The
Massachusetts Medical Society wishes to be recorded in opposition to Senate
bill 603, An Act Relating to Equitable Provider Reimbursement. The Medical
Society is firmly committed to seeking a solution to this issue, but has strong
concerns about the policies put forth in this bill.
The
Medical Society has long supported a solution that ends the situation whereby
patients receive unavoidable out-of-network bills. Any such solution must: 1)
promote greater education and transparency to prevent such billing situations
when possible; 2) completely remove patients from receiving unavoidable out-of-network
bills by holding the patient harmless and eliminating balance billing; and 3)
find an equitable and sustainable formula for the payment of services provided,
with proper safeguards to ensure fair payment in exceptional circumstances.
The
aforementioned bill fails to meet the third important criteria: the proposed
default payment formula of 100-110% of Medicare in each of these bills is an
inappropriate benchmark for payment by commercial insurers, and it would have
drastic effects on the sustainability of many physician practices and health
care institutions, ultimately jeopardizing access to care in many underserved
areas. The physician community opposes the use of the Medicare fee as the default
out-of-network physician reimbursement in legislative proposals.
Medicare
is not currently and was never intended to be a broadly applicable index for
commercial physician payment. Medicare rates are not established to represent a
valuation of professional services provided; instead, they function as a
distribution of an already limited budget of this social service program.
Further, Medicare rates differ widely across specialties as evidenced by a
study published recently in JAMA Internal Medicine that found significant
variation in the relative price of services across specialty billing
Medicare. A driving factor of this variation is that the denominator—the
rate of Medicare payment—varies significantly across specialties. For
example, a GAO report highlighted, “Medicare payments were lower than private
payments [for anesthesia] by an average of 67%.” While other specialties
may not have such wide variation, this example underscores why tying any
payment formula to Medicare is not appropriate and will have incredibly
negative impacts for certain specialties which could ultimately impede
patient’s access to quality medical care.
But the implications of an
insufficient reimbursement strategy extend beyond just underpayment for the
current sliver of unavoidable out-of-network care. If a default rate is
substantially below market value, insurers would have little incentive to
negotiate in good faith with physician practices, knowing that any resulting
out-of-network scenario would be reimbursed at a low default out-of-network rate. Having this insufficient
reimbursement rate be an expanding portion of overall payments would
significantly jeopardize the sustainability of many physician practices,
threatening access to care for patients across the Commonwealth. This also has the potential for
disincentivizing physicians from practicing in Massachusetts, making recruiting
and retaining physicians increasingly difficult.
The Medical Society instead believes
that the best legislative approach includes a default formula for reimbursement
of unavoidable out-of-network care that is based upon a percentile of average
charges for a given procedure or service, in the same geographic area, as
determined by a third party, independent, transparent non-profit data base such
as Fair Health. This would promote a sustainable, transparent solution that
fairly reimburses physicians for their services.
Given the complexity of this issue,
the Medical Society supports an inclusive commission or task force, such as
that proposed by Rep. Mariano (H.3571), to look more closely at this issue. The
medical community reiterates its commitment to working with the legislature,
patient advocacy groups, and other stakeholders to see the adoption of legislation
to address out of network billing.
