Can Socialists Save Us from Surprise Medical Bills?

"Surprise billing" is the latest health care crisis, and it has prompted the usual response: big government to the rescue.

Balance billing — or a surprise medical bill — happens when you get a bill from a doctor, hospital, or other health care provider who isn't part of your health plan's network of physicians, hospitals, and other health care providers.  Your health plan is your health insurance.

Surprise billing occurs because insurance plans can't create coverage for all the providers you might see in their promises to insured, and insureds don't get a proper warning about the impact of bills from out-of-network doctors and hospitals that aren't under agreements for fees with the insurance plan.  Most insurance/network plans don't get the high-dollar and high-expertise providers to agree to their fees, which are pretty modest (often chintzy), so most insurance plans with "networks" sell a shabby product to the public without warning that they are not comprehensive and leave a lot of gaps that are filled by specialists and other providers who don't agree to the insurance plan "network" fee schedules.

For example, a patient goes to an in-network hospital for emergency care and is treated by an out-of-network emergency physician or an out-of-network consultant called in.  The doctors and the hospital each bill $1,000 for their services, and the health plan pays them each $400 based on the network health plan fee schedule. The in-network hospital accepts the $400, but the doctors may bill for the balance of the bill, $600 that the health plan insurance didn't pay.  That begins the patient insured's anxiety and frustration, maybe even referral to collections and compromise of credit status as a deadbeat.  Nowhere in the mix is the original insurance company trying to settle up with the out of network providers — it's the patient, or the responsible party, on his own.

Senator Lamar Alexander, who has never seen a government intervention he didn't like, proudly announced recently that the Senate is coming to the rescue to fix a problem with health insurance coverage on surprise billing with a new law — last month, the Senate's health committee passed the "Lower Health Care Costs Act," by a vote of 20-3...and the grateful citizens breathe a sigh of relief?  States like Ohio and Texas have also passed laws to force "out of network" physicians and hospitals to accept "negotiated" fees based on market averages or medians or some other imposed standard for charges that is often determined by or heavily influenced by the insurance industry.  

The Obamacare disaster that created insurance plans that depend on "networks" populated by institutions and medical providers that agreed to contract prices for patients they cared for in the network obviously could not prevent the out of network problem.  The Senate, according to Senator Alexander's explanation, would arrange that out-of-network providers be paid the median amount paid in each local market — set by the market.  This approach is an alternative to negotiation on payments between the out-of-network providers and the insurance companies.  It is not clear how the median will be decided and what a "market" is. 

In a letter to President Trump, the Association of American Physicians and Surgeons (AAPS) asserts the obvious: that "surprise billing" generates a lot of heat, but the proposed solutions are about protecting insurance companies from the problem that they don't write policies that are clear about coverage in out-of-network situations, and they don't administrate claims to reduce the impact of out-of-network balance billings.  Politicians should not create an artifice to allow insurers to protect themselves from paying a fair market price for services their insureds need.

The reason patients get unexpected bills from out-of-network physicians is that insurers have increasingly become narrow "on the cheap" networks with unattractive payment schedules, and when presented with bills from out-of-network providers, they punt.  Hospitals in the "network" created by the insurance company can't fill their "on call" schedule with in-network physicians, and the network does not include physicians who refuse their fee schedules or provide costly and exotic services the insurer would like to ignore.  The "networks" ignore even such expected services as neurology and surgical services and are devoid of high-end services such as cancer care (oncology).  High-end specialists are just not willing to be treated with a take-it-or-leave-it, "managed care fees is all you get" contract.

Some physicians find the fee schedules punitive and unreasonable, so they don't sign up because the fees paid do not cover overhead costs, paperwork, and administrative burdens that are costly and onerous, or because the plan imposes constraints that prevent physicians from offering the appropriate levels of diagnosis and treatment. 

The Obamacare promoted program of managed care organizations, corporate medical practice systems, price controls and rationing projects is bound to result in restrictions to good patient care so it is a deception and a distraction to create this "Surprise Billing" political issue that allows bureaucrats and insurance people to blame the fundamental foundations of the health care system — the providers — as predators.  The providers are caring for the patients; the predators are the insurance companies and government bureaucrats.

The AAPS in its letter states a truism: "Price controls always cause shortages.  Just as rent control causes a shortage of apartments, prohibiting free market billing for medical care causes physicians to refuse to join punitive network arrangements, retire early, work fewer hours, [Dunn: refuse to accept low payer patients] or provide less charity care.  This leaves patients worse off."

On the matter of hospital bills that result in "billing surprises," the most outrageous bills are from hospitals billing patients at "charge master" rates, which are nothing more than a fake high-end bill that no hospital expects to collect, but the amounts are used to make the financial losses for the hospital more impressive and allow for better claims to tax exemptions or charity care.  The charge master bills are phony, but they scare the hell out of people with little experience with the health care system who have limited resources and have been abandoned by their insurers.  Besides — what working-class family wants to be put into collections for thousands of dollars for some inflated bill?

The answer to inflated prices is price transparency and free-market competition, not more price controls that protect the profitability of managed-care insurance and institutional cartels.

John Dale Dunn, M.D., J.D. is president-elect of the Texas chapter of the Association of American Physicians and Surgeons (AAPS), a national organization of physicians in all specialties committed to free markets and opposed to socialism.  AAPS was founded in 1943.  He is an emergency and corrections physician and inactive attorney in Brownwood, Texas.

"Surprise billing" is the latest health care crisis, and it has prompted the usual response: big government to the rescue.

Balance billing — or a surprise medical bill — happens when you get a bill from a doctor, hospital, or other health care provider who isn't part of your health plan's network of physicians, hospitals, and other health care providers.  Your health plan is your health insurance.

Surprise billing occurs because insurance plans can't create coverage for all the providers you might see in their promises to insured, and insureds don't get a proper warning about the impact of bills from out-of-network doctors and hospitals that aren't under agreements for fees with the insurance plan.  Most insurance/network plans don't get the high-dollar and high-expertise providers to agree to their fees, which are pretty modest (often chintzy), so most insurance plans with "networks" sell a shabby product to the public without warning that they are not comprehensive and leave a lot of gaps that are filled by specialists and other providers who don't agree to the insurance plan "network" fee schedules.

For example, a patient goes to an in-network hospital for emergency care and is treated by an out-of-network emergency physician or an out-of-network consultant called in.  The doctors and the hospital each bill $1,000 for their services, and the health plan pays them each $400 based on the network health plan fee schedule. The in-network hospital accepts the $400, but the doctors may bill for the balance of the bill, $600 that the health plan insurance didn't pay.  That begins the patient insured's anxiety and frustration, maybe even referral to collections and compromise of credit status as a deadbeat.  Nowhere in the mix is the original insurance company trying to settle up with the out of network providers — it's the patient, or the responsible party, on his own.

Senator Lamar Alexander, who has never seen a government intervention he didn't like, proudly announced recently that the Senate is coming to the rescue to fix a problem with health insurance coverage on surprise billing with a new law — last month, the Senate's health committee passed the "Lower Health Care Costs Act," by a vote of 20-3...and the grateful citizens breathe a sigh of relief?  States like Ohio and Texas have also passed laws to force "out of network" physicians and hospitals to accept "negotiated" fees based on market averages or medians or some other imposed standard for charges that is often determined by or heavily influenced by the insurance industry.  

The Obamacare disaster that created insurance plans that depend on "networks" populated by institutions and medical providers that agreed to contract prices for patients they cared for in the network obviously could not prevent the out of network problem.  The Senate, according to Senator Alexander's explanation, would arrange that out-of-network providers be paid the median amount paid in each local market — set by the market.  This approach is an alternative to negotiation on payments between the out-of-network providers and the insurance companies.  It is not clear how the median will be decided and what a "market" is. 

In a letter to President Trump, the Association of American Physicians and Surgeons (AAPS) asserts the obvious: that "surprise billing" generates a lot of heat, but the proposed solutions are about protecting insurance companies from the problem that they don't write policies that are clear about coverage in out-of-network situations, and they don't administrate claims to reduce the impact of out-of-network balance billings.  Politicians should not create an artifice to allow insurers to protect themselves from paying a fair market price for services their insureds need.

The reason patients get unexpected bills from out-of-network physicians is that insurers have increasingly become narrow "on the cheap" networks with unattractive payment schedules, and when presented with bills from out-of-network providers, they punt.  Hospitals in the "network" created by the insurance company can't fill their "on call" schedule with in-network physicians, and the network does not include physicians who refuse their fee schedules or provide costly and exotic services the insurer would like to ignore.  The "networks" ignore even such expected services as neurology and surgical services and are devoid of high-end services such as cancer care (oncology).  High-end specialists are just not willing to be treated with a take-it-or-leave-it, "managed care fees is all you get" contract.

Some physicians find the fee schedules punitive and unreasonable, so they don't sign up because the fees paid do not cover overhead costs, paperwork, and administrative burdens that are costly and onerous, or because the plan imposes constraints that prevent physicians from offering the appropriate levels of diagnosis and treatment. 

The Obamacare promoted program of managed care organizations, corporate medical practice systems, price controls and rationing projects is bound to result in restrictions to good patient care so it is a deception and a distraction to create this "Surprise Billing" political issue that allows bureaucrats and insurance people to blame the fundamental foundations of the health care system — the providers — as predators.  The providers are caring for the patients; the predators are the insurance companies and government bureaucrats.

The AAPS in its letter states a truism: "Price controls always cause shortages.  Just as rent control causes a shortage of apartments, prohibiting free market billing for medical care causes physicians to refuse to join punitive network arrangements, retire early, work fewer hours, [Dunn: refuse to accept low payer patients] or provide less charity care.  This leaves patients worse off."

On the matter of hospital bills that result in "billing surprises," the most outrageous bills are from hospitals billing patients at "charge master" rates, which are nothing more than a fake high-end bill that no hospital expects to collect, but the amounts are used to make the financial losses for the hospital more impressive and allow for better claims to tax exemptions or charity care.  The charge master bills are phony, but they scare the hell out of people with little experience with the health care system who have limited resources and have been abandoned by their insurers.  Besides — what working-class family wants to be put into collections for thousands of dollars for some inflated bill?

The answer to inflated prices is price transparency and free-market competition, not more price controls that protect the profitability of managed-care insurance and institutional cartels.

John Dale Dunn, M.D., J.D. is president-elect of the Texas chapter of the Association of American Physicians and Surgeons (AAPS), a national organization of physicians in all specialties committed to free markets and opposed to socialism.  AAPS was founded in 1943.  He is an emergency and corrections physician and inactive attorney in Brownwood, Texas.