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Published in Health Care

Michigan’s surprise billing legislation attracts national attention

BY Sunday, September 13, 2020 05:23pm

Alegislative effort to curtail surprise medical billing in Michigan has gained attention from national health care organizations shifting their focus to states amid stalled efforts federally.

One of those groups says the Michigan legislation moving toward final passage could even serve as an example for other states to follow when considering surprise billing legislation.

“We think that Michigan thus far is a model,” said James Gelfand, senior vice president of health policy for the Washington, D.C.-based ERISA Industry Committee whose members include large employers across the country.

“The Michigan debate so far is heavily favoring patients,” Gelfand added. “One unique thing about the Michigan bills is that it is very patient-centric and uses market mechanisms, as opposed to being a giveaway to these hospitals and doctors.”

The ERISA Industry Committee recently submitted written testimony to a state Senate committee in strong support for surprise billing legislation that state lawmakers have worked on for a year and a half.

As the final version of a four-bill package came together this month, the ERISA Industry Committee and three other national advocacy groups indicated their support. Each of the groups represents large employers that have operations in Michigan, Gelfand said.

The other national advocacy groups in support of the bills are the Washington, D.C.-based American Benefits Council and National Alliance of Healthcare Purchaser Coalitions and the Pacific Business Group on Health in San Francisco.

The groups’ interest in Michigan stems from a stalemate in Congress on federal surprise billing legislation despite the bipartisan nature of the issue, Gelfand said. 

“What’s playing out is that there has been a huge battle on the national level on this issue. In that sort of wake, a number of states have stepped up to the plate and those states have proxy battles playing out,” Gelfand said.

Even so, the ERISA Industry Committee still “would have cared about this no matter what” on the state level because some health plans are regulated at the state level and others at the federal level, “and it was never likely that Congress was going to solve the problem for both,” Gelfand said.

About half the states have enacted some form of surprise billing legislation “that range pretty significantly in how comprehensive they are,” he said.

The interest of the national groups in the state legislation has been somewhat unusual, said Dominick Pallone, executive director of the Michigan Association of Health Plans which represents HMOs and also supports the bills.

The groups’ interest illustrates the broad reach of the issue and how many people are affected by surprise medical billing, Pallone said.

“That causes, I think, some national players to get more engaged on a state-by-state basis when there’s a bigger topic such as this,” Pallone said. “It’s definitely unique to the legislation.”

Widespread issue

In a 2019 online survey of 1,000 registered voters by Families USA, more than four out of 10 respondents said they had received a surprise medical bill for out-of-network care. Nearly 80 percent said they have difficulty paying the bill or were unable to pay.

Almost nine in 10 respondents to the Families USA survey said they would support legislation that protects patients from out-of-network surprise medical bills.

Surprise billing occurs when a patient receives care from a physician who does not contract with their health insurer and is considered an out-of-network provider. The situation can leave patients with large medical bills when they receive care, often unknowingly, from a provider who is not part of their health insurer’s network.

The legislation would require care providers to inform patients in advance of a scheduled procedure that their health insurer may not cover all of their medical services and that they can request care from an in-network provider. The notice must inform the patient that a non-participating provider must provide them “a good-faith estimate of the cost of the health care services to be provided,” according to the legislation.

In emergency situations, the out-of-network provider would have to accept payment that’s the median amount within the region that a health insurer pays an in-network provider, or accept 150 percent of what Medicare pays for a medical service, whichever is greater.

Patients would still have to pay their customary co-pays or deductible built into the health insurance coverage.

If enacted, the legislation would require the Michigan Department of Finance and Insurance Services (DFIS) to conduct an annual survey on surprise billing that includes the number of out-of-network billing complaints and the adequacy of insurers’ care networks in Michigan.

The legislation also would establish an appeals process within DFIS if a provider believes the average amount that an insurer pays for a medical service within a region was miscalculated. An out-of-network care provider also could seek arbitration if an insurer denies a claim seeking payment of more than 150 percent of the Medicare rate.

The Senate Committee on Insurance and Banking passed the bills Sept. 3 and sent them to the full Senate for consideration. If the Senate approves, the legislation would return to the state House, which this summer passed its version of surprise billing legislation and would need to take a concurrence vote on the Senate changes.

Billing disputes

The issue of surprise billing has pitted physicians against health insurers and business groups, although in Michigan all sides have gone about tackling the issue from the perspective of removing patients from billing disputes over out-of-network care.

Paying out-of-network providers a median of the Medicare market rate has also been a unique aspect of the surprise billing legislation in Michigan, Gelfand said. Legislation in other states such as Texas “have not used market-based approaches,” he said.

While opposing sides have battled over and still differ on details of the legislation, they approached the issue with the same goal in mind: To protect patients from surprise billing, according to Pallone.

“All sides have agreed on that point since day one,” Pallone said. “It’s a populist issue. Everybody wants it solved.”

The Michigan bills that cleared the Senate committee had the backing of business groups such as the Michigan Manufacturers Association and the Economic Alliance of Michigan, plus the Michigan Association of Health Plans and the Michigan Nurses Association and AFSCME Council 25 labor unions.

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