I’m here today to talk about surprise billing, and I have the trifecta. I have a provider (myself), I have a hospital representative, and I have a payer. Surprise billing has risen to the public’s view. People are wondering what it is and what they can do about it, so I thought we’d gather some opinions. So first, from Dignity Health, I have Shirley Gunther. Shirley, can you introduce yourself and tell us just a little bit about you?
Shirley Gunther: I’d be happy to. I am Shirley Gunther, and my role with Dignity Health is the Vice President of External Affairs for the Arizona service area, the Arizona market. I am responsible for monitoring all federal and state legislation that may impact our hospital systems in Arizona, and it’s my responsibility to advocate on behalf of Dignity Health and our patients.
AP: Thank you very much. And Kathi Beranek, could you tell us a little bit about you?
Kathi Beranek: Sure. My name is Kathi Beranek, and I’ve been with Blue Cross Blue Shield of Arizona for 13 years. I’m their Director of Government Relations. Like Shirley, the scope of my job is that I serve as a lobbyist for Blue Cross Blue Shield of Arizona and advocate on behalf of our members and our customers at the state legislature.
AP: Terrific, thank you both. For those of you who don’t live in healthcare like some of us do, surprise billing is really a bill that the patient receives in which the numbers just don’t seem to jive. Many patients go to the hospital for a procedure, or they’re taken to the emergency room, and many weeks (if not months) after that, they receive a variety of bills—some from the hospital, some from the physicians who took care of them. Sometimes the charges from one or all of these folks are more than the patient expected. The reason for surprise billing, largely, is that the contracting between hospitals, physicians, and payers are not necessarily bundled. So a hospital may have a contract with a payer to provide services at a certain rate, but physicians who work at that hospital may not have agreed to the same rates with the same payers. And really, the physicians can come on and off different contracts, and it can be very difficult for a patient to know—and even for the hospital itself to know—what the charges are for a particular procedure. Shirley, I’ll come to you first. Why do you think hospitals can’t fix this problem?
SG: Well, I think you really have kind of laid the groundwork in the description of what the key issue is for a hospital system like Dignity Health. So, even though we have a hospital and we employ nurses and we employ physicians, we don’t necessarily employ every physician. We don’t necessarily directly employ every nurse. We have contracts in place to allow them to have their own separate businesses, where they’re not direct employees of Dignity Health. So our physicians who are our employed physicians that work for Dignity Health or our nurses that are employed nurses with Dignity Health—their services are covered under the contracts that we, Dignity Health as a hospital, have. But, for example, if Dr. Pitt, you are not an employee physician, you have your own separate practice, you may have different contracts outside of what Dignity Health has as a provider. So, unless we as a hospital mandated that in order for you to practice in our hospitals, you must have contracts with the exact same payers we have, that would really be the only thing that we could require you to do.
SG: However, many physicians don’t want to operate that way. They want to set their own rates with their insurance companies, and we have allowed that because a lot of physicians—particularly physicians in certain specialty areas—are really quite difficult to get, and they’re in very high demand. So we work with them to make sure that they’re able to get the contracts that they believe they deserve and need with the payers. So it’s been a challenge for hospitals, frankly, to require or mandate that all providers have the same exact contract or contract with the same exact insurance providers that the hospital system does.
AP: Do you see this changing? Do you see more physicians becoming employees in the next 5, 10 years? Is that the direction we’re going, or what’s your impression?
SG: My personal opinion is that we’re always going to have physicians who want to practice independently and not want to be part of a hospital system, and I think that’s fine; I think that’s great. There’s definitely a need and a place for that type of practice. Some systems, and it’s really a business model, some systems don’t want to operate that way. They want to employ everybody within their system. But Dignity Health has always felt that there is an opportunity for the independent practitioner to have a place in our facilities.
AP: Yes. You actually have one of the few departments of radiology at St. Joseph’s Hospital and Medical Center, where I work—I am not employed by the hospital. But the majority of radiologists are actually part of a different group, and they’re actually employees, so it’s probably a very strange model, but that’s because we’re very heavy in the neurosciences at the Barrow Neurological Institute.
AP: Kathi, you know, I heard that there was some new legislation in Texas and Arizona, and it may even be moving to the federal level. I think we all agree that whether you’re a provider, whether you’re a hospital, whether you’re a payer, you don’t think that this should be what happens to a patient. A solution for the patient is needed. Can you tell me about some of the legislative efforts that you’ve seen around the country?
KB: Sure, absolutely. The Arizona law, which actually took effect January 2019, is based pretty significantly on the Texas model, so there are a lot of similarities. The main differences are that Arizona utilizes arbitration as opposed to mediation, which is utilized in Texas, and the threshold for the surprise bills qualify to be subject to arbitration or an informal settlement conference is $500 in Texas, and it’s about $1,000 here in Arizona. But other than that, the process is really similar. A patient goes to an in-network facility, and they get a bill that, after cost-sharing, is about $1,000 or more. They can apply to the Department of Insurance for this settlement conference, it’s an informal settlement call, and basically it will allow the provider, the insurer, and the patient to be on the phone call and try to figure out the bill. And if that’s not figured out, then it kicks over to arbitration.
KB: So basically, the whole point is to get the patient out of the middle. The patient’s in a really difficult position because they’re going to an in-network facility, so they think, understandably, that everything should be covered. And like Shirley very deftly explained, that’s not the case a lot of times, and that is really a surprise to a lot of our customers. We get so many calls from customers and patients who were doing their due diligence, thought they were doing the correct thing by going to an in-network facility only to get a bill months later.
KB: This is so prevalent that not only our state, but about 25 states by now have passed some form of surprise billing legislation. But the federal government is also taking a very close look at this. There are a variety of proposals, but none have really kind of come to the forefront yet. But there are a variety of proposals that are looking at this exact same model, some utilizing arbitration, like we do here, some using a benchmark for payment. It’s hard to encounter someone that has not experienced a surprise bill. So I think that’s why this is so prevalent, and the reason that everyone can really relate to it, is because it’s happened to us. A lot of us, even those of us in the healthcare industry and who are knowledgeable about this, it still happens.
AP: Yes. So for an example, just for folks who are not as familiar. Say your surgeon says, ” I’m going to do an artificial knee procedure on you at my hospital.” It’s possible your anesthesiologist might be out-of-network, and God forbid you have a complication. Let’s say you get pneumonia and your stay is extended. You might have a hospitalist, the person taking care of you in the ICU, and they may not be an in-network provider. So you have a series of providers during your stay, some of whom are in-network, and some of whom are not. Shirley, what do you think that this means for the hospitals? How are they viewing this? Because they don’t want to go to arbitration, I would think. That’s not a place they want to end up with their patients.
SG: Well, we’re concerned for the patient, obviously. When the patient leaves the hospital, as you and Kathi both described, they often receive a bill but they don’t know what the bill is for. They don’t know whether the physician was in-network or out-of-network. One key component that we haven’t discussed yet but that is integrated through the implementation of this is that if a patient is in the hospital and is about to receive a service, Arizona law requires that the out-of-network provider must provide an estimate of the bill of potential charges to the patient. The patient then can either agree or disagree to those. So, for a patient that comes to one of the Dignity Health Hospitals, and Dignity Health is not covered under their health plan, we immediately have to notify them that, “This hospital system, we’re out-of-network for you. So here is what we estimate the services will cost you, or you’ll have to choose another hospital.”
SG: The same thing goes with the whole host of providers, as you just described. Maybe the anesthesiologist is out-of-network and the radiologist is in-network. The anesthesiologist is required to provide an estimate of the potential bill to the patient. If he or she doesn’t provide that estimate and the bill is more than $1,000, that’s when the patient can file a claim with the Department of Insurance. It’s called a surprise billing claim. So this will require physicians in hospitals and all providers to work together for the benefit of the patient, so the patient is fully informed.
AP: I have so much trouble getting consent for patients for procedures, I just have trouble envisioning this at scale. You’re about to go to surgery, your anesthesiologist walks in and says, “Oh, by the way, I’m out-of-network. Anesthesia today will be $12,000. Do you want us to proceed?” That can’t possibly be what the legislator had in mind, can it? It just seems absurd.
KB: Just to back Shirley up, I think it all boils down to information. Right now what’s happening is that patients are going in for pre-arranged surgeries or procedures, and they have absolutely no idea that they’re going to be treated potentially by an out-of-network provider. So I think the whole point of the legislation is to really get consumers more involved in their healthcare and get insurers and providers working together to provide some type of notice so that there isn’t just this out-of-the-blue, multi-thousand-dollar bill sent to the patient when they thought they were doing everything correctly. So I think it’s really all about information.
AP: Yes. Just to get people thinking about it, you think that this would probably not be the final solution. Now, I’d like to mention, as a provider, as a physician, although I wish I always agreed with the insurers about rates for my services, there’s a constant need to reduce costs. So oftentimes it’s a little bit contentious between physicians and payers in terms of what services are worth. You know, I wonder, Kathi, why would insurers not use this hammer that I now have to either disclose that I’m out-of-network or get in-network. What’s to prevent this requirement from forcing doctors to just take lower rates to be in-network?
KB: A couple of things. First of all, I don’t think it’s really about rates, this particular piece of legislation is about billing. So I don’t think this has anything to do with overall rates. But I do hear what you’re saying. I think insurers kind of feel the opposite way. Everyone in the healthcare industry is under tremendous pressure to keep costs down, and so we feel that insurers and hospital systems oftentimes have tremendous power to negotiate, because it’s really important for our customers, for you all, to be in-network, so that we get the best deal. So I think the way the bill is structured with arbitration is a really fair process. Both sides—the provider side and the insurer side—have to agree to the arbitration and the arbitrator.
KB: Then there is a series of different pieces of information that each side can provide to the arbitrator so that it’s really a fair process, and it’s really being made on what the service is worth, and there will be times when the insurer is not paying enough, and they’re going to end up having to pay more and vice versa. So I don’t think it’s perfect, but I think it’s a good start for both sides to be able to come to the middle and have a neutral third party figure it out.
AP: Yes. I’m a little worried; I have these visions of going to the post office and getting in line to meet with the arbitrator, because I could easily see how the number of claims and the number of reasons for arbitration could grow dramatically. And it will be very difficult to get through that volume of patients.
SG: The law was enacted January 1, 2019. One thing that the bill requires is that, on December 31, 2019, the Department of Insurance will compile a report that identifies and compiles information around the type of claims being submitted to the Department of Insurance. What claims are being disputed? What are the services for? How much are they? How often is it occurring? Is it occurring in one hospital much more than in other hospitals? So I think that data, Dr. Pitt, will bring to light where some of these issues are and whether additional legislation is needed.
AP: I see. Do either of you have some thoughts for patients—what they should expect moving forward, what they should do in this process to try to help protect themselves when they get a surprise bill?
KB: So first of all, the place that they should really go for information if they have a surprise bill or they’re not sure if it’s a surprise bill or if it qualifies for this process, is the Department of Insurance. They have a whole section of their website devoted to this. They have a Q&A page and explain the process, and they have the relevant forms to fill out. That website is www.insurance.az.gov. They also have a direct line where they can answer questions about surprise billing as well.
KB: Also, insurers are required to provide information that this process is available to our customers in our explanation of benefits, so you can always contact your insurer if you have questions about it, and we will be able to walk you through. And I know from Shirley’s side, the provider as well is going to be able to provide them information, as well, and kind of walk them through it.
AP: I presume Dignity Health has advocates and navigators for patients when they get some of these, Shirley? If patients get a surprise bill?
SG: Right. We obviously don’t want our patients to be unhappy that they’ve received a surprise bill. But I want to go back to what Kathi was saying in one of her comments before. I think the intent of this legislation is to get consumers more involved and more educated about their own health plan, asking, “What does my health plan cover? What does it not cover? What am I expected to pay out of pocket? What am I not expected to pay out of pocket?” Consumers need to be educated and informed exactly what they’re purchasing or what they bought before they get sick.
AP: Yes, I get it. It’s tough though. I know this is kind of a difficult question, certainly, the process you’ve outlined for me sounds a little clunky. Do either of you have a suggestion on how you would solve the surprise bill if you were queen for a day, in terms of getting around this problem?
SG: I think my comment is that when this legislation was proposed to us, it was really after two years of legislators telling both the insurance companies and the hospitals and providers, “Find a way to resolve this, or we’re going to do it for you.” We really couldn’t come up with an agreed-upon resolution, frankly. That is really why, Senator Lesko at that time, who ran the legislation, modeled it after some other states. It takes the patient out of it and forces all of us to work together to find some resolution. This is exactly where the federal legislation is going as well. So, I don’t know if this is the best that policymakers could come up with, or if there are some other innovative ideas to address it, but I think that this is a pretty good compromise that we’ve all agreed to, and I think that there’s definitely room for improvement and there will be in the upcoming years.
KB: I totally agree. I really think it was a collaborative effort and all the relevant stakeholders were around the table trying to figure this out, because we really need to work together—insurers, providers, and physicians—to get the patient out of the middle and to solve this problem. And it’s complicated! Health insurance, healthcare is very, very complicated, especially today. And it’s getting more so all the time. So any time we can work collaboratively and try to do what’s best for the patient—I think this really is designed with the patient in mind.
SG: One thing I wanted to add really quickly, just before we end, is that before arbitration there’s an opportunity for an informal settlement call. I just want to make sure everyone knows that the claim doesn’t automatically go to arbitration. In fact, in the Texas model, about 94% of cases that were brought up were resolved in an informal settlement conference. So it will be interesting to see if that’s the case in Arizona, if most of those disputes get settled at the call and don’t even end up going to arbitration. We’ll have to see whether there are other tweaks we need to make moving forward.
AP: It’s funny, all of us are healthcare folks, insurance, hospital, provider, we’re all in healthcare, but we’re also all patients. In thinking about this, I think this really gets at the heart of the matter, where people just want to buy a service for an understandable price. You get your knee replaced, you have a brain surgery, you should expect to see a price that’s understood before you get that. I have to wonder if this surprise bill may be the thing that really pushes us over to a single payer—Medicare for all or Medicare for more, whichever one you want to call it—kind of system. Because I think for a very long time, it’s been very confusing for all of us to figure out what healthcare pricing is. I want to thank you both for participating. Do you have any final thoughts for folks listening?
SG: Well, I just want to thank you for an opportunity to have us on your podcast, Dr. Pitt. I know this is a lot of new information, not only for providers but for patients, and I would just continue to urge people to be informed and understand what the process allows for you if you receive a surprise bill.
AP: Yes, you bet.
KB: Yes. Thank you so much for having us; I really appreciate the opportunity to talk to your audience.
AP: It’s been my pleasure. Thank you both very much.