The Latest Surprise-Medical-Bills Surprise Is No Surprise
by
Rep. Richard Neal (YouTube screenshot)

Earlier this year Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) proposed the “Lower Health Care Costs Act,” which purports to protect patients from surprise medical bills. In reality, it is a price-fixing scheme that would incentivize insurers to drop higher-cost physicians from their networks. As a result, more patients would find that their insurance plans no longer covered their preferred doctors.

Intense opposition to the bill has caused it to stall, meaning that Congress will now come up with a much better solution.

Just kidding. This is Congress we’re talking about.

It is not uncommon for a patient to receive medical care in an emergency room from an “out-of-network” physician — that is, a physician that is not covered by the patient’s health insurer. More and more patients, however, have been receiving large medical bills from those out-of-network physicians in recent years when insurance companies won’t pay for their services. An article in the Journal of the American Medical Association found that surprise medical billing increased over 30 percent from 2010 to 2016. Research from the Kaiser Family Foundation found that in 2017, 18 percent of people with large employer health plans who had an emergency room visit received at least one out-of-network charge.

The latest proposal for eliminating surprise medical bills, advanced by Rep. Richard Neal (D-Mass.), kicks the entire problem over to a committee composed of members from the Departments of Health and Human Services, Treasury, and Labor and lobbying groups representing physicians, hospitals, and insurance companies. This committee will be tasked with creating a rulemaking process to set prices for out-of-network services. Ultimately, this will create a process dominated by powerful health care interest groups at the expense of patients.

The history of Medicare serves as warning here. In the early 1990s, Congress adopted a system of price controls called “relative value units” to determine how Medicare paid physicians. Congress tasked the Department of Health and Human Services with periodically updating those price controls.

To ensure that physicians would participate in those updates, the American Medical Association established the Relative Value Scale Update Committee (RUC) in 1991. It is an advisory board composed of representatives from most of the physician interest groups, such as the American Academy of Family Physicians, the American Association of Neurological Surgeons, the American College of Cardiology, and so on. The RUC wields significant influence over what Medicare pays physicians. Health and Human Services has accepted somewhere between 88 and 94 percent of RUC recommendations since the early 1990s.

Over time the RUC has become very political, with battle lines usually drawn between groups representing primary-care physicians and groups representing specialists. Former members of the committee have reported that the specialists usually support one other’s proposed increases in Medicare reimbursement at the expense of primary-care physician proposals. As a result, pay for primary-care physicians has suffered, causing many of them to leave the program. Nearly 20,000 physicians have dropped out of Medicare this decade, and the bulk of them are likely primary-care physicians. A 2018 survey by the Physicians Foundation found that over 23 percent of primary-care physicians were no longer taking Medicare versus less than 10 percent of specialists.

The benefits of primary care are well established. Quality primary care results in improved health outcomes among patients. Areas where patients have greater access to primary care have lower rates of admission to emergency rooms. We do not want a system in which the elderly have trouble accessing primary-care physicians, but that is what Medicare’s price controls have been creating over time.

As the history of Medicare demonstrates, the government process of setting health-care prices quickly becomes a political one, with the least politically powerful groups losing out. If Rep. Neal’s proposal becomes law, powerful groups representing insurers, hospitals, and physicians will make sure that their members’ interests are met when government sets prices for surprise medical bills. But groups that represent patients are few in number and wield much less power. Thus, one way or another, patients will ultimately suffer.

David Hogberg is a writer living in Maryland and author of the book Medicare’s Victims: How the U.S. Government’s Largest Health Care Program Harms Patients and Impairs Physicians.

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