almost $390,000.
Hospitals fear, too, that they would be paid less under such legislation. They routinely warn that without the higher payments, they would have to reduce services or even close. But extorting patients with surprise bills hardly seems the way to shore up hospitals’ finances.
Hospitals and their fellow special interests also don’t have a viable policy alternative. They suggest making every single billing disagreement between insurers and the physicians — including at least 30 million surprise bills from emergency rooms alone — subject to arbitration. Talk about creating a complex, costly, administrative morass. Only the lawyers would win in such a situation.
It appears that despite the overwhelming public interest, the usual will happen: Congress will waver and fail to pass a bill. Though Senate Majority Leader Mitch McConnell (R-Ky.) has expressed support for a bill in the past, there’s no guarantee he will allow the bill to come to the Senate floor.
If Congress fails to stand up to special interests here, what hope is there for legislation that addresses bigger health-care issues, such as exorbitant drug prices? It is enough to make believers in representative democracy scream in disgust.