Moody’s: Surprise medical billing solutions will impact providers’ bottom line

Most proposed solutions to surprise medical bills will negatively affect provider organizations, according to a Moody’s Investors Report released June 20. However, even in the absence of a solution, the growing awareness of the scope and impact of surprise medical bills will harm providers’ relationships with patients.

Surprise medical bills have become a hot button issue. More than 20 states, including New York and recently Texas, have passed laws that shield patients from surprise medical bills. Congress is also considering approaches toward countering surprise medical bills. At a House Ways and Means Health Subcommittee hearing in May, payers and providers agreed with lawmakers that surprise medical bills are a problem but failed to reach a consensus on how to respond, HealthLeaders Media reported. Also in May, the Senate Health Committee unveiled a bipartisan bill, the Lower Health Care Costs Act of 2019. According to the draft legislation, the committee is considering several methods to stop surprise medical bills, including capping out-of-network charges at in-network rates or establishing an arbitration process involving the payer and the provider.

Because reducing or ending surprise medical billing has wide bipartisan support, it’s likely that some legislative or regulatory change will be made at the federal level, the Moody’s report says. Of the solutions proposed, bundled billing—requiring a single bill for all care received in an emergency department (ED)—or requiring hospitals to guarantee that all affiliated practitioners are in-network would have the most negative impact on hospitals. Many hospitals outsource all ED operations and billing to staffing companies, and many practitioners aren’t employed or controlled by hospitals, according to the report.

Large providers would be least affected by any changes, but smaller hospitals and other service providers such as physician staffing companies could bear the brunt of the impact, the report says. Any legislation may have unintended effects on how in-network rates are negotiated and may lead to more consolidation as smaller providers seek to become part of larger in-network providers.