Testimony In Opposition to House Bill 2164, Senate Bill 522, and House Bill 587 before the Joint Committee on Financial Services

The Massachusetts Medical Society wishes to be recorded in opposition to the following bills related to out-of-network billing: House bill 2164, An Act to ban hospital facility fees and surprise billing, House bill 2188, An Act Relating to Equitable Provider Reimbursement, House Bill 587, An act to require written notice of medical tests outside a patient’s network for insurance purposes and Senate bill 522, An Act reducing the financial burden of surprise medical bills for patients. The Medical Society is firmly committed to seeking a solution to this issue, but has strong concerns about the policies put forth in these bills.

The Medical Society has long supported a solution that ends the situation whereby patients receive unavoidable out-of-network bills. Any such solution must: 1) promote greater education and transparency to prevent such billing situations when possible; 2) completely remove patients from receiving unavoidable out-of-network bills by holding the patient harmless and eliminating balance billing; and 3) find an equitable and sustainable formula for the payment of services provided, with proper safeguards to ensure fair payment in exceptional circumstances.  

The aforementioned bills fail to meet the third important criteria: the proposed default payment formula of 100-110% of Medicare in each of these bills is an inappropriate benchmark for payment by commercial insurers, and it would have drastic effects on the sustainability of many physician practices and health care institutions, ultimately jeopardizing access to care in many underserved areas. The physician community opposes the use of the Medicare fee as the default out-of-network physician reimbursement in legislative proposals. 

Medicare is not currently and was never intended to be a broadly applicable index for commercial physician payment. Medicare rates are not established to represent a valuation of professional services provided; instead, they function as a distribution of an already limited budget of this social service program.  Further, Medicare rates differ widely across specialties as evidenced by a study published recently in JAMA Internal Medicine that found significant variation in the relative price of services across specialty billing Medicare.  A driving factor of this variation is that the denominator—the rate of Medicare payment—varies significantly across specialties.  For example, a GAO report highlighted, “Medicare payments were lower than private payments [for anesthesia] by an average of 67%.”  While other specialties may not have such wide variation, this example underscores why tying any payment formula to Medicare is not appropriate and will have incredibly negative impacts for certain specialties which could ultimately impede patient’s access to quality medical care.  

But the implications of an insufficient reimbursement strategy extend beyond just underpayment for the current sliver of unavoidable out-of-network care. If a default rate is substantially below market value, insurers would have little incentive to negotiate in good faith with physician practices, knowing that any resulting out-of-network scenario would be reimbursed at a low default out-of-network rate.  Having this insufficient reimbursement rate be an expanding portion of overall payments would significantly jeopardize the sustainability of many physician practices, threatening access to care for patients across the Commonwealth.  This also has the potential for disincentivizing physicians from practicing in Massachusetts, making recruiting and retaining physicians increasingly difficult.

The Medical Society instead believes that the best legislative approach includes a default formula for reimbursement of unavoidable out-of-network care that is based upon a percentile of average charges for a given procedure or service, in the same geographic area, as determined by a third party, independent, transparent non-profit data base such as Fair Health. This would promote a sustainable, transparent solution that fairly reimburses physicians for their services. 

Given the complexity of this issue, the Medical Society supports an inclusive commission or task force, such as that proposed by Rep. Mariano (H.3571), to look more closely at this issue. The medical community reiterates its commitment to working with the legislature, patient advocacy groups, and other stakeholders to see the adoption of legislation to address out of network billing. 

The Medical Society also wishes to be recorded in opposition to House bill 587, An Act to require written notice of medical tests outside a patient’s network for insurance purposes. This bill requires physician offices to notify the patient of any lab work will be done outside the patient’s network. The narrowing of insurance networks, and the proliferation of products within a given insurer have all led to an increase in the complexity of a patient’s insurance plan. Physician offices are having to dedicate more and more time to handling billing issues. Many patients can name their insurer, but are unaware of the exact plan that they have. Not all patients have their insurance card with them at the time of visit, and insurance plans often change from year to year. Physician office staff tasked with billing and payer-related issues are focused on ensuring that their own physician office takes a given insurance product. Expanding this requirement to ensuring that third parties are also responsible is not a prudent policy solution. The Medical Society hopes that with comprehensive out-of-network legislation will come transparency policies that allow for better understanding of networks-for patients and providers. For these reasons, we strongly oppose House bill 587.

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