White House joins the discussion on surprise medical billing

May 28, 2019

President Trump weighed in on “surprise medical billing” on May 9th. The Washington Post reported that the President called for Democrats and Republicans alike to work quickly to stop surprise billing, quoting him as saying that “these practices are bankrupting patients through healthcare costs that are absolutely out-of-control. No family should be blindsided by outrageous medical bills.” Administration officials favor requiring hospitals to inform elective surgery patients if any care is to be provided by out-of-network providers and if so, to receive a written price estimate and ability to consent.  

EHC NOTE: While the devil of theoretical national “surprise billing” legislation is in the details, it is difficult to imagine any solution will be favorable to the ability of anesthesia providers to negotiate payer rates. Anesthesia rates from government payers are woefully inadequate at approximately 25 to 33% of commercial rates, compared to most other specialties where government payers reimburse at 75 to 90% of commercial rates. This dubious distinction places anesthesia finances highly leveraged to commercial rates and therefore to the ability to negotiate with discretionary payers.

In order to negotiate, an entity must have one or more points of leverage. The traditional leverage for anesthesia providers has been to threaten to stop participating in a payers’ network. This is a negative for the payer since the patient (payers’ customer) will be responsible for an out-of-network bill. If legislation limits or eliminates this option for anesthesiologists, the major point of negotiating leverage is eliminated. Payers would have little incentive to raise rates for any anesthesia group and would have ammunition to help drive down rates of groups currently enjoying above market reimbursement. We have already begun to see this play out in a few states where surprise billing legislation has been passed.

If commercial payments decrease while all other factors remaining equal, reduced professional fee collections will lead either to reduced anesthesia provider compensation or increased hospital subsidy support. Stakeholders on both sides should pay close attention to the political winds swirling around this issue at the state and national levels.