As the L.A. Times’ editorial board noted Tuesday, one of the biggest fears among consumers is that if they go into an emergency room in desperate need of treatment, they’ll leave with a hefty bill from an anesthesiologist, a surgeon or some other healthcare provider who’s not in their insurer’s network. It’s a reasonable fear; one recent study showed that 14% to 20% of ER visits ended in that kind of nasty surprise.
Assemblyman David Chiu (D-San Francisco) has proposed a solution. Assembly Bill 1611 would require health insurance policies that take effect on or after Jan. 1, 2020, to impose the same out-of-pocket costs for emergency care whether the providers are in-network or not. The measure would probably push up premiums — insurers would have to start absorbing high out-of-network fees that they pass on to their customers today. But it would eliminate a risk of potentially crushing bills, which is why people buy insurance in the first place.
The Legislature has already protected Californians against surprise bills from doctors for nonemergency care, and Chiu’s proposal was intended to close the loophole for hospital ERs. But AB 1611 didn’t propose the same formula for resolving disputes between insurers and out-of-network providers over fees, and that’s drawing some special-interest flak. The insurers lobby wants to keep moving the measure forward while stakeholders work out their problems with the language; the hospitals lobby wants it to die in the Assembly unless the language changes now.
Jan Emerson-Shea of the California Hospitals Assn. said her group fully supports protecting consumers against surprise ER bills. But AB 1611 “is a backdoor form of rate setting, which we oppose,” she said. “We believe it should be a clean piece of legislation” that bars patients with insurance coverage from having to pay more out of pocket for out-of-network emergency treatment than for in-network treatment.
Such a measure wouldn’t make it any easier for insurers and ERs to resolve their differences over fees, however. And that’s fine by the hospital association, Emerson-Shea said. “What we want is what happens now, which is that the health plan and the provider negotiate a payment. If they can’t come to an agreement, then they go to court.”
The status quo is unacceptable, however. Part of the problem Sacramento is trying to solve is profiteering by some ER management companies, which have pulled out of insurance networks in order to charge high out-of-network fees. AB 1611 would tamp down on that behavior by setting a benchmark price for ER services: either the average rate insurers have negotiated with in-network ERs or fees that reflect the services’ “reasonable and customary value.” The latter would be based on a number of factors, including the prevailing rates for hospitals in that area paid by private insurers and the government.
The benchmarks try to reflect what a functional free market would do. But healthcare is anything but a functional free market, and that’s especially true of emergency care. Patients don’t shop around, they don’t have the expertise to decide what services they need, and they have no say over whether the physicians and specialists who treat them are in-network.
Meanwhile, an assortment of laws and regulations distort the negotiations between insurers and providers over the reimbursement rates for in-network care. Some providers complain that the rates are far too low, while some insurers complain about provider groups demanding exorbitant fees.
So it’s a bit of a minefield for lawmakers. Still, the approach taken by AB 1611 makes sense and would be a much better option for lawmakers than letting insurers and hospitals duke it out in court — a costly path that would put even more pressure on insurance premiums.