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CEO Message

Protecting Patients, Avoiding Rate Setting

Over the past several weeks, as the 2019 legislative session has kicked into high gear and the political realities for some of our top priorities have become clear, we’ve begun to hone our positions on hot-button issues.

Among the priority issues is an Assembly bill nominally purported to eliminate the practice of hospital “surprise” billing (this issue is also getting attention at the federal level, with bipartisan proposals in the House and Senate to prevent surprise billing surfacing). That’s a goal that hospitals support; patients should not be worried about things like out-of-pocket costs, their network status, or prior authorization when they are ill or injured.

But a section of this bill proposes something else entirely: the insertion of a state-determined rate-setting mechanism into the health care financing system. Specifically, when medical bills are unpaid, this proposal would allow insurance companies to pay a “default” rate that, in most cases, does not cover the actual cost of care.

As stewards of your hospitals and the resources needed to care for patients and communities, you understand well the significant problems this would create, not only in terms of a direct reduction to resources, but also the long-term problem of generating an unfair advantage for insurance companies when negotiating rates with hospitals.

There are other concerns with this bill, namely that the ban on balance billing would apply to post-stabilization services and that it fails to address conflicts with federal law for patients covered by ERISA plans. While each of those creates its own set of problems, the greatest concern at this time is that establishing a “default” rate for certain unpaid bills is tantamount to state rate setting.

Yesterday, the bill passed a significant procedural step. That’s why our focus going forward will be on eliminating the “default” rate section of the bill while retaining the important patient protections it affords. In doing so, we aim to blend smart policy and savvy politics to find the path to the most favorable outcome for hospitals.

– Carmela