Hospitals increasingly outsource their emergency departments to emergency medicine staffing agencies. However, emergency staffing is different than temp agencies supplying nurses, physical therapists or radiology techs to meet staffing needs that vary one day to the next. Emergency Room (ER) physicians generate revenue for the hospital and also bill for their own services provided to patients in the ER. A National Bureau of Economic Research study explains why this is sometimes controversial. Using data from a large national insurer, the study finds the average charges billed to patients often  rises after an outside agency takes over staffing for the ER. In many cases, hospital admissions rise, as does up-coding charges to higher-paying codes.

After an emergency medicine agency takes over hospitals often enjoy higher fees and less hassle over staffing. However, patients complain outrageous fees, inflated bills and out-of-network balance billing that catches them by surprise. Complaints are streaming in across the country about high balances owed to out-of-network emergency physician even though patients made sure the hospital was in their network.

There is no easy way to ensure physicians who provide services at the hospital are in-network. Why would hospitals not require physicians staffing their ERs to affiliate with area insurers? Perhaps there’s an unstated agreement; the staffing firm games the system and refuses to join networks and the hospital allows the game to go on since it’s benefiting from increased revenue.

There are two opposing views on why physicians staffing hospital emergency rooms sometime refuse to affiliation with area insurers. Doctors complain insurers low-ball them with paltry reimbursement offers that are below market. Insurers argue emergency room staffing agencies take advantage of patients who are in no position to go elsewhere even though the prices are high. (In reality, the prices are unknown)

For some emergency room physicians joining a network would likely yield lower fees, since their patients cannot easily go elsewhere. Physicians who have not contracted with patients’ health plans are free to charge whatever they want. If the insurer doesn’t pay, the physician can often bill the patient for the inflated balance. One researcher compared this to kind of ambushing patients. It is no coincidence that out-of-network balance billing is more common among physician specialties whose members rarely meet with patients prior to providing care. These include radiology, pathology and anesthesiologists – and of course emergency physicians. Sometimes assistant surgeons are placed in this category.

Across the country more states are taking steps to limit patients’ exposure to surprise out-of-network bills. One solution is to require a “meeting of the minds” between doctor(s) and patients or hospitals and patients before a debt is collectable. A meeting of the minds is already the standard under contract law.

Devon Herrick, PhD, is a health economist and former hospital accountant.

The three major credit reporting agencies have announced major changes in the way medical debt is reported. STAT News reports that about half of all bad debt on credit reports is related to medical bills. Starting in mid-September, Experian, Equifax and TransUnion will all initiate a 180 day waiting period before reporting medical debt on consumers’ credit reports.  This will allow six months for hospitals, clinics and doctors to work out medical bill payment disputes with insurers and patients.

Hospitals and doctors have never been very adept at billing patients directly and collecting from them. Unpaid medical bills are often sent to collection agencies or purchased for pennies on the dollar by collections agencies who hope to profit from anything paid. For example, my wife found a medical-related bad debt on her credit report quite by accident. The lab had never billed her for the services — at least that she was aware of. After comparing the charges, the lab location and the time the services supposedly took place, she concluded the charges were probably legitimate. She diligently called up the agency and paid the ~ $100 outstanding laboratory bill.

We didn’t really know whether she was enriching a firm that invested in her bad debt or paid a collection agency working for the lab the debt was originally owned. What was most annoying was not the bill; it was the way she found out she had an outstanding medical debt. She discovered it two years later with a mysterious negative report on her credit.

My wife could have possibly negotiated a discounted payment if she had been so inclined. However, she did not want to argue over ~ $50 she actually owed.  Yet I am much, much less sympathetic about outstanding medical bad debts when disparate providers (many you never met ahead of time) all send separate bills with outrageous fees for things you were never give a choice about. Or were told the prices for in advance or told you could shop elsewhere or decline.

My idea for improving bad debt collection is greater transparency. The current establishment will only change their business practices when it is in their best interest to do so. My solution is to require a meeting of the minds – the standard for n enforceable contract — before a debt becomes collectable. Only then will all parties have an incentive to sign actual agreements disclosing the cost of services patients are expected to pay for.

FOR IMMEDIATE RELEASE
Contact: Reagan Stewart at 214-891-3340 or reagan_stewart@sbcglobal.net

DALLAS, TX — The National Center for Policy Analysis (NCPA), a 501c3 public policy research organization, announced this week that its Board of Directors has voted to dissolve the organization effective immediately. The thirty-four year old free market think tank has made significant contributions to free-market public policy research and implementation, including Health Savings Accounts, Roth IRAs, automatic enrollment in 401ks, and ongoing work in the areas of taxes, healthcare, entitlements, economic development, energy and national security.

The decision to leave the world of think tanks comes after the organization has faced significant financial challenges over the last three years. The incident is not isolated, according to a June 29 Article in Exempt Magazine. The article mentions a recent survey from The Bridgespan Group, which examined the financial health of nearly 300 grantees and cites, “More than half of surveyed nonprofits have frequent or chronic budget deficits; 40 percent have fewer than three months of operating reserves; and, 10 percent showed no reserves.”

NCPA wants to honor the people who have served this organization and fulfilled its mission in recent years despite significant challenges. NCPA has been blessed with a tremendously talented group of policy experts, communications managers, development professionals and administrative staff who continued to persevere for the sake of empowering Americans and advancing liberty through free market public policy. The spirit of free enterprise, free markets and free people will continue as these individuals move on to the next stage in their careers.

The organization is also grateful for the individual donors, foundations, companies, research fellows and volunteers who have contributed significantly and loyally with their time, energy and resources throughout the organization’s thirty-four year history.

NCPA plans to sell its proprietary analytical models, intellectual property, research archives and other assets. For additional information or to express interest in acquiring assets, contact Reagan Stewart at 214-891-3340 or reagan_stewart@sbcglobal.net

Some states are trying to solve the shortage of donor organs by requiring the legal owners of the aforementioned organs to “opt out” if they don’t want to give away thousands of dollars worth of organs for free at time of death.

I have a much better way. How about paying the decedents’ family for the donations. Allow people to opt to have their organs harvested at time of death and the funds go into their estate. If people knew they were burying, say, $10,000 worth of organs they would be much more likely to contract for their sale when they no longer needed them.

Federal law currently does not allow for the compensation of organ donors – except for blood plasma. This needs to change. There is an entrenched organ donation and resale industry who does not want to allow compensation. These purveyors of donated organs do not like the idea because their cost to acquire organs could potentially go up, while the price for the products they sell would go down.

The laws of supply and demand actually work. If you want more organs, just compensate people for them rather than appealing to their generous nature. I’ve wanted to write a report on this for years but have never found the time.

Last week, Senate Republicans released a draft of their health care reform bill, the Better Care Reconciliation Act (BCRA). Like the House bill, the BCRA repeals the individual and employer mandates and rolls back the Affordable Care Act’s (ACA) Medicaid expansion. The BCRA also caps per-person Medicaid spending and gives states the ability to change essential health benefits. The ACA’s tax credits and protections for those with pre-existing conditions are largely unchanged. (Health Affairs)

Five Republican senators have announced opposition to the BCRA as written. Four don’t believe the bill does enough to repeal the ACA, while Senator Dean Heller (R-NV) expressed concerns about Medicaid cuts. Republican leadership would like to hold a vote this week, while other senators want more time to review the bill. (Washington Post)

The Congressional Budget Office (CBO) released its scoring of the BCRA. The analysis projects a $321 million deficit reduction over the next decade and 22 million more uninsured people by 2026. Average premiums are expected to rise relative to current projections until 2020, and fall thereafter. (Congressional Budget Office)

The Food and Drug Administration (FDA) is planning to hold a public hearing in July on “gaming” by brand-name drug companies. Gaming is a practice where drugmakers prevent competition by using regulatory rules to delay the approval of generic drugs. The Senate has introduced a bill that would allow generic drugmakers to sue companies who game the rules and delay approval. (Morning Consult)

Hand Holding Cash ca. 1998

Historically hospitals have not really had to worry about collect directly from patients. On average patient cost-sharing is only about 3% when patients enter the hospital. Health care providers generally focus on insurance reimbursement. Maybe that is changing with the growing prevalence of high deductible plans. Now hospital patients can potentially owe several thousand dollars depending on whether they’ve met their deductibles and their cost-sharing arrangements.

One complaint about Obamacare is that deductibles have skyrocketed since its inception. To get affordable coverage many people have had to settle for deductibles of $3,000, $5,000 even $7,000 per year.  Average deductibles have also increased for employer-sponsored health coverage; about doubling over the past decade — a phenomenon that began long before Obamacare. As a result of higher deductibles, many individuals are essentially paying for much of their medical care out of pocket.

A new report by TransUnion estimates that nearly two-thirds (63%) of patients’ outstanding hospital balances are $500 or less. The consumer credit reporting agency recently found:

• In 2016 68% of hospital patients with bills of less than $500 did not pay the full balance in its entirety.
• This is up 53% in 2015 and 49% in 2014

These bills are presumably outpatient services and patients’ share of the bill after insurance has paid.

• In 2016 about 10% of hospital bills were between $500 and $1,000. Of those, 85% were not paid in full.
• Only a small minority of hospital bills were more than $3,000 but 99% were not paid in full.

Only a few years ago, nearly 90% of patients at least made partial payments on hospital bills. In 2016 this had fallen to around three-quarters (77%).  As hospital outstanding debts mount, many hospitals are setting up programs to get patients to pay more of their bills in advance. It is too bad hospital don’t set up programs to lower prices to levels their customers are comfortable paying.

Why are people not paying their outstanding hospital bills? It is not uncommon to have your car need $500 worth of repairs. Presumably, the majority of Americans pay for auto repair when their car breaks down. Maybe a hint can be found in the TransUnion report:

“In just about any retail environment in the U.S., people know how much they’ll pay for something before they buy it. Except when it comes to their health. Patients are often not provided with pre-service estimates because of the complexity involved in estimating healthcare costs.”

The report continues,

“According to one recent study, more than 90 percent of patients felt it was important to know their payment responsibility upfront.”

That last quote should be in the running for understatement of the year! I would argue patients are often not provide pre-service estimates because it is not in hospitals’ self-interest to be transparent in their prices.

The report states it a little more delicately than I am, but it basically says most people (92%) have the capacity and are willing to pay bills of less than $500. Just over half (54%) can and would pay bills that exceed $500. You can infer from the report that Americans would be more apt to pay their outstanding hospital bills if they were “engaged” in advance. That’s a fancy way of saying consumers are generally more loyal and willing to pay their bills when they know what to expect are not blindsided by a bill they did not expect. The article suggests giving patients an idea of bills ahead of time is also an opportunity to get a deposit and collect more of their outstanding fees in advance.

I would argue that competing on the basis of price would also help. It’s not just the unexpected bill that annoys consumers. It’s also the sense that the bill is unfair. After patients leaves the hospital they often receive an undecipherable bill in the mail. Digging through the bill they often find charges of $15 for each ibuprofen and $300 for an admissions kit (Kleenex, a plastic water pitcher and a plastic bedpan). The fact that the hospital then discounts the charges to only $5 apiece and $100 respectively, still does not make consumers excited to pay their remaining share.

The report explores a case study where Arizona-based Banner Health boosted collections by 39% through pre-service estimates and increased collections efforts. Something that all hospitals should take to heart is that pre-care cost estimates not only increases collections, it also increases patient satisfaction. Indeed, the report explains,

“Patients and providers can use effective pre-care cost conversations to create a more rewarding healthcare experience for all.”

Backroom policy deals have been described as akin to making sausage. You don’t really want to see it done or you’d lose your appetite. The new senate health bill is more like meat loaf than sausage, however. By that I mean a recipe composed of delicious ingredients mushed together with really distasteful ones in an unappetizing blob that could have been a great burger but wasn’t. Remember that 1977 song “Two Out of Three Ain’t Bad” by the band Meat Loaf? That pretty much sums up the senate health reform bill.

The Better Care Reconciliation Act of 2017 (BCA) proposes a couple good changes: repeals the Obamacare mandates and associated taxes, sort of caps Medicaid growth but does nothing to make health coverage a better deal for most people. First and foremost BCA does not attack the rout cause of high premiums. These are the regulations requiring insurers to accept customers they do not want and make up the difference by overcharging desirable ones. The catch: gouging good customers makes them less likely to enroll since their perceived need for health coverage is lower. Without profitable customers, premiums must rise to cover all the unprofitable ones.

To be precise, the Better Care Act does not repeal Obamacare’s costly guaranteed issue / community rating regulations. Everywhere these regulations have been tried, they resulted in adverse selection. Adverse selection is a condition where sicker than average consumers are most likely to join because it’s a bad deal for everyone else. This causes medical claims to skyrocket, requiring premium increases to compensate. Each successive round of premium hikes causes a fresh round of healthy people to drop out — leading to more premium hikes. For the small number of sick people, Obamacare is a bargain, but it’s a huge ripoff for the majority of people without health problems.
It sounds mean spirited to expect people with ongoing health conditions to pay higher premiums. But that’s not the case. Either way sick people’s premiums are going to be high. It’s just that prior to Obamacare, healthy people could also get coverage that reflected their health risk. Today, healthy people shun Obamacare, which is why premiums are high for all that remain.

The BCA would tweak the subsidies Americans receive for health insurance, This appears to be a slight improvement. Subsidies would be a function not only of income but also age. The benchmark plan is also based on an actuarial value of 58% rather than 70%. Democrats believe this is far too stingy, while conservative Republicans believe it too costly for taxpayers.

On plus side, the BCA repeals the individual and employer mandates. Also on the plus side, the BCA would repeal most Obamacare taxes. This is a huge deal. I’ve heard Obamacare supporters claim this is a huge redistribution from the poor and middle class to the rich. That’s bogus: Obamacare was a huge redistribution from the rich and middle class to a rat hole, with the poor benefiting a little. This change just redirects the former taxes back to taxpayers. The bill would repeal the Cadillac tax for several years and allow it to come back. There are differing opinions whether this is good or bad.
Small employers could also band together and form Association Health Plans, allowing numerous small firms to leverage their community to get insurance rates similar to what large employers obtain. The bill would also boost health savings accounts (HSAs), allow higher contributions and catchup payments. Consumers could even use their HSAs and FSAs to pay for over-the-counter drugs.

For their part, insurers would get cost-sharing reduction payments for several years but these would be phased out. The essential health benefit package would also be phased out and states would have more authority to decide the benefits that must be covered. I hope this means consumers could decide which benefits they’re willing to pay for.
States would receive a stabilization fund to shore up their insurance markets. This would also give states more leeway to apply for waivers to tweak some insurance regulations, such as medical loss ratio, age bands and (according to some) cost-sharing. This seems too little, too late. States need the right to innovate and respond to consumer needs rather than be stuck with Obamacare rules that are causing individual insurance to fall into disarray.

Arguably the most important change would be a cap on future Medicaid growth. States would have the option to accept per capita block grants with some stipulations. States could also impose work requirements if they wanted, but it’s not mandatory. Further Medicaid expansion would be curtailed. In several years those that have already expanded eligibility to single adults would have their matching rate ratcheted down. In 2023 the federal government would still pay 75% of expansion populations. That doesn’t really go far enough. States should on the hook for expansion and bells & whistles, with the federal government covering only the core needs of the poor.

The Better Care Act is a disjointed hodgepodge of good, bad and ugly provisions. Many observers rightly criticize it as being more of an Obamacare change bill than a repeal or replace bill. It’s not a bad start but certainly not a good one. Congress needs to go back and finish the job they were elected to perform.

(aka Senate version of American Health Care Act)

The Senate health bill has some good things and some not-so-good things. It largely keeps too much of Obamacare, except the individual and employer mandates, and repeals most of Obamacare taxes but allow almost no additional health plan flexibility. Oh, it’s pretty good on Medicaid.

Here’s quick rundown of major elements in the bill:
• Subsidies phase out at 350% (not ACA’s 400%)

• Subsidies a function of both age and income
• Changing Silver etc to “median benchmark plan”
• Repeal individual and employer mandate
• No abortion coverage
• States get a boatload of money
• Repeal most taxes
• Use your HSA/FSA on OTC drugs
• Higher HSA contribution limits
• Medicaid expansion phased out
• States can impose work requirements
• Per capita block grant
• Association Health Plans for small biz
• Opioid assistant to states
• Medical loss ratio state regulated
• Cost sharing reduction payments phased out
• NO increased state flexibility health plan regs

• States can adjust age bands

• Sunsets so-called Essential Health Benefits (yeah!!!)

• State have additional rights to seek waivers (not sure how this helps)
https://www.budget.senate.gov/imo/media/doc/SENATEHEALTHCARE.pdf

The special election for Georgia’s Sixth District to fill the seat vacated by Secretary Price was heated. Jon Ossoff was the Democrat who ran for the seat with considerable outside support. He lost, nonetheless. A precinct captain supposedly complained that many of Jon Ossoff’s potential voters were hard to reach because they live with their parents. Democrats purportedly spent $200 per democratic vote, but I guess it wasn’t enough.

About the time Jimmy Carter was president or maybe it was after he left office, he was interviewed about Georgia politics. If I understood him correctly (I was young at the time), he explained that it was during his lifetime that the state had to pass a law limiting the number of years a wife could vote her deceased husband’s preferences. (Presumably the limit has been reduced to zero since then.) I guess this means there was a time when it was legal for dead people to vote in Georgia. I wonder if some of them voted in Tuesday’s special election?

The special election was the most expensive House race in history.  This is an illustrate how divisive the politics in the time of President Trump is; and the GOP health initiative in particular. The election was not so much about the preferences of Georgians from the Sixth Congressional District as it was about outside interests intent on swaying the election and denying Trump the votes he needs to pass his agenda.

Jon Ossoff, the young Democrat who ran for the seat, received 808 private donations from inside his district. These are people who supported him and presumably could vote for him. By contrast, nine times that number of donors were from people who could not vote for him because they lived in… California! Approximately, 7,218 private donations were received from California residents. Ossoff had nearly four times as many donors from the San Francisco Bay area as donors from his district. He raised nearly six times the funds as his victorious opponent, Karen Handel

So I ask you: Was this election about Trump? Or was it about health care?

This post was prepared by research associate, Jerrod Attias.

The Senate Health, Education, Labor and Pensions Committee has begun examining the role that pharmacy benefit managers (PBMs) play in rising drug prices, starting with a hearing this week on the drug delivery system. Drug manufacturers have blamed PBMs for rising prices and Senators from both sides of the aisle have called for more transparency in drug price negotiations. (Morning Consult)

According to a new report from the Office of the Chief Actuary for the Centers for Medicare and Medicaid Services, the House health care bill would result in 13 million more Americans uninsured by 2026. This is 10 million fewer uninsured than predicted by the CBO estimate. (CNBC)

In a private meeting with Senate Republicans, President Trump reportedly called the House health care bill “mean” and urged the Senate version to be “more generous.” Senate Republicans are currently working on their own health care reform which they hope to vote on next month. (Associated Press)

Major health insurer Centene announced plans to expand into three more insurance exchanges and increase coverage options in six states. This comes at a time when competitors such as Humana and Aetna are weighing large price increases or have exited exchanges altogether. (The Washington Post)

Senate Republicans are weighing options to address state differences in Medicaid spending. One proposal would use higher growth rates for lower spending states when determining yearly increases in federal funding for Medicaid. Senate Majority Whip Jon Cornyn points to this dispute as a major sticking point in Senate negotiations over a revised health care bill. (Roll Call)