As Congress and the Trump Administration propose strategies to address surprise balance billing – charges for unexpected, out-of-network medical care – states have significant experience in implementing surprise billing laws that can inform the discussion. Importantly, state authority cannot protect individuals covered by self-insured plans, which are pre-empted by Employee Retirement Income Security Act (ERISA,) from state oversight. To extend protections to consumers covered by these plans federal action is needed either through mandated protections or a change in law to enable states’ laws to apply toward ERISA plans.
States’ approaches to addressing surprise balance bills vary in how they:
- Define what services are covered by these protections;
- Address how reimbursement for services should be resolved; and
- Define provider and insurer transparency requirements.
Through National Academy for State Health Policy’s (NASHP) work with states, it has identified the following themes and lessons from state laws and experiences that could help inform future federal action on surprise balance bills.
Broadly define services covered by the law.
Balance billing protections are strongest when they extend to both all emergency circumstances and situations where the consumer does not have control over the out-of-network (OON) services provided. Such situations can occur without consent of the patient when an in-network physician is unavailable, because of an unforeseen medical situation, and/or because of a direct referral to an OON provider or facility rendered by an in-network provider. Surprise balance billing laws that include provisions to extend protections broadly across multiple provider and facility types, including specialists, labs, imaging centers, and air and land ambulance transport, offer the strongest consumer protections.
Consider multiple factors when determining the law’s dispute resolution process.
Essentially, state laws take two approaches to resolve billing disputes for surprise balance bills – setting a specific reimbursement rate for such bills and/or defining an arbitration process through which providers and insurers can resolve payment disputes. Because many state balance billing laws are nascent — and have been implemented during a time of considerable policy change affecting health care markets — there is a lack of evidence identifying the ultimate effects, either positive or negative, of either approach on state health insurance markets, including their impact on premium costs and provider network composition. Both approaches have challenges. Setting reimbursement rates for balance bills can be challenging given the multiple stakeholders involved and there is time and expense to consider in establishing fair mediation or arbitration systems. Whatever strategy Congress adopts, states’ experiences suggests the following factors for consideration:
- Remove consumers from billing disputes. To maximize consumer protection from surprise balance bills, the process for resolving reimbursements should be kept between the insurer, the provider, and any agency appointed to aid in resolution. To encourage this, additional requirements may be put in place to foster direct communication between providers and insurers, such as a requirement that insurers alert providers about what, if any, ability they will have to balance bill for services rendered to the insurer’s beneficiary. (For example, multiple states require insurers to include this information in their Explanation of Benefits sent to providers.)
- Use of data sources that leverage claims data. By using this data, such as that collected by all-payer claims databases (APCDs), reference price amounts for negotiations for medical bills will be based on actual paid amounts, rather than billed amounts. The latter may lead to inflated rates and higher health care spending. However, not all states have APCDs. Including funding to support state APCD programs could be an impetus to improve access to needed claims data in every state. To assure the most robust data collection, however, requires Congressional action to amend ERISA or provide other means for states to mandate the collection of claims data from self-funded plans. The Supreme Court’s ruling in Gobeille v. Liberty Mutual currently prohibits such requirements. While states do encourage voluntary reporting with some success, a mandate would assure more consistency in reporting. One of the issues identified in the Gobeille decision was the burden on self-funded plans created by different reporting requirements in different states. Including reference to the common data layout developed by states would resolve that reporting burden question.
- Inadvertent effects on provider networks and contracts. The ultimate reimbursement rates paid to resolve surprise balance bills should provide sufficient compensation to providers, without incentivizing providers to stay OON. For example, a benchmark that provides payments set too high may incent providers to remain OON. However, payments set too low may impose negative impacts on providers already operating on the margins. To protect against the latter, reimbursement calculations may consider a variety of factors, including average payment amounts for similar services, geographic cost variation, provider experience, or other factors unique to the situation of the service performed.
- Set a fixed amount for consumer cost sharing. This added protection will guard consumers from potentially exorbitant out-of-pocket costs in the case that final reimbursement rate decisions on a balance bill result in large out-of-pocket cost-sharing for services from deductibles, coinsurance, etc.
Include prohibitions on billing practice and hold harmless protections.
The most protective strategy would be an explicit prohibition on the part of providers or insurers from balance billing patients. While this should absolve consumers from the surprise billing burden, the law should also be clear in holding consumers harmless in situations where a balance bill is being negotiated between insurers and providers. This may take the form of specifying what form of contact, if any, insurers and providers may take with consumers regarding billing disputes and prohibiting certain actions, like credit reporting, against consumers.
Encourage enforcement through federal penalties.
Because of their limited jurisdiction over providers and certain health plans, enforcing surprise billing protections has been a challenge for some states. A successful federal law would include an enforcement mechanism that would support additional compliance with surprise balance billing laws.
Include deference to existing state laws.
States, including those with robust balance billing protections, have taken very different approaches to crafting their laws. This wide variation reflects states’ diligent and deliberate work to find solutions to surprise balance billing that work best for their markets.
States’ experiences can inform Congressional proposals and deliberations to address balance billing – from requiring transparency about networks and service costs to establishing the processes to determine the reimbursement rate for an OON provider. States have acted to protect consumers, experimenting with a variety of strategies to protect consumers from unexpected financial exposure. Federal action can extend the reach of those protections to include consumers covered by self-funded, employer-based insurance, but it should consider how any new federal law will impact state progress in this important arena of consumer protection.
Thursday, August 16th
3:30pm – 5:00pm
State agencies and legislatures are becoming increasingly active in their efforts to curb large and unpredictable prescription drug cost increases that make coverage unaffordable for consumers and state budgets. Areas of focus include:
- Regulating pharmacy benefit managers;
- Requiring manufacturer drug price transparency;
- Prohibiting price-gouging;
- Establishing drug cost review commissions for rate setting; and
- Implementing state wholesale drug importation from Canada.
This session digs deep into the strategies behind these legislative approaches. Hear from experts and state officials who have taken on prescription drug costs.
ModeratorRene Mollow, MSN, RN, Deputy Director of Health Care Benefits and Eligibility, California Department of Health Care Services
René has been with the California Department of Health Care Services (DHCS) since 1995. In the Medi-Cal program, she serves as the Deputy Director for Health Care Benefits and Eligibility (HCBE). She provides leadership for benefit and eligibility policy planning, development, implementation, and evaluation of health care services and delivery systems under Medi-Cal and for the Children’s Health Insurance Program (CHIP). HCBE is comprised of five divisions and one office: Benefits, Eligibility, Pharmacy Benefits, Primary and Rural Indian Health, Dental, and the Office of Family Planning. René works to ensure that policies, procedures, and related activities in HCBE conform to applicable state and federal policies, statutes and regulations. She assists the Directorate, Administration and State Legislatures in determining program direction consistent with legislative intent and consults with the Director and State Medicaid Director on issues of significant policy impact.
SpeakersVirginia Lyons, Vermont Senator, Vermont State Senate
Vermont Senator Virginia “Ginny” Lyons serves as Vice Chair of the Health and Welfare Committee and on the Finance Committee. She Co-Chairs Vermont’s Commission on International Trade and State Sovereignty, Chairs the Joint Energy Committee, and serves on other Senate and community organizations. Ginny champions data informed policies that address public health, health care improvement, substance misuse, child and family resilience, consumer product safety, environmental and water quality, energy efficiency, and others. Ginny served as Town Select Board Chair for 15 years. As a College Biology Professor with a Doctorate form the University of Vermont, Senator Lyons developed and directed Pre-Medical and Allied Health programs.
Joshua Wojcik, Assistant Comptroller, Connecticut Office of the State Comptroller
Joshua Wojcik an Assistant Comptroller at the Connecticut State Comptroller’s Office. The Office of the State Comptroller is responsible for the employee and retiree medical, dental, and pharmacy benefit programs for 230,000 employees, retirees, and family members throughout the state. Joshua is responsible for the development and coordination of new policy initiatives for the office, oversees the implementation of new programs related to health care and state employee benefit changes and participates in all procurement activities for health care related vendors. Joshua represents the Office of the State Comptroller as a member of several health care related boards and committees and plays a lead role in negotiating the passage of major legislation promoted by the office related to health care, pharmacy costs or other significant issues.
Vincent DeMarco, President, Maryland Citizens' Health Initaitive
Vincent DeMarco is a long time advocate for public health causes including reducing teen smoking, underage drinking and gun violence, expanding health care access and making prescription drugs more affordable. He is the subject of a book by former FTC Chair and Advocacy Institute co-founder Michael Pertschuk entitled “The DeMarco Factor: Transforming Public Will Into Political Power.” He played a key role in the enactment of Maryland’s life-saving tobacco tax increase of 2007, alcohol tax increase of 2011, and Firearm Safety Act of 201, and anti-price gouging law for prescription drug prices of 2017 and is working to guarantee health care for all Marylanders. His work has resulted in legislation which has substantially reduced smoking in Maryland, giving Maryland the fourth lowest smoking rate in the nation, reduced drunk driving deaths as a result of the alcohol tax increase, and has expanded health care insurance to over 300,000 people. As National Coordinator of Faith United Against Tobacco, a national coalition of leaders from across the country working to reduce smoking, he played a key role in the enactment in June of 2009 of landmark national legislation to authorize the FDA to regulate tobacco products. He is the Board Chair of the Maryland Clean Energy Jobs Initiative working to increase renewable energy use in Maryland. And, as an Adjunct Assistant Professor at the Johns Hopkins Bloomberg School of Public Health, he is working to educate public health students from around the world on effective methods of advocating for public health policies. He has been recognized for his work by the organizations such as the Baltimore Sun which declared him “Marylander of the Year” in 1988, the Central Maryland Ecumenical Council which awarded him its 2002 “Ecumenical Leadership Award” and the Daily Record which named him one of Maryland’s 60 most influential people in 2010.
This session was made possible with support from the Laura and John Arnold Foundation
In late March, Jessica Altman became Pennsylvania’s insurance commissioner, responsible for protecting consumers in the fifth-largest insurance market in the United States and the 14th-largest in the world.
Altman, who is vice chair of the National Academy for State Health Policy’s (NASHP) Health Care Access and Finance Steering Committee, helped implement the Affordable Care Act (ACA) when she worked at the Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight. She joined Pennsylvania’s Insurance Department in 2015 as its chief of staff and served as acting commissioner since August of 2017.
Altman talked to NASHP recently about the evolving role of health insurance coverage in state and national politics, and how her own career trajectory has followed the evolution of health insurance as the country’s critical health care issue.
Q: How did you come to insurance regulation?
Health insurance is a critical part of the ACA, which fundamentally changed the way the health delivery system works in our country. Working on the ACA demonstrated to me the impact that government can have and the unique and critical role that insurance plays in each of our lives. No one likes to think about insurance – it is strange to invest time and money in something you hope you will never need – but it’s so important for the critical times in people’s lives, whether you need your health insurance for an illness, your car insurance after an accident, or your homeowners insurance following a fire. I have always wanted to be in public service, and when I moved from the federal government to the state level, what especially appealed to me was the consumer protection aspect of this job and the ability to work more directly with consumers and address the issues most important to them.
Q: How has the ACA worked in Pennsylvania?
In many ways, the ACA has been a huge success in Pennsylvania. Our uninsured rate is at an all-time low, and I believe there is a sense of financial security and access to coverage that did not exist before the ACA. When engaging in various communities, I have seen people cry tears of joy because they were able to find better health insurance coverage under the ACA today for thousands of dollars less than ever before. Pennsylvania’s exchange is also among the nation’s healthiest, with five major health insurers insuring about 400,000 residents.
Implementation of such transformative reform has not come without its challenges though, and state regulators are constantly responding to changes directed by the federal government, while implementing policies that we believe will mitigate any potential harm and be in the best interest of the people we serve. One example of our responsiveness is how states around the country recently dealt with President Trump’s decision to stop making payments to fund the cost-sharing reduction program. States found a way (the so-called “silver loading” strategy) to account for these costs by building them into health insurance rates, while actually helping consumers better afford more generous coverage because of the way the premium tax credit structure works.
Q: Does it surprise you that the ACA has had such a profound effect on the country’s health policy dialogue?
Yes and no. I am surprised by the magnitude of the ACA’s impact considering that much of the act focuses on reforming the individual and small group market, while leaving many areas of the system, and in fact the areas where the majority of Americans receive coverage, employer-sponsored coverage and Medicare, relatively unchanged. I think many people have a perception that the ACA reforms are broader than reality. I see this every year when we go through the rate review process, and I hear from many consumers their concerns about requested increases, only to find that most of them will not be impacted because they do not rely on the individual market for coverage. The individual market serves only about 5 percent of Pennsylvanians, and while it is an important and challenging market that we will continue to work to improve, most people are served by other areas of our system that are not experiencing the same volatility that the individual market is today.
Simultaneously, I am not surprised by the profound impact of the ACA because the act represents a fundamental shift in how our government approaches health care. It was a huge step in ensuring health care coverage is a right and not a privilege in this country. There is no doubt that the shift has come with some growing pains, but I believe it has also demonstrated that health insurance is a fundamental right and need, and government should play a role in it.
Q: Did you know how controversial the ACA would be years after its inception?
I was among the first hires to implement the ACA and we had only a few months to make decisions and implement the early regulations while scrambling to set up an organizational structure. When you’re in that environment, you don’t have time to think about how important the work is, but I did have moments when I thought about how friends and family members with pre-existing conditions would finally, for the first time in their lives, get affordable and high-quality insurance. Because of that, I always believed that the ACA would gain acceptance over time. There are many reasons why the ACA remains controversial today, from pieces of the law itself, to changes made to it over time, to just plain politics, but I remain hopeful that we can work together to embrace what is so good about the ACA while looking for solutions to what may not be working.
Q: Is having the country’s persistent debate about ACA important, despite its contentiousness?
Having a national dialogue about our health care system, who that system is working for and who it is failing, is unquestionably valuable. What is important is under the ACA, at the end of the day, is that no one must worry if they can get health insurance if they have a devastating need; it is now there for everyone who needs it. As changes have been discussed and made, I think the dialogue has instilled in people an appreciation for the necessity of coverage from a financial stability perspective, which is why the ACA has made such a difference. My hope is that this dialogue will help move us forward. We need to fix what needs to be fixed, and focus on the many other problems our health care system has, namely cost. The ACA gave us the assurance of coverage, but we have a long way to go to get to the assurance of truly affordable care. Let’s talk about that.
Q: Has it been hard to see the ACA dismantled by the Administration?
It has been incredibly disappointing. What was proposed in the ACA stabilization package (reinstatement of cost-sharing reduction subsidies for moderate- and middle-income residents and creation of reinsurance to help high-risk consumers) would have been a measurable benefit to state insurance markets around the country. I worry about the subset of the population [about 1 to 2 percent of Pennsylvanians] who depend on the individual markets and are not eligible for financial assistance. They’re not protected from decisions that have been made in Washington or from future decisions that may weaken the ACA and increase premium prices. But, I always have hope that those of us who have the privilege of serving the public will do whatever we can to protect insurance coverage and have a positive impact.
Q: What will be the impact of the “thin,” short-term policies that the Administration is proposing on state ACA marketplaces?
There are a number of different plans being talked about that don’t guarantee the comprehensive coverage that ACA provides, for example, coverage of essential health benefits, no discrimination against those with preexisting conditions, no caps on insurance limits, and the right to appeal if coverage is denied. I am working to be a source of accurate information in my state for the public, no matter what insurance choices they ultimately have. We will use the state laws we have to educate and protect consumers.
All insurance regulators around the country are concerned about the overall impact that these short-term policies will have on states’ individual markets if they are able to draw healthier people out of those major markets and drive up costs. Here in Pennsylvania, we don’t have laws or regulations that expressly address these short-term plans, but that will not prevent us from monitoring their impact on the market and looking for ways to mitigate negative impacts on those we serve. In particular, we have already revoked a number of licenses of insurance professionals who misrepresented these plans to consumers and will continue to ensure no consumer is misled about the coverage these plans provide – or do not provide.
Q: Do you have tools and responsibilities you didn’t expect to have as a commissioner given the dramatic changes in the national health insurance landscape?
I came into the job when the ACA already existed, but I know other regulators around the country have seen a huge transition. Insurance has historically, and by law, been a purely state-regulated industry. The ACA introduced a dual role, where the federal government has become a secondary regulator in addition to state regulators, and that has definitely been a challenge. Grappling with that will continue to be a challenge, and not limited to just health insurance – it’s true of other areas of insurance where the federal government plays a significant role, like flood insurance. State regulators are problem solvers and our job is to solve the problems facing our consumers. Because of this dual regulatory framework, we need the federal government to be a partner in solving those problems. Unfortunately, that is not what is happening today.
Q: How hard is it to be an insurance commissioner in this era when you need to quickly respond to sudden federal changes to the ACA coverage?
Insurance regulators have always had to mobilize quickly and respond to emergencies such as floods, fires, or earthquakes by getting on the ground and helping the consumers we are here to protect. However, we would much rather focus on those natural disasters than disasters coming due to eleventh-hour and late-breaking decisions from the federal government.
Historically, before the ACA, we only had state-regulated insurance markets, but with these decisions coming from the federal level where sometimes the only role we are able to play is to mitigate a decision that we were not part of making, it’s very frustrating. But, it is rewarding is to be on the ground and indeed try to mitigate those situations.
Q: Do you see your job changing in the months and years ahead?
We have a lot of work to do to monitor numerous things that are coming our way to shape our markets, for example, the potential proliferation of association or short-term health insurance plans. In addition to consumer protection, my department’s role is to serve as a trustworthy source of information, and we’ve been doing much more to be proactive and inform consumers about these issues. When the federal government curtailed insurance market sign-ups and enrollment time, we launched our own coalition of elected officials, insurers, citizen groups, and health care providers to make clear to consumers what was happening, and what the time limit for marketplace sign-up was. I see that effort continuing.
Q: How does being part of NASHP help you in your job?
I’m a big believer in states learning from each other, from what they have done and brainstorming what we can do. It is invaluable to have credible data and state leaders from around the country get together to talk about different approaches and experiences and do it in a nonpartisan and slightly wonky way. That’s incredibly valuable for us who take the time to take advantage of it.
We insurance regulators have the National Association of Insurance Commissioners that plays an irreplaceable role in convening state regulators and facilitating thought and action on national issues facing the insurance industry and the regulatory community, but to have the additional opportunity to meet and talk with state leaders from departments of human services, Medicaid, and other health care systems who have different perspectives allows us to better engage in a comprehensive discussion of state health care policy.
Q: Your governor is proposing integrating the Department of Human Services with the Department of Health to improve efficiency and innovation. Where does your department fit into improving overall improvement of health care delivery?
I am privileged to serve alongside a group of cabinet members who lead Pennsylvania’s health and human services agencies, including my predecessor Teresa Miller, who value collaboration and are committed to taking a unified and coordinated approach to Pennsylvania’s most pressing health care issues. As we look to combat the opioid crisis, to find value in our health care system, to improve health in our rural communities, and deal with the many other issues all state health officials are facing, having the level of communication and partnership that we do is a major asset. We all have different levers and priorities and strategies for our own agencies or constituencies, but doing that in a way that we are all moving in the same direction and with the same ultimate goals in mind is going to mean we get there faster and, at the end of the day, hopefully achieve better outcomes.