Tennessean: Congress is trying to protect patients from surprise medical bills

Posted on September 26, 2019

If you have been a patient in a hospital emergency room, chances are one in five that after going home you had a big surprise: a $300 or $3,000 or $30,000 bill from a doctor you didn’t choose and that your insurance did not cover.

This is why so many Americans are up in arms about patients receiving surprise bills after being taken to an emergency room not covered by their insurance — such as the Texas teacher who received a $108,951 bill after being taken to an out-of-network hospital while having a heart attack.

A patient can also get a surprise bill after going to a hospital that accepts the patient’s insurance after being treated by an out-of-network doctor — such as the Tennessee dad who wrote me about receiving an $1,800 bill from the emergency room doctor who treated his son after a bicycle accident, or a South Carolina woman who got a $15,000 bill from an anesthesiologist for her emergency C-section.

Usually the only person surprised by the medical bill is the patient. Private equity firms that own many of the emergency room physician staffing companies were in on the game all along.

These private equity groups — realizing the amount of money that can be made by these excessive charges — control three of the largest companies that handle billing and staffing for emergency rooms. These staffing companies set up agreements with hospitals and then refuse to sign contracts with insurance networks unless excessive charges are agreed to. So private equity firms are profiting off of unsuspecting patients’ exorbitant bills.

Based on an examination of data from the Kaiser Family Foundation, it would appear that only about 5% of doctors send most surprise medical bills. They intentionally stay out of insurance networks so they can bill patients for hundreds or thousands of dollars, months after they received care. 

According to an example found by the Brookings Institution, doctors at one firm averaged eight times what Medicare pays doctors for a similar procedure when they billed out of network. In-network doctors are paid three times what Medicare pays.

Surprise medical billing is perhaps the most visible market failure in the American health care system. As a result, many hardworking people are being chased by collection agencies.

You may have seen letters to the editor from doctors and hospital administrators about the Lower Health Care Costs Act, bipartisan legislation Senator Patty Murray (D-Wash.) and I introduced in the Senate to end surprise medical bills. These letters are not a surprise. They come from the same folks who benefit from the status quo, which is becoming increasingly unbearable for patients.

The Senate bill — which passed the Senate’s health care committee 20-3 — would put an end to patients receiving surprise medical bills. Here’s how.

  • Under our bill, doctors who don’t join insurance networks would be paid the negotiated free-market rate within their local area.
  • This rate is the amount that doctors and hospitals have already fairly negotiated with insurance companies to establish in-network, market-based rates.
  • Unlike what some letters to the editor say, this bill does not allow the federal government to set the rates doctors and hospitals are paid. Nor could insurance companies unilaterally set those rates. The bill does not provide any new ability for insurance companies to cancel previously negotiated contracts and force doctors and hospitals into new contracts. The free-market will set the price which reflects the cost of providing care in that local area.

Some have suggested that Congress instead adopt a new system of third-party arbitration, or Independent Dispute Resolution, for settling such billing disputes between insurance companies and doctors and hospitals.

A House of Representative proposal includes such an arbitration system. I am reviewing the legislation to make sure that it does not add new costs to the health care system and that it does not lead to higher insurance premiums and out-of-pocket costs for patients, all while adding additional paperwork and frustration to an insurance process that’s already difficult enough to understand.

The Alexander-Murray Senate bill protects patients from surprise medical bills while empowering local markets, not government bureaucrats, to determine the price of health care. This bipartisan senate bill is the simplest, most market-driven, most effective way to protect Americans from surprise medical bills, and Congress should pass the bill this year.