Intro: Cooper paper sets organized EM back a pace
This summer Zack Cooper et al gave a kick in the teeth to efforts by ACEP, EDPMA, and Physicians for Fair Coverage to try to reframe the message about balance billing with their paper “Surprise! Out-of-network Billing for Emergency Care in the United States,” published in the National Bureau of Economic Research. The study, which explores when, and why, out-of-network billing occurs when patients present to an in-network emergency care facility; purports to answer the question of who is really responsible for surprise balance billing: the physicians, the hospital, or the insurance company? By now, most impartial observers have already concluded that this is a health systems issue, and all three stakeholders (not to mention legislators and regulators) bear responsibility. What is most disturbing about this study is that uncovering the incentives that appear to drive and enable surprise balance billing may reveal behaviors that are far more troubling.
What Cooper’s paper alleges – and it’s not pretty
Cooper’s study points the fickle finger of blame (pardon the expression) squarely at EmCare (now named Envision) and the hospitals that contract with this group to staff their EDs, though undoubtedly there are other groups and hospitals that also have been utilizing similar strategies to maximize their revenues. This group had an average out-of-network (OON) billing rate of 62% and the authors allege that EPs working at for-profit hospitals are also much more likely to generate surprise balance bills. The authors go on to state that: “To motivate hospitals to allow out-of-network billing to occur inside their facilities, we show that physicians and physician outsourcing companies may need to compensate hospitals with a sufficiently large transfer to outweigh the costs they incur from the practice.” In other words, some form of excess financial return exchanged for utilizing these groups to staff the hospital’s ED. The findings of the study purport to show that when this outsourcing group took over an ED, facility payments increased by 11%, “driven in part by increases in imaging rates of 5% and a 23% increase in the rate that physicians admitted patients to the hospital”; average ED physician charges increased by $556 (96%), and that the group’s physicians were 43% more likely to bill for ED visits using the highest acuity billing code. When a competing outsourcing EM group, TeamHealth, took over an ED, however, increases in hospital revenues were driven by increases in ED volumes, and not by changes in imaging or admission rates; though surprise balance bills did increase significantly. In short, the authors accuse EmCare’s physicians not only of applying a strategy of aggressively balancing billing patients, but also of up-coding, over-charging, over-ordering expensive diagnostic tests, and inappropriately admitting patients to the hospital.
Is the Cooper study trustworthy?
There are a lot of faults, potential confounders, and suspect bias to be found in this study, all of which can be used to challenge both the findings and conclusions derived. All of the charge and payment data from the 13 million ED visits examined in this study were sourced from a single health plan with a known agenda (akin to: “take that, unnecessary ER visits”), which in itself is cause to suspect the validity of the data. The methods used to identify transitions in ED staffing contracts were circumspect; the timeline (2011 – 2015) for the study covers a period in which many changes in charging, balance billing; and clinical practices have taken place; average admission rates were surprisingly low at only 9%; EPs generally are not solely responsible for the decision to admit a patient to an inpatient service; and regions of the country were not proportionally represented. In addition, the statistical and mathematical modeling of incentives for physicians to engage in OON billing, for insurers to contract, and for hospitals to contract with EM groups that engage in surprise balance billing, are obtuse and based on a lot of questionable assumptions (for example, that: if the ED physician is OON she obtains a quantity of patients that is equal to what she would receive if she were in-network). The authors do acknowledge that some balance billing of ED physician services is inevitable, but fail to appreciate that 70% of EP services are provided on nights, weekends, and holidays when comparing EP claim payment rates to other specialists. Moreover, the authors gloss over the impact of coercive contracting, narrow networks, and market monopsony by health plans as a significant contributor to the surprise balance billing problem.
Analysis: The realities of balance billing and emergency medicine
The authors recommended solution to address surprise balance billing is to require hospitals and physicians at those hospitals to bundle their ED services under a single claim or under a single contract with plans, and for the hospital to ‘buy ED physician services’ in a local labor market, producing a market price for ED physicians. Would the bundled payment option be successful? Many older EPs may remember when hospitals billed insurance plans for EP services, and how bad a job these hospitals often did billing and collecting for these physician services. As bad debts rose and reimbursement rates fell, hospitals were quick to pass this risk back on to EM groups; and the hospital industry is unlikely to reverse course now.
To patients, receiving a balance bill from an out-of-network emergency physician for amounts that insurers will not cover, when the patient goes to an in-network ED, smacks of a bait and switch. I get it that EM groups, as EMTALA-obligated providers, are at a big disadvantage when it comes to negotiating with health plans, especially when these plans apply coercive contracting pressure through the hospital C-suite. Still, one way or another, inadequate payment for EP services by plans inevitably has negative impacts on ED services at the hospital, and EM groups need to know how to make that clear to hospital administrators. I think at this point, most EM group managers understand that surprise balance billing is no longer an effective business strategy. If this had been widely recognized (or accepted) five years ago, ACEP might have had a better shot at establishing a charge-based OON benefit standard for EM services in exchange for abandoning surprise balance billing. Unfortunately, articles like the one published by NBER make this goal, at the state and federal level, much harder to reach.
ACEP may have won its lawsuit against CCIIO over the unenforceable ‘greatest of three’ standard for OON benefits, though with the future enforcement of PPACA regulations in doubt under Trump, this may be a pyrrhic victory. In any case, demanding that plans reimburse OON EPs at the 80th percentile of usual and customary charges is going to generate a lot of resistance in legislative houses when legislators understand that plans would be required to pay 8 out of 10 OON EPs more than what those EPs charge. The findings in this study will only magnify the pushback. A follow-up study of surprise balance billing might well show that the practice has been disappearing since 2015; but what else might it reveal?
The more important question
Despite the faults of the study, it is disturbing to hear the allegation that certain EM groups are, or at least were, consistently encouraging up-coding, over-ordering, over-admitting, and over-charging by their physicians; and aggressively using surprise balance billing as a business strategy, all with the encouragement of their hospitals. One suggestion is that public or private equity ownership of these outsourcing companies plays a role here. There are always going to be outliers in medical practice and medical group business practices; but this study, however biased, of 13 million claims implies that the outliers may be way out there. Parts of the FAIR Health database certainly show wide variation in charges for EM services, and stories abound of hospital CEO’s demanding higher admission rates from their EDs. The issue that may be more important than balance billing is: are the other revenue enhancing practices alleged in this study real, and do they persist? Since its inception, the specialty of EM has been touting the role of EPs in reducing unnecessary inpatient admissions; of being good stewards of health care resources; of having excellent claims coding compliance programs; of wearing the white hat with a ‘no shirt, no shoes, no problem’ motto; and of being, first and foremost, advocates for patients. How are EM groups and their physicians who rely on up-coding, over-ordering, over-charging, and over-admitting to maintain revenues going to be able to adapt as more and more hospitals go at risk for the cost of care in their facilities? What does the House of Emergency Medicine do if mounting evidence suggests that even some of these allegations are true, and these practices continue?