House Democrats and Republicans are struggling to reach a consensus over several competing bills that would limit surprise medical bills for patients, as physicians, hospitals and insurers wage a media and lobbying war to protect their various interests.

A “surprise medical bill” is when an insurance company charges a patient for care from an out-of-network physician received at an in-network hospital or facility.

This frequently happens when someone needs emergency services. For example, John Smith rushes to the hospital for a burst appendix and then often receives care from a medical professional contracted by the hospital, like an anesthesiologist, but who is not considered “in-network” by the insurance company.

After receiving the hospital bill he’s expecting, Smith then receives a “surprise bill” from the insurance company for the out-of-network services from the anesthesiologist.  These bills are paid for entirely out of the patient’s pocket and can be hundreds of thousands of dollars.

In July, Rep. Frank Pallone (D-N.J.) with Rep. Greg Walden (R-Ore.) introduced the No Surprises Act, which would “require insurers offering plans that cover emergency services to bill plan holders no more than the median in-network rate for a particular emergency service, even if the service provider is out of network. The bill further prohibits insurers from billing plan holders more than the median in-network rate for nonemergency services provided by out-of-network providers at in-network facilities.”

But the medical community worries this kind of legislation will disrupt the health care market, resulting in understaffed hospitals due to insurance companies unable to pay above a federally-mandated in-network rate.

“[Under this bill] insurers can simply default to a benchmark payment and decline to contract with many different types of physicians,” said Tom Nickels, executive vice president of the American Hospital Association (AHA) at a House Energy & Commerce hearing in June. “This dissolution of networks could undermine patients’ ability to access care for services not protected through this draft legislation, as well as undermine efforts to enhance care coordination and improve quality through different types of value-based arrangements.”

The American Society of Anesthesiologists also condemned the bill, claiming it “threatens to fundamentally disrupt health care delivery.”

“Insurers are placed in full control of payments for physicians and other providers and as a result, physicians will have no recourse to challenge the insurer created payment levels,” the ASA said in a statement. “Insurance companies will have no incentive to create adequate networks of providers and, therefore, it is expected that patients receiving health care from out-of-network providers will only increase.”

In June, Reps. Raul Ruiz (D-Calif.) and Phil Roe (R-Tenn.) introduced a competing bill, the Protecting People from Surprise Medical Bills Act, which the medical community supports. The bill requires physicians and hospitals to settle payment disputes with insurance companies via arbitration with a neutral arbiter choosing the fairest price the patient should pay.

Meanwhile, insurance companies support a third bill from Sen. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), the Lower Health Care Costs Act, which would cap how much physicians, hospitals and emergency services can charge for out-of-network services.

To influence the direction of Congress’ legislative efforts, the warring health care factions have been spending millions on advertising attacking each other’s proposals.

To push back on the No Surprises Act, a new dark money group, Doctor Patient Unity, spent $2.3 million on TV advertising accusing supporters of the bill of pandering to insurance companies and hurting the medical community.

Physicians for Fair Coverage, a nonprofit group comprised of various physician and hospital groups, also aired a $65,000-TV ad specifically blaming the insurance industry for high health care costs, according to the Center for Responsive Politics.

Not to be outdone, a coalition of insurance companies including Blue Cross Blue Shield aired a $65,000-TV ad blaming hospitals for high health care costs and supporting a cap on how much physicians, hospitals and emergency services can charge for out-of-network services.

Conservatives and liberals thinkers and health care advocates place blame on both the medical community and the insurance industry for high health care costs and surprise medical bills in particular.

“An obvious question is why insurers don’t take steps to prevent such abusive practices from occurring in the first place,” said James Capretta, Milton Friedman Chair of the American Enterprise Institute. “Insurers have the theoretical power to head off the problem. They already sign contracts with hospitals and surgeons to establish networks of preferred providers. Those same contracts could stipulate that in-network hospitals and surgeons are only allowed to work with in-network ancillary providers when caring for the insurers’ patients. That would eliminate surprise billing in many cases.”

But due to the market-oriented nature of the health care system, specialists who are in high demand — like anesthesiologists — command high prices for their services, which insurance companies don’t want to handle.

To avoid these costs, insurers choose instead to leave them out of their networks, which has the effect of exposing patients directly to the inflated prices in the form of surprise bills,” Capretta wrote. “Insurers may be choosing not to confront the medical system superstructure because controlling costs is not essential to their business model. They are able to pass rising costs to their customers in the form of higher premiums without jeopardizing their bottom lines. Higher premiums generate larger governmental subsidization of insurance through tax breaks and premium assistance.”

But Capretta said hospitals and physicians are to blame as well.

“Stopping surprise bills is within the theoretical power of many insurers, but it would require disrupting the business models of many hospitals and physician groups, and in a confrontation between insurers and local providers, the public is more likely to side with the providers than with the insurance companies that process claims and pay bills,” he wrote.

Benedic Ippolito, another research fellow at AEI, said all three bills are “serious attempts” to address surprise medical bills, but argued before Congress that “adopting an in-network guarantee is the best option. It represents a straightforward and market-oriented way to stop surprise bills from occurring in the first place, rather than adjudicating them after the fact.”

“Physicians at in-network hospitals would have two choices: come to an agreement with the insurer, or chose to be paid by the hospital,” he said. “This would force the small number of bad actors to stop surprise billing patients and impose few additional burdens on the majority of providers who do not engage in this behavior.”

Sen. Bernie Sanders (I-Vt.) has made addressing “surprise medical bills” part of his 2020 presidential campaign pitch. Last week, Sanders unveiled a plan to eliminate all medical debt for all Americans, like debt brought on by surprise medical bills.

One in six patients with insurance incurred a surprise medical bill in 2017,” he said. “Hospitals throughout the country are selling uncollected medical debt for pennies on the dollar to collection agencies who aggressively attempt to force patients to pay the full amount due. These debt collectors harass patients at work and at home, deploying unscrupulous tactics even after the statute of limitations on the debt has expired. Forcing additional stress and hardship on someone for the ‘crime’ of getting sick is immoral, unconscionable, and un-American.”

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