Dr. Derrick Smit shares the final words from one of his COVID-19 patients as he struggled for his last breath, “Who’s going to pay for it?”
This doesn’t happen anywhere else in the world. Only in America.
Dr. Derrick Smit shares the final words from one of his COVID-19 patients as he struggled for his last breath, “Who’s going to pay for it?”
This doesn’t happen anywhere else in the world. Only in America.
A record 3.3 million people filed for unemployment in one week, in the wake of the coronavirus outbreak, but people didn’t just lose their jobs. Many also lost the health insurance that came with the job, Axios’ Bob Herman reports.
Why it matters: U.S. workers, even those who feel relatively secure in their health benefits, are a pandemic away from falling into the ranks of the uninsured.
Many of the people losing their jobs right now may not have had coverage to begin with — which would make the coronavirus-related disruption smaller, but still highlights the very large holes in this system.
The big picture: People who lose their jobs have some options.
Congress’ big stimulus package will provide more than $100 billion and several favorable payment policies to hospitals, doctors and others in the health care system as they grapple with the coronavirus outbreak.
The cornerstone provision is a no-strings-attached $100 billion fund for hospitals and other providers so they “continue to receive the support they need for COVID-19 related expenses and lost revenue,” according to a summary of the legislation.
The bill provides many other incentives for the industry.
What’s missing: Patients who are hospitalized with COVID-19 could still be saddled with large, surprise bills for out-of-network care.
A patient can do everything right and still face substantial surprise medical bills.
In his recent Oval Office speech, President Trump pledged that Americans won’t receive surprise bills for their coronavirus testing.
The goal is good; we need people who are lightly symptomatic to be tested without fear of high personal costs. But it was an empty promise. Unless swift action is taken, surprise bills are coming. And they could exacerbate a public health crisis that is already threatening to spiral out of control.
As demand for coronavirus testing surges and beds start to fill with the sick, hospitals and clinics will roll out contingency plans that call on any available resources in their communities. Test samples will be sent to whichever private laboratories have capacity, patients will be transferred from overloaded hospitals to less-crowded locations and physicians and nurses will make greater use of telemedicine.
Emergency rooms will be slammed with visits from the worried well and the dangerously sick alike. College students are already being sent home and will seek treatment far from the universities that offer them health insurance.
All of this will be chaotic.
To their credit, health insurers recognize the need to eliminate out-of-pocket spending that might discourage people from seeking care. At a meeting earlier this week with Vice President Mike Pence, they publicly committed to eliminating deductibles and co-pays for coronavirus testing. The federal government is also taking some needed steps to eliminate or ease cost-sharing.
But insurance companies aren’t the ones sending surprise bills. They’re coming from private labs and emergency-room doctors and other providers of health care services — and they weren’t at Vice President Pence’s meeting.
A patient with insurance through work or the health-insurance exchanges can be surprise-billed when she seeks medical care at a hospital or clinic that’s in her insurance “network” — but then receives medical care from a person or an institution that’s outside the network.
That out-of-network provider will first send a bill to the patient’s insurer. But if the insurer doesn’t pay the full amount, the provider may bill the patient directly for the remaining balance. Because the provider is basically free to name its own price, these surprise bills can be wildly inflated.
In a coronavirus pandemic, a patient can do everything right and still face substantial surprise bills. Take someone who fears that she may have contracted Covid-19. After self-quarantining for a week, she develops severe shortness of breath. Her partner rushes her to the nearest in-network emergency room. But she’s actually seen by an out-of-network doctor — who may soon send her a hefty bill for the visit.
Matters get worse if the in-network hospital is approaching capacity and the patient is healthy enough to be sent to a hospital across town with spare beds. If the second hospital is outside her insurance network, she could potentially receive a second surprise bill. A third could come from the ambulance that transfers her — it too might not be in-network, and no one will think to check during a crisis. She could get a fourth surprise bill if her coronavirus tests are sent to an out-of-network lab. And so on.
Even in normal times, patients with private insurance receive roughly one surprise bill for every 10 inpatient hospital admissions.
These are not normal times.
Federal law currently provides little protection. The Affordable Care Act does cap an individual’s out-of-pocket spending — but the cap only applies to in-network care. For surprise bills, the sky is the limit.
Reputable providers will appreciate that now is not the time for price gouging. But many won’t and will seek to exploit people’s medical needs for financial gain, much as they did before the coronavirus began to spread. They may calculate that can collect enough money charging exorbitant fees for out-of-network services — and still make it to an airport ahead of a mob carrying pitchforks and torches.
We need more than gauzy commitments from the president. We need a law to ban bills incurred from out-of-network providers for medical care associated with the coronavirus outbreak. Unless that commitment is ironclad, people may not believe it. And if they don’t believe it, they won’t get tested.
To date, Congress — cowed by a furious public relations campaign led by private equity and specialty physicians — has been unable to pass a law banning routine surprise billing. Though Congress has moved closer to a watered-down deal in recent months, neither the House nor the Senate has actually passed a bill.
The coronavirus should refocus Congress’s attention. At a minimum, the legislature should quickly pass a temporary measure to limit out-of-network charges for coronavirus testing and treatment.
In the meantime, states can take action. About half have already passed surprise-billing laws, including California and New York, two of the hardest-hit states. But the laws in many states are patchy: Some cover only emergency room care, others don’t contain a legal mechanism for cutting back on excessive bills, and none are tailored for the current outbreak.
Already, reports of people who have received eye-popping bills for coronavirus testing or emergency room visits are circulating. As these stories proliferate, people will become even more reluctant to get tested or treated when they should. That will obscure the spread of the virus, complicate efforts to adopt measures for social distancing, and lead to unnecessary deaths.
It’s a national disgrace that the United States didn’t ban surprise bills in a time of relative prosperity and security. It could become a public health calamity if we do not end them in a world with coronavirus.
As the coronavirus pandemic exerts a tighter grip on the nation, critics of the Trump administration have repeatedly highlighted the administration’s changes to the nation’s pandemic response team in 2018 as a major contributor to the current crisis. This combines with a hiring freeze at the Centers for Disease Control and Prevention, leaving hundreds of positions unfilled. The administration also has repeatedly sought to reduce CDC funding by billions of dollars. Experts agree that the slow and uncoordinated response has been inadequate and has likely failed to mitigate the coming widespread outbreak in the U.S.
As a health policy expert, I agree with this assessment. However, it is also important to acknowledge that we have underfunded our public health system for decades, perpetuated a poorly working health care system and failed to bring our social safety nets in line with other developed nations. As a result, I expect significant repercussions for the country, much of which will disproportionately fall on those who can least afford it.
Spending on public health has historically proven to be one of humanity’s best investments. Indeed, some of the largest increases in life expectancy have come as the direct result of public health interventions, such as sanitation improvements and vaccinations.
Even today, return on investments for public health spending is substantial and tends to significantly outweigh many medical interventions. For example, one study found that every US$10 per person spent by local health departments reduces infectious disease morbidity by 7.4%.
However, despite their importance to national well-being, public health expenditures have been neglected at all levels. Since 2008, for example, local health departments have lost more than 55,000 staff. By 2016, only about 133,000 full-time equivalent staff remained. State funding for public health was lower in 2016-2017 than in 2008-2009. And the CDC’s prevention and public health budget has been flat and significantly underfunded for years. Overall, of the more than $3.5 trillion the U.S. spends annually on health care, a meager 2.5% goes to public health.
Not surprisingly, the nation has experienced a number of outbreaks of easily preventable diseases. Currently, we are in the middle of significant outbreaks of hepatitis A (more than 31,000 cases), syphilis (more than 35,000 cases), gonorrhea (more than 580,000 cases) and chlamydia (more than 1,750,000 cases). Our failure to contain known diseases bodes ill for our ability to rein in the emerging coronavirus pandemic.
Yet while we have underinvested in public health, we have been spending massive and growing amounts of money on our medical care system. Indeed, we are spending more than any other country for a system that is significantly underperforming.
To make things worse, it is also highly inequitable. Yet, the system is highly profitable for all players involved. And to maximize income, both for- and nonprofits have consistently pushed for greater privatization and the elimination of competitors.
At any given time, this decrease in capacity does not pose much of a problem for the nation. Yet in the middle of a global pandemic, communities will face significant challenges without this surge capacity. If the outbreak mirrors anything close to what we have seen in other countries, “there could be almost six seriously ill patients for every existing hospital bed.” A worst-case scenario from the same study puts the number at 17 to 1. To make things worse, there will likely be a particular shortage of unoccupied intensive care beds.
Of course, the lack of overall hospitals beds is not the most pressing issue. Hospitals also lack the levels of staffing and supplies needed to cope with a mass influx of patients. However, the lack of ventilators might prove the most daunting challenge.
While the U.S. spends trillions of dollars each year on medical care, our social safety net has increasingly come under strain. Even after the Affordable Care Act, almost 30 million Americans do not have health insurance coverage. Many others are struggling with high out-of-pocket payments.
To make things worse, spending on social programs, outside of those protecting the elderly, has been shrinking, and is significantly smaller than in other developed nations. Moreover, public assistance is highly uneven and differs significantly from state to state.
And of course, the U.S. heavily relies on private entities, mostly employers, to offer benefits taken for granted in other developed countries, including paid sick leave and child care. This arrangement leaves 1 in 4 American workers without paid sick leave, resulting in highly inequitable coverage. As a result, many low-income families struggle to make ends meet even when times are good.
I believe that the limitations of the U.S. public health response and a potentially overwhelmed medical care system are likely going to be exacerbated by the blatant limitations of the U.S. welfare state. However, after weathering the current storm, I expect us to go back to business as usual relatively quickly. After all, that’s what happened after every previous pandemic, such as H1N1 in 2009 or even the 1918 flu epidemic.
The problems are in the incentive structure for elected officials. I expect that policymakers will remain hesitant to invest in public health, let alone revamp our safety net. While the costs are high, particularly for the latter, there are no buildings to be named, and no quick victories to be had. The few advocates for greater investments lack resources compared to the trillion-dollar interests from the medical sector.
Yet, if altruism is not enough, we should keep reminding policymakers that outbreaks of communicable diseases pose tremendous challenges for local health care systems and communities. They also create remarkable societal costs. The coronavirus serves as a stark reminder.
Now that the Democratic primary campaign has produced a clear front runner, it’s worth examining Joe Biden’s healthcare plan, which aims to expand the Affordable Care Act (ACA) by increasing access and affordability. As the graphic above highlights, former Vice President Biden has a broad—if at this point, still fairly high-level—proposal that includes a Medicare-like public option along with a variety of other ACA tweaks that aim to offer consumers more options and lower their healthcare costs.
These include allowing individuals in states without Medicaid expansion to join the pubic option premium-free, providing unlimited subsidy eligibility, and limiting drug price increases to the level of consumer inflation.
An independent analysis projects Biden’s plan would cost $2.25T and add an additional $800B to the deficit over 10 years. While large at first blush, these costs pale in comparison to Sen. Bernie Sanders’ Medicare for All plan, which would add a projected $12.95T to the deficit over the same period.
Of course, there are still many unanswered questions in Biden’s proposal, including how much consumers would pay under the public option, how much the public option plan would reimburse providers as a percentage of Medicare, and how the public option would impact competition among private insurers.
A public option offered at a significant discount has the potential to drive private plans out of business, which some project could eventually result in Medicare for All as an ultimate consequence. The devil will, as always, be in the details.
The nation’s largest private insurer has been terminating its contracts with physician staffing firms in a bid to extract lower prices, part of a years-long pattern analysts say could spur other payers to follow.
UnitedHealthcare contends it is simply trying to curb the rising cost of healthcare by driving out high-cost providers that charge far more than the median rate in its network. The payer said it had hoped to keep these firms in network “at rates that reflect fair market prices,” a UnitedHealthcare spokesperson told Healthcare Dive.
The most recent action targeted Mednax, a firm that provides specialty services including anesthesia, neonatology and high-risk obstetrics in both urban and rural areas. United cut Mednax contracts in four states, pushing those providers out of network, potentially putting patients at risk of balance bills.
United also recently canceled its in-network contracts with U.S. Anesthesia Partners in Texas, starting in April, which caused Moody’s to change its outlook to negative for the provider group because the contracts represent 10% of its annual consolidated revenue.
These latest moves to end relationships with certain physician staffing firms seem to have escalated in recent years, Sarah Kahn, a credit analyst for S&P Global, told Healthcare Dive.
Since the insurer’s 2018 tussle with ER staffing firm Envision, “it’s sort of ramped up and become more aggressive and more abrupt and more pervasive,” Kahn said of the contract disputes.
United said the volume of negotiations it’s involved in has not changed in recent years, and added that it expects to renegotiate the same amount of contracts in 2020 that it did in 2019. However, United pointed a finger at a small number of physician staffing firms, backed by private equity, that are attempting to apply pressure on United to preserve the same high rates.
Private equity firms have been increasingly interested in healthcare over the past few years, accelerating acquisitions of medical practices from 2013 to 2016. Private equity acquired 355 physician practices, representing 1,426 sites of care and more than 5,700 physicians over that time frame, according to recent research in JAMA. The firms had a particular focus on anesthesiology with 69 practices acquired, followed by emergency physicians at 43.
Mednax is a publicly traded company. But Envision is owned by investment firm KKR; TeamHealth is owned by private equity firm Blackstone; and U.S. Anesthesia Partners is backed by Welsh, Carson, Anderson & Stowe.
Proposed legislation around surprise billing may be influencing United’s actions, Kailash Chhaya, vice president and senior analyst at Moody’s, told Healthcare Dive. Congress has been weighing legislation that seeks to eliminate surprise billing, mainly through two vehicles, either using benchmark rates or arbitration.
If Congress ultimately decides on a bill that uses benchmark rates, or ties reimbursement for out-of-network providers to a benchmark rate (or average), it would benefit insurers like United to lower its average rate for certain services, Chhaya said. One way to do that is to end relationships with high-cost providers.
“It would help payers like UnitedHealth if that benchmark rate is low,” Chhaya said.
In late 2018, United threatened to drop Envision from its network, alleging the firm’s rates were responsible for driving up healthcare costs, according to a letter the payer sent hundreds of hospitals across the country. United and Envision eventually agreed to terms, but United seemed to outmuscle Envision as the deal secured “materially lower payment rates for Envision” that resulted in lower earnings, S&P Global analysts wrote in a recent report.
In 2019, United began terminating its contracts with TeamHealth, which has a special focus on emergency medicine. The terminations affect two-thirds of TeamHealth’s contracts through July 1. The squeeze from United caused Moody’s to also change Team Health’s outlook to negative as an eventual agreement would likely mean lower reimbursement and lower profitability for company, the ratings agency said.
“They’re trying to lower their payments to providers. Period,” David Peknay, director at S&P Global, told Healthcare Dive.
Data shows prices — not usage — is driving healthcare spending. Physician staffing firms are frequently used for ER services and the ER and outpatient surgery experienced the largest growth in spending between 2014 and 2018, according to data from the Health Care Cost Institute.
United said it had been negotiating with TeamHealth since 2017 and does not believe TeamHealth should be paid significantly more than other in-network ER doctors for the same services. United alleges its median rate for chest pains is $340. But if a TeamHealth doctor provides the care it charges $1,508.
“As Team Health continues to see more aggressive and inappropriate behavior by payors to either reduce, delay, or deny payments, we have increased our investment in legal resources to address specific situations where we believe payor behavior is inappropriate or unlawful,” according to a statement provided to Healthcare Dive.
TeamHealth said it will not balance bill patients in the interim.
The pressure from payers, particularly United, is unlikely to relent. The payer insures more than 43 million people in the U.S. through its commercial and public plans.
“I don’t think anyone is safe from such abrupt terminations,” Kahn said. However, United disputes the characterization of abruptly terminating contracts and says in many cases it has been negotiating with providers to no avail.
Likely targets in the future may include firms with a focus on emergency services, which tend to be high-cost areas, S&P’s analysts said. In their latest report, Kahn and Peknay pointed to The Schumacher Group, which is the third-largest player in emergency staffing services. However, it commands a market share of less than 10%, far less than its rivals Envision and TeamHealth.
Smaller firms may not be able to weather the pressure as effectively as very large staffing organizations.
For those smaller groups, it may be wise for them “to sit tight on their cash or prepare from some pressure,” Kahn said.
Although some believe it may influence other payers to follow suit, Dean Ungar, vice president and senior analyst with Moody’s, said United may be uniquely placed to exert this pressure because it has its own group of providers it can use and considerable scale.
“They are better positioned to play hardball,” Ungar said.