Bills to curb surprise medical billing in Michigan move forward in Lansing without the backing of physicians, who worry the proposed changes in state law would put them at a disadvantage when negotiating future reimbursement contracts with health insurance carriers.
While physicians and organizations agree with insurers that patients need protections from surprise billing, they view the legislation that cleared the state House last month as giving health insurers too much power in negotiating future deals.
In recent testimony to state legislators, Dr. Bobby Mukkamala, president of the Michigan State Medical Society, called the four-bill package a “one-sided solution to surprise medical bills.”
“This is about further consolidating leverage with an already minimally competitive insurance market to drive down physician rates at a time, quite frankly, we need physicians more than ever,” said Mukkamala, a Flint-based otolaryngologist.
The state House backed the four bills in a near unanimous vote on June 24 and sent them to the Senate, which is considering its own version of legislation on surprise medical billing, also known as balanced billing.
Surprise billing occurs when a patient receives care from a physician who does not contract with the person’s health insurer and is considered as an out-of-network provider. The situation at times can leave patients stuck with large medical bills when they receive care, often unknowingly, from a provider who is not part of their health insurer’s care network.
The legislation the House approved would require care providers to inform patients in advance that their health insurer may not cover all of their medical services and that they can request care from an in-network provider. In emergency situations, the out-of-network provider would have to accept payment that’s the average amount within the region that a patient’s health insurer pays an in-network provider, or accept 150 percent of what Medicare pays for a medical service, whichever is greater.
If enacted, the legislation would require the Michigan Department of Finance and Insurance Services, beginning in 2022, 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 the Department of Finance and Insurance Services if a provider believes what 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 and can document a “complicating factor,” such as the severity of a patient’s condition.
‘Changes the dynamic’
Dr. Tom George, a Kalamazoo anesthesiologist and a one-time state legislator, told the House Ways and Means Committee that the arbitration process is “very narrow” and “very circumscribed.”
Instances of balance billing at Kalamazoo Anesthesiology PC where George practices are “very rare,” and involve less than 1 percent of the more than 80,000 cases annually, he said. The amount is typically small, $50 or so, making it impractical to pursue arbitration, George added.
“That’s not going to be worth going to arbitration for one case like that,” said George, who urged lawmakers to alter the bills to allow medical practices to bundle multiple cases for arbitration for aggregate amounts with an insurer.
George worries that health insurers may drop some providers from their care networks to gain negotiating leverage in future contracts. The legislation could drive more consolidation in the industry, reducing competition and consumer choice and leading to higher prices, he said.
“It changes the dynamic between insurance carriers and private practices like ours,” George said. “If this passes as is, it will just be another step toward the slow extinction of independent medical practices, much like the family farm. It won’t happen overnight, but you’ll contribute to the demise of small Michigan businesses.”
A Blue Cross Blue Shield of Michigan representative dismissed concerns that the legislation would give insurers leverage over care providers in negotiating future reimbursement contracts. Insurers oppose giving care providers a wider arbitration process than what they accepted in the bills that cleared the House.
Gabe Basso, Blue Cross Blue Shield’s manager of state government relations, claimed that a broader arbitration process could lead to physicians leaving care networks because they could ultimately get paid more.
“We think it would be a tremendous incentive for even more of them to drop out of network because they know they’ll get what they’re getting today, and could in fact get even more (through arbitration),” Basso said during the recent hearing on the bills before the Ways and Means Committee.
‘Looking to grow’
Dominick Pallone, executive director of the Michigan Association of Health Plans that represents HMOs, said that health plans are required by state law and have a strong market incentive to maintain robust networks of care providers for members to use.
Reducing the size of the care networks runs counter to market demands, Pallone said.
“Generally speaking, we’re looking to grow networks,” he said. “Dropping core providers — especially large numbers of providers — out of the networks jeopardizes the ability to even bring a product to market if we cannot meet that network adequacy.
“We can’t provide access to services if we don’t have providers within our networks.”
When health insurers do drop providers from their care networks, it’s typically because of fraud, waste, abuse or quality issues, Pallone said.
The surprise billing legislation was introduced in April 2019 and lawmakers have worked with concerns on both sides of the issue to craft a compromise.
“In this current form, it may not be perfect to all sides and maybe that means that we’ve done our job,” said state Rep. Brandt Iden, a Kalamazoo-area Republican and chairman of the Ways and Means Committee. “If not every side is happy in this situation, then that means we’ve done the best we can to put good legislation forward.”