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tv   Brookings Institution on Surprise Medical Bills Part 1  CSPAN  March 27, 2019 10:18pm-11:45pm EDT

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nuclear power accident near harrisburg, pennsylvania, the most serious one of the united states. joining us, historian and author samuel walker, acting director of the nuclear safety project for the union of concerned scientists, edward lyman, and concerned mothers of women in pennsylvania. 4 pm on real america, the 1979 cbs report, fallout from three mile island. >> there is an evacuation, stay indoors with the windows closed. >> for almost a week last month, the people of middletown pennsylvania lived in fear of a enemy they couldn't feel, hear or see. >> watch it this weekend on c- span three. healthcare advisors and insurance commissioners discuss approaches to eliminate surprise out of network medical
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bills, real-life examples of how many consumers are faced with these additional payments, often associated with emergency healthcare costs and hospitals, from the brookings institution, two hours and 20 minutes. thank you for braving the weather to get here. i guess that's the wrong note, you are planning to come february 20 as well, i'm glad we could get together today, and so many of the panelists were able to make it today as well. my colleagues and i have been working on the issue, of surprise billing since the beginning of the shafer initiative in early 2016. it has been striking how much interest in the issue among policymakers has grown since then, and how many states have enacted policies to address it.
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this continues to accelerate. a grant from the john arnold foundation made last year has enabled us to substantially expand our activities, and led directly to this conference and the paper on policy options for states, that was released in february around the original meeting date, we are grateful for their support. we are focusing, i think everyone, dealing with the issue, focusing on the subset of services for which patients can't choose a provider. and of course this undermines the potential for having a competitive market. so if a patient can't choose, the only motivation for providers to be in network is the challenge of collecting from patients, instead of billing, an insurer. the result is very high network
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rates, and large balance bills for unlucky patients. and while this is a bad situation, especially for patients, the silver lining is that it is conducive to bipartisan, or more accurately, nonpartisan efforts to find a solution, both in states and more recently in congress. the conference is going to begin with the paper presented that was released in february. and taking questions from the audience, the associate director of the brookings initiative, and he did an outstanding job in leading the appropriation of the paper, navigating the challenge of having 6 co-authors, all affiliated with the shafer initiative, and who made substantive contributions. after lauren takes questions, we will -- loren, we will turn
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to mark hall, professor of law at wake forest, and a co-author of the paper. and to moderate a panel of policymakers who have been working on this issue, three at the state level and one at the federal level. finally, after a break, i will moderate a panel of stakeholders that expect to be impacted by policies to address surprise billing, and influence the policy process. hi everyone, thank you for the introduction, paul, cover the basics of what we did, thank you to all of the co- authors on the paper as well, it would not have happened without everyone's work on this issue. i wanted to start today, out walking through why
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these surprise bills haven't, paul mostly touched on what they are already, and what the different policy solutions look like, and where we come out, in our paper, for recommendations, and thinking through what the impacts of different policies addressing surprise billing might be. just to take a first look, to define what is a surprise out of network bill, this is in any surprise you get, focusing in on sort of three main types of examples, this one gets written a blog, you have a heart attack, hit by car, call 911, the ambulances dispatch takes you, the hospital you get taken to is out of your insurer's network, they can hit you with a large bill, or the ambulance that took you there is not in your insurer's network, and the more common cases they get
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talked about, where most people even in emergency situations are choosing network hospitals, but the emergency physicians who work there, or the surgeons on paul, whatever doctors might be on call in the emergency room are out of network, they are negotiating independently with health plans, it is possible and not uncommon, the hospital in network, with the ones who practice there are not in the same networks. the last example, this can happen with elective care, hip replacement surgery, call ahead to make sure the hospital is in network, and the surgeon and the operation is a network, it turns out after the fact that the anesthesiologist or the radiologist hits me with a surprise bill, they were out of network, and it's impossible to imagine people choosing their anesthesiologist before hand,
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and try to do this, i tried before my wife gave birth, it took me eight calls to figure out, i was given like a 90% sure answer. so it is useful, i will talk mostly in the presentation, an example of emergency medicine, physicians, anesthesiologist, that is where the overwhelming surprise balance bills are coming from, and also somewhat common amongst pathologists, ambulances, ground and air, less commonly, other types of physicians working in the emergency department, neonatologists, right after rebirth, and they might not be in network, in a hospital, there has been some private equity activity buying up hospitals, physician groups, the doctor who works at the hospital, codes and checks up on you, primary care, that you don't typically choose, that hasn't been a problem much
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today, i am nervous that will become a problem in the future. we have read a lot of anecdotes about these, a lot of great stories and kaiser health news, the individual examples, this is a somewhat common phenomenon, it's not a few would off anecdotes, a few research studies have been put out, about 1 and 5 emergency department visits and up and that potential, a in network hospital, one of the doctors who treated you is out of network, even in the 1 and 10 times that you do the procedure, prescheduled everything, 1 in 10 times, your scene out of network, and then the endless cases is an interesting one, 50% of amulets rides, and the one study, a pretty large data set, half of
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them were out of network, a gao report yesterday or the day before found that 69% of air ambulance rides were out of network, and how could there possibly be a market for these rare events. so the first thing that i want to do is take a step back, and discuss why did this happen, what is going on that allows surprise bills, why does this happen in this and not any other industry? there is a market failure going on. for your typical physician, cardiologist, whoever might be, they go to an insurance company, and they say, look, i will steer my inner leisure way if you give me a price concession, a standard price volume checkoff, the
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cardiologist can't practice without being in the insurer's network, if they don't sign up, they see that stacy zero patients and see zero dollars, flip that around, talk about anesthesiologist, that is simply not the case, no price volume trade-off, they are not the driver volume for them, regardless, if they don't contract with the health plan, they see roughly the same number of patients, patients are choosing the hospital and not the ancillary commissions, the out of network billing option, of these captive patients that no other provider type has, and we see very high in network rates for these physicians, and very high bill charges, which i will get to. they might be in network, and most doctors don't like surprise billing patients, but that is the only thing surprising surprise billing, in
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my opinion, that's why you see bigger companies coming here, you have a more efficient one for patients, and less qualms collecting from patients also, driving up rates. the hospital plays a very big role in these negotiations, that is where the actual market is here, the real market is being -- between the hospital, who drives volume, they pick the hospital, they go to surgery, and they see the anesthesiologist. and hospitals also need them also, you can give surgery without anesthesia, a natural market where there is a price volume trade-off, and already a lot of money flowing between the hospitals and these types of doctors, contracts here as
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well, hospitals are typically trying to pressure these decision types to join the same networks that they are in, it doesn't always work, almost every hospital i've talked to said they're trying to pressure these doctors, and the reason they do this, is hospitals don't like surprise billing happening at the hospital either, that looks bad for them, a study said, women who give birth at hospital and get a surprise bill are much more likely to choose a hospital the next time around. and when you see sort of the emergency doctor surprise billing patients in the hospital, they are compensating the hospital to allow that to happen. the typical case that i've seen written up, and heard of, a company like envision, the poster boy for this, they'll go to the hospitals a look, i know you're currently paying a $300,000 subsidy to your emergency doctor group to get them to practice, you don't have to pay me anything, don't tell me how to bill patients,
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and there's already a little bit of money changing hands to allow this today. that's the theory behind why this has been a problem, and it's worth turning to the data to see why that is, and given that they have this lucrative out-of-network billing option, the specialists lean into this, the bill high amounts, you can see the exact type of physicians, anesthesiologists, radiologists are billing 5 1/2 times the medicare rate on average, 80th percentile, only 20% of anesthesiologist bill above that, and 80% bill less, that means that 20% of anesthesiologists bill at 11 times or higher, that is a pretty jarring amount, you can see below, take every other
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specialist, there almost all of the 2 up to 2.5 medicare rate, other than the specific types of doctors, this might be hard to read from where you're sitting, putting a little bit of numbers in this car to get a look at how big these balance bills can be, and talking about emergency medicine, anesthesiology, in the thousands of dollars, and emergency sitting, not just a out of network emergency doctor but a surgeon who might bill you $10,000. get the large bills, the 80th percentile, $1300, leaving a large amount of money that you're trying to do, these are the common procedures. the other thing here is,
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this is not just stash this gets lost in the discussion, it's not just a problem for the people who get the surprise bills themselves, because of this leverage to surprise bill patients, we see that these physician types get paid more money when they go in network, as a result of that, the insurance companies are paying more, and we are all paying higher premiums as a result. anesthesiologists get paid 350%, emergency doctors, too, when you look across other types of specialists, pretty much every other specialist is in the 125% of medicare, up to 150% of medicare, large outliers, the natural contradiction is that medicare rates are not perfect, i'm not saying the medicare rate is dead right, they have budgetary
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constraints, but they are a best estimate of costs, of delivering the services, so it's not exactly right, but we see crazy high rates for these exact types of specialists, that you expect economic theory would predict, and literally no one else, that coincidences to grand, maybe the market rate for anesthesiologists is not 130%, but i'm pretty sure it's not 350% of medicare. i think i've established this is a problem, or i hope so, how to resolve it? walking through a few options, i wanted to touch on the overview on the overview and the keys, taking patients of the middle, it is unrealistic
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to expect patients to be selecting their anesthesiologist or emergency doctor, and when you're talking about a solution, you want to take them out of the, even between insurer, hospital and provider. i also think it's important to be comprehensive, a number of states, older laws of this issue, really only address the situation in emergencies, emergency services, this is clearly a problem not just in the emergency setting, similarly, older state laws only address this in hmo plans, the data i've seen, the prevalence is pretty similar across ppos, broader network plans as well, no reason to narrow the send to just hmos. something i will harp on a bit is even states have authorities to protect folks in self-insured plans, defining what that is, most large
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employers handle the risk of the health costs themselves, meaning they self-insure, they are kind of on the hook of -- on the health, scott they are using a insurer to administer the benefit, that is about half of the commercially insured lives, and the law prevents states from telling those plans with they can pay, or telling them to regulate the plans themselves, you can regulate providers, the solutions we are focusing on allow you to focus on some of the regulations on providers to provide that protection to everyone in your state rather than just half your state. and the last thing i will harp on his avoid policies that increase health spending, we want to avoid solving one problem while creating another. we have 2 broad swaths year, billing regulations, this is
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what every state who has addressed this issue to date has done some form of, the typical way this happens is for most states, a three-part thing, you basically prohibit the provider from balanced billing in the surprise cases, tell them to treat these services in network, and set minimum payment standards that they have to pay to the provider, what we are talking about here, the equivalent if the federal government was doing it, flipping it slightly, where you put a on the charges, the out- of-network charge rate, if you put a cap on that at a reasonable rate, that solves the problem, even for folks in self-insured plans, if the anesthesiologist can only build 200%, they have an incentive to take care of that. there is some harm to insurers when enrollees get surprise bills, sometimes is not worth it to pay 10 or 12 times medicare rates, but if it is 2
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times medicare, i'm confident you would see this, and the problem would go away. and you have combined this with requiring fully insured plans to treat the network, you close the loop entirely, at the federal level, obviously you can do that for all plans, it doesn't matter which one of these you do. i think the next question is how do you set the payment standards. the fundamental question. in particular, i like to frame this into high versus two low -- too low. if you set a rate above what doctors are currently getting paid as the out-of-network payment, every doctor can go out of network and get the rate, you will see rates climb up to the level, premiums go up, costs go up, etc., a pretty straightforward mechanical
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thing, if you city high payment standard. the flipside is not equivalent, if you set a payment standard that is too low in some sense, or that is below the normal market rate, which is below what they are getting paid today, if you set it on the low end, there is a natural market between the hospital and the physician, they still need them to practice, if you set it at 100% of medicare, the hospital says okay, go to the insurance company say we need our anesthesiologist to actually practice, insurance company, as part of the negotiation with us, offer him 150% of medicare, that's closer to the market rate, that will be part of our agreement, or the alternative is, the insurer refuses to do that, and the hospital pays them directly, 50% of medicare,
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and they build those costs into the negotiations with the insurance company. i know it sounds unusual, this happens today on a smaller scale, it is, no for a hospital that has a high share of medicare or medicaid patients for instance, basically, because the anesthesiologist, effectively getting paid, the same dynamic, no fears that this would happen in practice, the bench marks that they choose, don't base anything on physician bill charges, a completely made up rate, that has no basis, completely
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untethered to the market, the list price, no one actually pays, some patients are liable, but basically no control, we looked at both slides, they tend to be 10 times medicare, five times medicare, they are very high numbers. ideally, we would avoid basing this on current contracted rates, they are already too high, you are basically baking in the high costs that we are already paying for the services, and rewarding the specialists, who have been benefiting from the market failure status quo. ideally, said something lower, get into recommendations in a slider to. somewhat uneasy, about using the approach, sitting arrayed, is to take this to make the
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decision of what the rate should be, and in some ways, the same considerations apply, as long as you tell them to consider low rates, and don't tell them to consider charges, it will be similar, some lack of transparency and risk, no reason to think that they are better to pick the appropriate rates, political expediency, not having to choose the exaggerate, just driving home the don't base anything on bill charges point, the data recently released, on your data, here's what the media network rates are in new york for a few of the very common surprise billing cases, and the incentive is blatantly clear, if you are emergency doctor making $320 currently in network, you can just go out of network, go to the arbiter, they are told new york,
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consider the 80th percentile of charges, this very high rate, arbiters almost always pick whoever is closer to that number, you get paid $1200, four times the rate, it is a straightforward incentive, there are some things in the state law from spiraling too far, but if you did this at the federal level, rates would climb up to those high levels, and premium impacts and budgetary impacts. the regulation, you would prohibit emergency and ancillary clinicians from billing independently to help plans or patience for the services, they would contract for payments with the facilities rather than health plans, and the hospital would bundle that in, when they are negotiating with the health plan to get paid, analyzing nurses, hospitals pay nurses, they build the cost into the
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negotiations with health plans, and this has the benefit, because it is exclusively a regulation of providers, the state would apply across the board, and you're creating a real market, a broken market exists today, creating something much more approximating a real market. markets have other issues of high market power, but that is sort of a separate issue. walking through our recommendations, we have two main ones, they were pretty much the same, the first is that you would regulate it, to what other specialists get paid, as i was saying earlier, other physician types get paid hundred 20 -- hundred and 25% or 130%, if you tied a payment standard to that, much more reasonable, you can very that
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bistate market, and given what i talked about before, there is no risk it sitting it below the market rate, we would air on the low side, setting the rate at 125%, of medicare, and similarly, the arbitration approach, give policymakers the same guidance, consider what other specialists, or name what they get paid to -- relative to medicare. the problem is that this -- jumping to the next one, the contracting regulation, the same thing, applied to the facility-based services, but that doesn't help you with those few cases, the emergency department for the ambulances, in those cases, you need the billing regulation approach, there is no facility a play, it wouldn't help you at that point. lastly, obviously we are in washington dc, there are
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federal policymakers watching this, most of the paper is focused on states, there is not a whole lot of difference in how you want to think about this, the main thing is, ignore the things i said, you can regulate self-insured plans at the federal level, states are prohibited by if a regulation for what we pay for air amlin services, at a federal level, you can fix this problem on the air ambulance side, which seems to be a jarring problem, $10,000 balance bills, and the same solutions aside, it should be applied from ground amlin stew air ambulance, a question at the federal level with what you do with existing state laws, kind of a open discussion to your own preferences, my views you would preempt anything that you don't
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consider a particularly strong law, pick a few states that have laws, we are going to allow somebody who has that, it will still hold, if not, it is prohibited by federal law, that is more of an open question. on that note, that's the presentation, i would like to open it up to audience questions and answers for five minutes or so. >> hi, david lester, a consumer, not in the business, but i own a small business, and i struggle with paying for insurance, and how much to pass onto my employees every year, goes up, just a couple of comments. one area that you did not discuss were these freestanding surgical facilities, i know from experience you sign up for a colonoscopy with a in network doctor, and they do all them at
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this freestanding facility, which they may or may not own part of, and afterward you find out it is out of networks, and not the doctor, but the facility, and you get walloped with that fee, you talked about how much higher it is, the other problem is that typically, your out-of-network deductibles are much higher, you may end up paying hundred percent, not just the excess over, but the insurance cover -- doesn't cover any of it. the other point, was another recent experience, my wife had surgery at a local hospital, i think the bigger problem are the hospital facility fees. the facility fees for her surgery were absolutely outrageous, they were in network, and the discounts off of the facility fees negotiated by the insurance company were negligible. so the hospital has to pay
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doctor because your plan ends up having the fees limited, the hospital has other ways to generate income. that is through much higher facility fees. that is as big a problem is this, and the final question i have is, and a lot of regulatory settings, when you fix a problem, you are fixing the loophole that somebody found, or the way around regulations that somebody found, you have to test these solutions to find out rather -- whether the doctors and the facilities find a way around your fix, and find another way to jack up their charges. >> i should have mentioned that, i glossed over that, facility without defining it, certainly this is a problem in freestanding emergency departments and asc's, surgical centers, on the hospital side,
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i agree that is a problem of hospital market power, we pay high rates in general, i think it is is an important policy topic, just somewhat separate from direct surprise billing. that situation. obviously, when we pass this will be some small loophole we missed. there is always sort of a game of whack a mole. i think this catches 99% of the cases at least, much better in that situation. sorry. >> bruce. to make sure i understand the surprise bill, if i am hospitalized and i get a surprise bill from the anesthesiologist and its high, i am still covered for at least some percentage of what the insurance company would have paid in network. if it's
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$10,000 and they would've covered $2000, on the one hand i have to pay the bill and then submit to the insurance company , they are only going to reimburse me for some fraction of the in network amount. is that true? >> so what actually happens, what does your data say about what people who are confronted with these surprise bills actually do? do they pay them? always? >> that's a good question and sadly we do not have good data on that. i mean, i have talked to a lot of people at this point. most of the time that these potential surprise bills are showing up, most of the time or a lot of the times the insurer and physician are working something out. a lot of times the insurer ends up paying the bill of charges
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because the complaints are too loud and that's why we see higher premiums. a lot of times it gets worked out before. in that case the anesthesiologist, you are liable for 30% of the $2000 and on top of that the anesthesiologist can legally bill you the $8000 balance. you have no actual legal recourse. but you don't want to spend $10,000 on lawyers fees. but they can bill you. the fact that they can bill you is why they get paid so much in network. the fact that it gets resolved half the time or maybe more than that, doesn't resolve that the problem exists. we will do one more question. >> hello joyce, med page today. you are talking about negotiating a cap is one of the options. you said if you negotiated low enough that the insurer would have an incentive to pay that. can you expand on that? why wouldn't they let the patient pay it if it was low enough? >> sure. i think our view, right now
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often when this happens, when a patient gets the surprise bills from the anesthesiologist, often the insurer is paying the crazy height build charges but i think the point is right, it's worth something to not have your enrollees be balance bill because otherwise you will lose company customers. it just might not be worth paying 10 times the medicare rate for these types of services. but in the markets, there are a few markets whether paid at a more normal level, then you don't see the issue happening. the insurer wants the anesthesiologist in that work at the hospital, if they could just pay a normal market rake rate they would be happy to do that. they would be downsized from allowing enrollees to get surprised bills, it's worth paying the more reasonable cap. it might not happen 100% of the time, but it worst you've also limited the surprise bill rate at least more reasonable.
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my theory would be that almost all the time the insured takes care of it at that point. i think they're taking care of a large majority of the time now. that is it for me. i wanted to introduce and bring our next panel up to the stage. if you want to walk up. paul already introduced mark hall briefly. he is a law professor at lake forest university. and a nonresident senior fellow with brookings institution schaeffer initiative for health policy. and then we have jessica. the commissioner of the insurance department in pennsylvania. we have jane who is a senior health policy advisor in washington state insurance commissioner's office and a state that is working actively on legislation this session. we have lauren who is the program health director for the national governors association.
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and then we have mary on the end who is a health policy advisor for bill cassidy who is working on this issue at the moment. i will walk off the stage. >> you are very efficient with those introductions. are you ready? >> i think so. >> they have much more extensive resumes than that. >> we are going to go down the panel and start with a broad overview of the righty of things you're doing, we're going to hear from two states who been working with this issue for a while and then we will hear from the federal government and what's brewing there. >> i am lauren block i work for the national governors association at center for best practices. a little context about why am here. nga has two parts. nga advocacy where the interests of governors are represented before the
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administration and congress. and there is a lot of activity and interest right now among governors with regard to cost and value in controlling cost. in addition there is the center for best practices. that is where i work. we function as something between a think tank and a consultant. it's really helping them learn from one another and identify best practices. states truly are the laboratory for innovation as we have seen with surprise billing. really the states are taking so much action right now we are seeing how the federal government's learning from some of what states are doing and introducing new bills and discussion drafts. that's really exciting. our work is focused a lot in recent years and consultant costs and medicaid, building more efficient medicaid programs, working with high needs high-cost population, using data to inform policy and
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addressing costs broadly with regards to pharmaceuticals. currently we are seeing a lot going on in the private market with surprise billing and a growing interest. i wanted to briefly talk about some of the trends we are seeing and where we think things might be going. just in the last few years since 2017 we have seen seven states pass laws that address surprise billing. we have seen many more bills introduced and there are a lot right now. summer will think about changes to the existing laws they have. i think where we know everyone agrees is that this is a problem. where there is a lot of variability, it's how different stakeholders view the problem and what they see as the solution. fundamentally what's happening is the consumers are having challenges where it's a situation that can't control. they are either going to the emergency room or going to an in network provider and seeing out of network i'm sorry going to in network facility and singing out of network provider. that they didn't expect. really, what we are seeing in
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regard to state solution and the trend is that really the states are moving more towards billing prohibition. where providers are not allowed to bill patients for the services. this is the biggest trend we have been seeing. has been paired with other solutions. i should note that some states have laws that just address emergency room. some address the providers in the in network facilities, the providers out of network. and some are more specific than that and only address specific provider types. some say all providers something only specific writer types. along with the billing prohibition we see states setting rates. we see everything from percentage of medicare to the contractor during negotiated rates. sometimes we also see a percent of billed charges, loren did
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reference their health as one of their charges look that. we see greatest or least of options. sometimes there will be three different options presented and it will be the greatest or least those. this is really where we have seen a big sticking point among states where when they been trying to pass legislation there has been a challenge. i think you will hear more about that for my colleagues when they speak about their experiences. so sometimes there is dispute resolution. that sometimes is paired with the billing prohibition. it's where estate would set up a independent arbitration process. sometimes the arbiters are given specific data points to look at so there might be an all pairs claims database. they might be given a reference point like fair health, and in some cases like new york and new jersey, and this is a growing trend, there is small arbitration. it's when each party comes to
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the table with the number and the arbitrator pics between them. that has become more common. sometimes again they are given different reference points to consider along the way. that is a trend we are seeing, if you can't come up with the reimbursement amount that everyone agrees to, that is an alternative solution. oftentimes we have heard it doesn't get all the way through the process. things get resolved before you get to that arbitration process. there might be an informal process what happens. but it can be a long process. so they don't all get there. another strategy sometimes see is called harmless provision. this is a situation where the consumer doesn't have to pay the bill, but the issue is they may not know, you have to have an awareness for this to be relevant and helpful.
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technically what is supposed to happen is the consumer would get the bill, talk to the insurer and they will pay it. sometimes the insurer would be paying the full amount that there is that risk that the consumer doesn't know, it stresses them out, they are attempting to pay. and that can be a challenge. but there are a couple of states where that is policy in place. another common thing we see our disclosure requirements. these are often times paired with some of the other strategies i have mentioned. there are at least one or two instances in states where there is disclosure that there is not anything else. the issue there is, you have a disclosure, you are being notified that you might be seeing a provider that is out of network. but what do you do? first of all if you are in an emergency this isn't going to be very helpful if you are finding out when you're checking in that the assistant surgeon or the neonatologist or someone else you didn't know you were going to need in your
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procedure is out of network. what are you to do? there have been things going on where there are some bills that suggest upon stabilization you notify the person or at other times. i think it's important to recognize disclosure in and of itself when you're in an emergency situation can't have anticipated something probably won't be sufficient. i did just want to note, loren did talk about ground ambulance. this is an issue. most states have not regulated on this. it's often seen as a local issue but it certainly is a problem where there are a lot of out-of-network bills. also, when we talk briefly about the federal role, certainly have seen air ambulance is a big problem across states. there are some states have attempted to regulate but because of the airline deregulation act they are preempted from taking action. i think there is broad interest in a federal solution. also, loren has mentioned self-
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funded plans. and state regulation. there are a few states, new york and new jersey who have different types of opt in provision were either the plan or the enrolled individual can take action. but it's not fully protected. states can't require although there is an opportunity federally. that is sort of the playing field we are seeing, we have been excited and interested in what we have seen come federally in terms of discussion drafts and bills introduced. i think states are interested in seeing what will happen, but there is an interest in about being preemptive and states being able to continue if they already have something in place that they like. but probably having a baseline would be something that many would appreciate. >> thank you. we will call you lauren with 8a instead of lauren with o.
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>> a couple of years ago this issue started coming to the department's attention from a number of sources all at once. sort of an overwhelming, we were hearing it from our own team of people who answered calls at the consumer complaints. we were hearing it from our legislature, we were hearing it from consumer organizations and other stakeholder groups. we began to focus on it really quite some time ago. one of the things that has always struck me about this issue is there is such a focus on these blockbuster high dollar claims that get the headlines. there is a reason for that and those are really severe cases. but our experience has been they are sort of high-frequency low dollar versions of surprise bills and low-frequency high dollar versions of these surprise bills. we have a state senator who is coming to us and has been a
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lead sponsor an avid supporter of the legislation all along because women in her district were seeking mammograms. and mammograms under federal and state law are supposed to be at no cost to the patient. but these women were going to a mammography center in network and then somewhere a scan was sent to someone who wasn't even on-site to a radiologist who is out of network and they were getting a bill that they never should've gotten. that wasn't a very expensive hill, it wasn't tens of thousands of dollars, but it was happening to a lot of women. the other case, this is on the other end of the spectrum, the one that has been stuck with me in the beginning was a gentleman who contracted -- contacted us he continued heart surgery. he went to an in network hospital and in network surgeon. but there was an assistant surgeon who happened to be out of network, he had never met before the procedure.
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he received a bill in the tens of thousands of dollars. the crazy thing about that case for us was he happened to live in the very northeast corner of pennsylvania on the new york border. he happened to work in new york, have insurance in new york, go to a hospital in new york and have his procedure on the very day, i am not making this up, that new york billing protections went into place. so he was protected by that law. our position, and her response was, why should we have to be grateful that a pennsylvanian is going to new york for their care to have this type of protection? we have been working on it ever since. it's been about three years of legislative sessions. it's one of the nice things about this issue, are not very many nice things, it's that it's very bipartisan. there's nothing about this issue that is partisan. nothing that should be partisan. i think everyone is in this to find the right answer to help consumers and do it in a fair way. generally the goal is, take the
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consumer out of the middle and create a fair process for the insurer and provider to agree on reimbursement. the first part of that is actually quite easy. everyone agrees on that. this is a problem, consumers are doing the right thing and being stuck in the middle, really falling through a crack in our healthcare system that is not fair to them. the second part is the hard part. figuring out how to determine reimbursement in a way that is fair, the right way to do it. and so in the couple of years we have been working on legislation, i think pennsylvania has discussed every single thing under the sun from arbitration, medicare rates to usual and customary rates to in work network rates, everything that's out there. i come out with three principles. the first is to remember this is inherently supposed to be a consumer protection bill.
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and perhaps not a fundamental shift in how our healthcare system is supposed to work. although some may have bigger picture goals. that means not just having a way for the consumer to take care of this if they do their homework and understand everything that is happening. but really keeping an eye out for the process, how the consumer will experience the process. lauren touched on the differences between harmless and billing prohibition and transparency. all along, i think what is the consumer supposed to do, if you have a prescheduled surgery and you know your surgeon and two days before you get a piece of paper that said, by the way, your anesthesiologist may or may not be in network and you may or may not be on the hook for all that cost? what are you supposed to do? cancel your surgery?
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is the hospital supposed to find a different anesthesiologist? is the insurer supposed help you find a different hospital? we have to create a process that is understandable and manageable for the consumer. the second principle is really not creating negative ripple effects in the market. trying to not disrupt the processes we have in place. not creating for example, there is a lot of discussion about disincentives for network participation. their very good reasons why health plans have networks. we don't want to undermine that process. we also hear about potentially creating disincentives for physicians to practice in certain either types of facilities or even in pennsylvania altogether if the process goes too far in the other way. the third principle which is really tied to the last one is healthcare costs and trying not to do anything -- we are all desperately looking for ways to
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move the needle on healthcare costs in a way that we are bringing them down and we don't want to do something in this case where we take the cost that according to loren are already really high and move them even higher because of the incentive we are creating. that is sort of the overall principle that i come to this with. in terms of where pennsylvania is because of the natural transitions and legislative body, we have a new sponsors, the has brought some great new energy. our house of general assembly has been holding hearings, both chairs are lead sponsors of the insurance committee of that bill and they are really going through an extensive deliberative process with stakeholders. i am hopeful that energy, as well as i think the attention coming from the federal level, so thank you for that as well, will help us get something across the finish line in pennsylvania. but if not, we will keep trying
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and i will see you back on a panel like this we continue to work on it. >> thank you jessica. you've been many decades of health policy issue, how is this one striking you? >> this one is interesting. first of all, the commissioner regrets he was not able to be here today. i wanted to say that. he has been -- this is his fourth year trying to get surprise billing legislation through the legislature. and i think this year might be it. i'm going to talk to you a little bit about the commissioners thinking behind the issues that have come up, how we have evolved over the course of thinking about this for four years, and a few issues that haven't been discussed that i think are really important taking in mind. i can say ditto to everything that jessica said and lauren said. loren made me feel guilty about some the things i'm about to say but this is the real world
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working in a state legislature where it is very democratic. every opportunity for every stakeholder to clearly express their perspective. to legislators and others. are legislation has three major goals. as we have gone into it. prohibiting balanced billing. we totally agree that it should not be the consumer's burden to have to figure out, this is a right i have i should exercise it. when any of us looks at the bills that we get, given especially the higher deductible health plans and inclusive provider organizations , etc., it's hard enough to figure out what your appropriate cost sharing is let alone whether something is actually a surprise bill. it is not okay to ask consumers to have to figure that out. and in our bill, just as others
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have indicated, we are focusing on the situations where consumers don't have a choice. emergency services and then services provided by out-of- network providers and in network facilities as well as our legislation lists the type of provider that this would apply to. radiologists, surgeons, er docs, anesthesiologist, labs, and over and over again the issue we have tried to stress is trying to come up with a balance between provider and insurers interest in all of this. and that is the hardest needle to thread. there is no question. so with respect to payment standard, we try for three years to have a formula in the legislation and got nowhere. and the breakthrough, literally this year, was we shamelessly stole from the state of new hampshire and the payment standard available is commercially reasonable amount.
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with a requirement, and i will talk to you a little bit about how are going to use the all payer claims database, essentially with a requirement that the insurer and the physician try to work it out. you have to have a 30 day period of informal negotiation before either can pursue arbitration, as lauren indicated, we are using baseball arbitration and both parties have to split the cost of the arbitration. so there is unquestionably an incentive to not have to go to arbitration because it's expensive. that is how we are addressing the question of the payment amount. we are one of the few states it has an all payer claims database . and so our plan, through this legislation, is to develop a database that pulls information about claims in washington state with respect to what the
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median in network payments have been by insurers, with the median out-of-network payments have been, with the medicare rate would be, and what the median will of charge would be. and the idea is to have the arbitrator have what would be thought of as the high end of what might be paid, and the low- end of medicare. and each party is coming in with their final best offer. the arbitrator has to choose one or the other. that is how it's designed. i will say that if this bill is indeed enacted, and the changes are looking good, because it passed the house of representatives, 84-13 vote. it is scheduled to be voted out of the senate healthcare committee next week. and again the discussions have been completely bipartisan. on this.
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but we have the opportunity for an all payer claims database to monitor once the bill is enacted , what is happening and what trends we are seeing in terms of out-of-network payment rates and also what trends we are seeing in terms of network participation. so really quickly, in terms of a few other issues i just wanted to point out, emergency treatment received in border state hospitals. this has been a big issue for us , we have two consumers, one who received a $100,000 bill for emergency services and another who received a $200,000 bill. that is a surprise bill. that is over and above what was paid for the service. this is where federal legislation could be very helpful, the way we are approaching the bill is you
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can't just say to the consumers, too bad, so sad. in our bill we are saying with emergency services provided by an out-of-state hospital, the insurer does have to hold the consumer harmless from balance billing. but we would like there to be a federal solution that says it doesn't matter where the hospital is, for emergency services you can't balance bill. then enforcement. if we are prohibiting balanced billing by provided providers there needs to be a mechanism to enforce it. our legislation gives the insurance department the opportunity to reach out to the provider and say, maybe you didn't know this wasn't allowed, but it's not allowed to do you want to take care of this and fix it? if there is a repeated violation, the legislation in washington state would make it unprofessional conduct for a provider to continue to balance bill where it's illegal and also for facilities to do that. that is the linkage, that involves a good relationship with your regulatory agency that regulates providers. finally with respect to
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transparency, the legislation has requirements providers, related to providing consumer information about networks providers participate in. the insurance commissioners developing a standard template, a notice for consumers to explain the rights. washington state is one of the states that is providing in the legislation and opt in option for self-funded employer groups. but we would anticipate is for example there are many plans that are self-funded and so when those entities are going into collect collective bargaining that's an opportunity for employees to come forward and say, we want these protections as well. i will stop there. >> impressive. we have aviation redemption, cross-border issues, obviously are the feds going to sweep in and solve all of this for us?
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>> working on it. [laughter] thank you so much for having me here today, i am pleased to be here to speak about some of the work my bus along with others are doing in congress to address is on a federal level. there is a clearly demonstrated me. my boss is a physician, a gastroenterologist, in louisiana in the u.s. senate. he is attuned to some of the issues that patients have raised. i think others have mentioned how it seems the issue has reached this level of sort of salience, much in part due to the reporting that has gone on on the issue, a lot of activity on the state level. it has given at this great momentum that has enabled my boss to be spearheading this effort in senate together with five other members in senate, equally bipartisan, to provide a federal protection for
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patients from surprise medical billing. it's interesting to hear, i like how you talked about the low incidence of high dollar bills and high incidence of low dollar bills. when you contextualize that in economic reality of most americans, i know i have seen six out of 10 u.s. families don't have more than $500 in a savings account. when they get that to hundred dollar bill, that's not just inconvenient, that is taking whatever it is, money to buy food for their family, and then when you get into the high dollar amounts, that has the potential to be financially ruinous for that family. i think that is sort of the driving force for my boss and others to be able to protect that patient from what could be really devastating. so, in terms of our process, we
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are not quite as far along as some of you all. we released a discussion draft last october in which we sort of had a mechanism of capping the provider charges and a combination of a couple of things i haven't mentioned. it elicited a lot of feedback from some of you in this room. and we appreciate that. it has been highlighted lately about the level of acrimony between some of these stakeholders. and we have heard about providers is this a function of network, a growing trend of high deductible health care plans, are insurers not acting in good faith, from the plans we hear about some of the providers who might use it as their business plan to sort of stay out-of-network and balance bill. and then highlighting the really high level of charges by
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some of these folks. there is certainly enough blame to go around different parties. we have taken this feedback and are trying to thread the needle on some of these issues. there are the different frameworks being discussed, there's arbitration, bundling that loren talked about . network matching that is an iteration of that. we are trying to weigh the pros and cons of each of these. i think they each come with their own set of strengths and weaknesses. we are still in the process of narrowing in on what our approach will be. i think is sort of to echo some of the comments jessica made, we are trying to keep a few things in mind, and that of knowing that this is not, in terms of being a chronic balance bill or, it does seem to be concentrated among a
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small number of, relatively speaking, a small number of providers. how do you sort of target your approach to address what is the bad actions committed by a few? if we are keeping that in mind, keeping in mind what undue implications there could be from some standard we set, particularly, i feel the weight of that knowing we are put in place a federal standard. it's going to apply across the nation where there are different healthcare markets, where there may be different asymmetries. in some areas the plans may have greater leverage and over providers and in other markets providers might have leverage over the plants. how do you make a federal standard that doesn't tilted one way or the other. keeping that in mind. ultimately we are certainly
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cognizant of the impact this will have on cost and ultimately premiums knowing that whatever we establish year can have effects on that which is really important. at the heart of this, we know it always comes back to protecting the patient. in this scenario, we could end up with a solution that everyone loves and that would be so wonderful. we could end up with a solution that everyone hates and that is, sometimes you may be doing the right thing, if everyone hates it. but we are keeping that patient in mind knowing that is at the heart of this. and frankly, i am optimistic knowing that this is an issue that the administration is interested in, the president had a roundtable at the beginning of the year where she talked about surprise medical bills. we know there is interest across the congress and the house and senate. there been different initiatives.
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ultimately, surprise medical bills, this is one issue whether does seem to be some momentum behind it, i'm encouraged to see the level of interest and engagement. by everyone. i think is also part of a larger set of reforms that need to happen, getting at some -- there are so many things we need to do in terms of looking at what is driving cost, how are our incentives misaligned between different stakeholders? the lead to increased costs. we are thinking about all of these things broadly and i think surprised medical billing fits in this picture. i am hopeful he can be the driving force to, if i am honest, in congress where there can be a lot of discord, this is an issue where there is
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bipartisan agreement that we need to do something. i am hopeful surprise medical billing can be the issue that can lead to agreement on other parts of our healthcare system which also need addressing. >> all right. and on a positive note. i'm going to take a few more minutes to pose a couple of questions to the panel for we go to the audience q&a. direct your attention to the brookings report. i think it pushes the boundaries a bit more because it tries to get down to the root of market failure that causes the problem as presented. it brings more the role the hospital please. i think it presents an innovative idea but i want to get your reaction to in terms of whether you would agree. you can speak to the pragmatics also the principle, you see
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problems essentially requiring these key specialists, their services to be bundled with the hospital so the hospital has to negotiate and bill for that on their behalf to bill. or number two, don't worry about setting the cap to low because if you do there is a market correction which is the hospital can top off the payments to these ancillary specialists and bring it up to a level necessary to keep adequate supply. those two functions, potential functions of the hospital, does that grab you is plausible or an exciting new idea or will never get out of the gate? >> i can start and i will defer to might state friends to say it would mean in their states. certainly it would be beneficial to the consumer to have an assurance that whatever they go
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to a facility, they are not going to have an out-of-network experience. hands-down i think everyone can agree to that. i think there is a question of the political palatability and whether or not states would be able to get the stakeholder buy- in to be able to make something like that happen. i think there's also a question of, could there be some sort of cost shifting and we need to think about that. i think from an operational standpoint, and this isn't necessarily something that could be overcome, but there is a jurisdictional issue. host of the laws that exist now are out of the departments that oversee health plans as opposed to those that oversee facilities or the boards of medicine who oversee providers. that would probably be a new role and a new level of coordination that might need to exist across the doi along with the facility oversight and provider oversight. >> so i agree with everything lauren said. i want to actually tease out
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that jurisdictional concern a little bit because this is something that is coming up in a lot of areas as we talk about what to do about cost. when you come to the state level, we are working within these existing regulatory frameworks where i regulate insurance companies, there is a long history of regulating finances and payments and sort of the financing side of the system. and then we have the state board of mendelson -- medicine, those function for a very long time until today are largely about public safety, largely about medical standards, largely, really this health- related function. and there are not in most states entities that really oversee financing as it relates to the provider side of the healthcare system. i think it from a pragmatic standpoint but also certainly
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this gets to a political standpoint, when you are trying to fit a construct to fix this problem within the processes we already have in the state, there isn't a natural home for something that would be overseeing how hospitals are being reimbursed, hospitals are operating with independent positions the practice or have privileges. so it becomes, there are serious operational challenges from the state oversight perspective. it's also a bit of a mentality challenge in terms of the role states have historically played versus the role that some are looking for states to play in the broader conversations about cost. i think we should be cognizant of all those dynamics. >> i would say a couple of things to be really concrete about what jessica said. states for purchases. medicaid program covers almost 2 million people and the legislature, without much
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difficulty years ago, maybe even 10 years ago, passed a bill that basically said for purposes of the medicaid program, because we are the purchaser, dividers out-of- network have to accept the medicaid rate. we are the purchaser. taking that and translating that state of purchaser roll into state as regulator rule is challenging. the other issue is, there are two other issues. anything that has a state legislature setting rates is automatically very controversial and volatile. even though we can say, but wait, it's only for surprise bills, the perception that others will have is, under the tent. it's a reality we have to deal with all the time. and then i would respectfully
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say that i don't think that having a hospital bundle on the payment and having that be the entity that negotiates the rates with the insurance company is separate from the market dynamics that we have around market concentration in hospital systems. especially in rural communities. so i think it is a classic example of if you see the balloon in one place it pops out in another. i think those two are related and i'm a little bit nervous of having that much more leverage in the hospitals negotiating position when they are negotiating with insurers. especially in states like washington that have strong networking accessing. >> any further comments? >> i would just echo, i took
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some notes, some of the concerns you expressed in so far as one being the bundling approach in particular, i think , on the face of it from the consumer side, it sounds great. you have eliminated the possibility of being treated by an out-of-network provider at an in network facility. and that is a great method and point. i think practically, there are concerns about what the downstream impact could be. in particular the concentration of power essentially. my boss has concerns about just generally speaking the consolidation in our healthcare system right now. and that is among insurers, the list goes on. but right now even, there is a third piece which came out which showed the hospital facility fees of increased 42%
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over the past 10 or so years. may not be getting it exactly right. physician fees have been around 20%. and so if you concentrate the negotiating power within the hospital, how could that further solidify that trend and you are able to negotiate on behalf of of all the physicians in their facility, and how can they leverage that potentially with the plan? that is my concern. that could be used as a driver to increase cost in that way. i think the providers would also come up with their own set of issues with that insofar as, not having the ability to negotiate on their own behalf and things like that, which i don't dig as well received by them. i would echo some of those concerns and say that, some
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also point to this is really interventionalists and could be very disruptive to the status quo. so i sort of go back to the point i said in my initial comments about making sure our approach is proportional to the problem we are trying to address insofar as this would have broad implications for the entire healthcare system and could get outside the scope of what we are trying to address. >> thanks for that reality check. disruptive innovation at best. anyway, to the audience now, we have a few minutes. there is a hand here, i handed there, one in the back. >> and jack from georgetown university. i appreciate all these comments. one of the things, so review
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made references to scope of providers that might be included in the protections, jane you have a list of provider types, i'm wondering about the limitation that creates. and one example is plastic surgeons who might come in when someone has a facial injury. that might not be on the list. how do you think about consequences of limiting the category of providers? i think it's also relevant to the bundling question. it's one thing to think of bundling the anesthesiologist or er doctor that doesn't necessarily stand with other specialties such as plastic surgeon. >> on the first point i mean the second point the paper was careful to say we are addressing pensively just the hospital based referral specialists and not the other kinds of physicians selected. in emergencies, yes.
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so it does get tricky. but, other reactions to the specificity of providers? >> i will start and jane can jump in. my preference is not to have that specificity. i think if you begin to collect the stories, i've got to tell you if you asked three people on the street if they've had one of these at least one will have an you begin to hear the stories. some of the specialties that we have come across were never named as sort of the common players when you first think about that. the one that really comes to mind is when we have seen incredibly high bills is neonatology, pretty girly premature births where there is no way to anticipate prior to giving birth whether you will need neonatology services or not. and then depending on how
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premature the birth is, the links for which your child will need those services can often be quite long. and then you get into that, what i said before, there is a focus on the high dollar claim and there is no question it's worse to get a $200,000 bill than a $200 bill but to the point that you made about the savings and impact, $200 is still $200 the consumer should not have to pay, and probably 100 other consumers as well. in my discussions i would strongly prefer to see a bill in pennsylvania the religious says, this is a systemic problem in this is a systemic solution and not limit in that way. now i turned to jane and say why they have in their bill. >> your point is well taken. really well taken. i'm going to go back and say, should we think about for example neonatology.
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and for those of us in the room, i worked for the state legislature for 20 years in addition to doing this and some other roles, and we frequently come back two years later, just like california is doing now and other states are doing, saying, we need to perfect this. so your point is really well taken. >> and i had also the labs, i note jeff talked about sometimes the low-cost for many of them, labs are another area where this is an issue. it's not just specific types of physicians. >> i'm going to move on because their hands here, here and here and there. >> good morning. david, j.p. morgan. i think most everyone gets the issue. i don't know if you accept the term cross subsidization. but it seems like that the common term to reference disparity in payment rate.
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all of these solutions seem to have significant indications for physician compensation. is anyone done numbers on what that would mean, does it have any unintended adverse consequences? >> i'm not aware of any scoping it out to that extent. i am assuming some specialist societies have taken a look at that whether it's public or not i don't know. >> i am christine, i was wondering if you could comment a little more on the unique policy challenges to air ambulance. yesterday the highlighted minnesota that goes after a harmless provision for air ambulance. from the plan perspective to get around the ada exemption. on the federal level there is also, the appetite for doing something like that where you go after the approach as opposed to the ada because there
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additional aviation challenges. any comments you might have on that area? >> going to turn this to one person. >> go ahead mary. >> i would say this has been a focus in congress, particularly last year during faa reauthorization, there was a push to, there was some language that was considered that would enable states to use their regulatory authority to regulate air. it was not ultimately included in the bill. what came out of that was a task force which is supposed to be jointly done by implication and cms to work and advise on what would be the best path forward in terms of regulatory structure. as you can imagine folks can get really nervous when you talk about mending the ada in terms of broadly, it might
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strain airlines, others because if they think there's going to be changes to that. i will say it's very complicated right now. there is some uniqueness to air , i think 30% of the transports are interstate. that is different than other types of services perhaps where it might reinforce the need for a look at it federally. i think the exact policy details of what the best solution is, i think it's something i'm looking into. but i'm not sure exactly what that is. >> in the back, probably our last question. >> a lot of pressure. i just wanted to reiterate, i know we talked a little bit about the medicare payment rates for a lot of these providers and that we don't have a lot of data. we see more and more people go
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into the medicare program, taking more and more of that funding that might be we consider a lower rate, is that concerning that we don't have a lot of understanding about whether or not that is an adequate payment rate and what that would be will be go into the ratesetting discussion? >> i will chime in on that. >> i would just say, i agree, trying to get more data is helpful. it's not like we have noted a. there are a lot of man hours spent trying to get the rates right. and i think the key thing we were getting it earlier is if you set a low rate you are not actually setting a rate in the situation because the hospital has a role here and they are going to be involved here. the next step on that is if you actually wanted to rate set here and you wanted to say we really want to set the rates really low for anesthesiologists for any reason, would need to not only
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cap the payment standard at medicare but also hospital payments at that point because otherwise you are not ratesetting letting the market dynamic state play. the main thing is you're not really setting a rate for medicare, setting a rate at whatever the market rate ends up being it's just the hospital getting involved in the negotiation. but to your question, i agree. >> your helping cost shifting to happen. >> right. i'm an economist type so i don't believe any of the cost shifting rhetoric, there is zero evidence of the cost shifting is a thing. if not profit maximizing now, it seems a little silly, that anesthesiologists are getting paid the most they are now. >> i shouldn't say that just before the break. [laughter] it is time. 10 minutes, eight minutes now,


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