Massachusetts Medical Society: Testimony in Support of An Act Relative to Out of Network Billing

Testimony in Support of An Act Relative to Out of Network Billing

The Massachusetts Medical wishes to be recorded in strong support of House bill 932, An Act relative to out of network billing. This bill provides a solution to the out-of-network billing dilemma by prohibiting patients from receiving "surprise bills" and by laying out a solution to ensure reasonable reimbursement between the health insurer and the clinician for the services provided. Surprise billing is the occurrence whereby a patient receives a bill for medical services provided at an in-network entity by an out-of-network clinician. These situations have been the subject of much discussion in the Commonwealth of late and are increasingly due to the narrowing of networks by health plans. This bill addresses situations in which the patient does not have the opportunity to know with ample notice that they are seeing an out-of-network provider.

House bill 932 is a comprehensive solution: patients would be held harmless from these bills, there would be a ban on balance billing. Gone would be stories of patients being saddled with these bills that were often unavoidable in the first place.

In addition, this bill provides transparency and disclosure provisions that will aim to prevent some of these situations from occurring in the first place (but again, for those situations which cannot be prevented, it protects the patients nonetheless.) This bill also clarifies a reimbursement formula between the payer and physician as well as a dispute resolution process for any exceptional circumstances. This bill would provide a complete and total fix to this problem for all patients who are subject to MA insurance regulation.

And second, House bill 932 is time-tested: it has been proven to work. Much of this bill has been modeled after the New York approach which was passed in 2014. House bill 932 contains the same patient protections, and the same reimbursement rate as the New York legislation. (House bill 932 has been adjusted to reduce the rate of unnecessary arbitration which can be costly and burdensome, and to reduce any barriers that patients need to take to receive the full protections from these bills.)

Moreover, this is a model that we now know has fixed the problem and maintained stability in the health care market. And that is a critically important second objection. We don’t want this type of legislation to unintendedly shift the dynamics which allow for good faith negotiations between physicians and health insurers. We have been pleased to learn that the New York approach has continued to incentivize physicians and insurance companies to come to contract. This is evidenced by a report by the New York State Health Foundation from this year which reported a reduction in out of network emergency services bills from 20.1% in 2013, before the law was passed, to 6.4% in 2015, after its implementation. Not only did the New York Out of Network billing legislation protect patients from being responsible for paying the bills, it reduced the amount of out of network bills that occurred in the first place. We urge your appreciation of this important point.

We consequently wish to express opposition to Senate bill 607, An Act reducing the financial burden of surprise medical bills for patients. While we appreciate that this bill provides some patient protections, it fails to adequately reimburse physicians for the services that they provide. The proposed default payment formula of 100% of Medicare 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.

MMS also therefore conveys concerns for H. 967, as it provides substantial uncertainty about reimbursement rates, and does not establish a reimbursement “floor” to avoid the highly problematic scenario of an inadequate reimbursement rate dissuading insurers from contracting with physician groups.

MMS believes that solutions exists to achieve the patient protections that all parties desire, while also striking a balance in the provisions outlining reimbursement by defining a fair, adequate formula. MMS believes that House bill 932 represents a comprehensive, time-tested solution. We urge your support.

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