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How Hospitals Compete With Bundled Of Payments At Surprise Invoice

Industry leaders recently proposed implementing bundled payments in the emergency room to solve surprise medical billing, but the AHA, AMA, and FAH conflicting the suggestion.

Surprise medical billing and bundled payments

April 09, 2019 – Payers, providers, and other healthcare stakeholders agree that the industry needs a solution for surprise medical bills. But major hospital associations are saying that proposals to implement bundled payments in the emergency department are not appropriate for patient services.

The American Hospital Association (AHA), American Medical Association (AMA), and Federation of American Hospitals (FAH) recently opposed the idea floated during a April 2 House hearing on surprise medical billing.

“This concept may seem simple and straightforward in theory; in reality however, this approach would be administratively complex, fundamentally change the relationship between hospitals and their physician partners, and alone, does nothing to protect patients from surprise bills. We strongly oppose such a model,” the associations wrote in a letter to members of the Committee on Energy and Commerce.

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Bundled payments would help resolve the issue of using specialists in the emergency department, Christen Linke Young, a fellow with the USC-Brookings Schaeffer Initiative for Health Policy, told policymakers at the hearing.

Anesthesiologists and emergency medicine physicians treat a flow of patients regardless of their network status, she explained. The physicians have little incentive to join a network and receive the lower rate for in-network services.

Policymakers need to eliminate the incentives that encourage specialists in the emergency department to stay out of network. Bundling payments and enabling hospitals to pay the specialists for care delivered within the facility is a strategy Congress can use to correct the distorted market, she argued.

However, bundled payments are inappropriate for some types of medical billing services, the major hospital groups retorted in the letter.

“Any individual visit to an emergency department can involve countless possible services – from initial diagnosis and confirmatory tests to complicated trauma and surgical procedures involving multiple physicians and other providers, depending on an array of factors,” the groups wrote. “Simply put: bundled payments are not appropriate for emergency care and have not been sufficiently tested for widespread adoption for other types of care.”

Additionally, bundled payments in the emergency department shift the responsibility for developing comprehensive provider networks from payers to hospitals, resulting in hospitals assuming the associated financial risk, the hospital groups argued.

“We should remain focused on taking patients out of the middle of standard negotiations between insurers and providers and protecting them from ‘surprise bills’ when they have not had the opportunity to choose who provides their care, while rejecting unproven proposals that would up-end the foundation of relationships that hold the healthcare system together,” the letter concluded.

The hospital groups also suggested that surprise medical billing services solutions focus on “arriving at a fair payment from an insurer to a provider while protecting patients from the consequences that can arise when an insurer lacks adequate contracted providers.”

In the past, AHA and FAH have advocated for other surprise medical bills fixes, including the prohibition of balance medical billing services. Balance billing is when a provider bills a patient for the difference between the provider’s charge and the allowed amount.

The groups also added their names to a list of hospital associations calling for surprise medical billing solutions in a February 20, 2019, letter to Congressional leaders. In the letter, the coalition of six major hospital associations advised Congress to preserve the role of negotiation between hospitals and private payers, remove the patient from health plan and provider negotiations, ensure patients have access to comprehensive provider networks, and ensure patients have access to emergency care through their health plans.

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