TMA Opposes CSHB 2360 – Price Upfront or Forfeit Fee

TMA Testimony by David Bryant, MD

House Insurance Committee
Committee Substitute House Bill 2360
April 16, 2013

Good afternoon, Chairman Smithee and members of the committee. My name is David Bryant. I’m a practicing anesthesiologist in Dallas. I’m also chair of the Texas Society of Anesthesiologists (TSA) Economics Committee and a partner in Pinnacle Anesthesia. On behalf of the Texas Medical Association’s (TMA’s) 47,000 physicians and medical students and the more than 3,000 TSA members, I would like to thank the chair and committee members for the opportunity to respectfully testify today in opposition to the Committee Substitute for House Bill 2360 by Representative Greg Bonnen.

The medical community has had several conversations with Representative Bonnen about requiring health care price disclosures or amounts before we deliver medical services. Based on several conversations we have had with Representative Bonnen, we discussed concerns regarding the administrative complexities associated with posting amounts and provision of estimates under threat of penalty. 

Our concerns with this substitute are similar to those we presented in TMA testimony on House Bill 2838 by Chairman Smithee on April 2nd.  Our opposition is not to transparency in general or to the disclosure of a quote or estimate. Rather, we are concerned about the impracticality of compliance in some circumstances and the impossibility of compliance in others without required actions by other health care stakeholders. TMA has policy supporting transparency. However, we can’t support approaches that are administratively burdensome, or require forfeiture of funds or of payment for noncompliance — especially when it is impossible to foresee or predict in advance all the medical services that a patient may need, not only by me as an anesthesiologist, but by other  physicians as well.

As stated in my previous testimony, we support legislation similar to the spirit of Sec. 1470.006. Required Disclosure of Payment and Compensation Terms. This section makes transparent and available to physicians and health care providers the payment and compensation information necessary to permit them to effectively evaluate the offer on the table.  Without this requirement on the health care contractor, it would then be impossible to hold a physician or health care provider accountable for the provision of an estimate and then subsequent forfeiture of any payment due but not foreseen in the estimate, including applicable deductibles, copays, and coinsurance.

New Sec. 118.002 entitled “Applicability” appears to allow other health care providers the choice to disclose or not disclose.  Physicians are not permitted that choice and must disclose prices.  However, the committee substitute allows for the forfeiture of consumer payments regardless of whether or not one voluntarily elects to disclose or not disclose.  So in effect, everyone must disclose because anyone who fails to disclose cannot recover a payment from the consumer. Physicians and health care providers should be afforded the flexibility to disclose or not disclose without penalty.

Even more troubling is that we believe there is an unintended consequence with the way the committee substitute has structured the forfeiture penalty.  Essentially, if a physician or health care provider does not disclose prices in any form, this law permits, even requires, the waiver of co-pays and deductibles.  A health care provider could tell a patient that they are purposefully not disclosing their price so that whatever the insurer ultimately pays will satisfy payment of the service.  The waiver of co-pays and deductibles under current law is generally not permitted and certainly not permitted to solicit patients to use a particular physician or health care provider.  The penalties under this committee substitute places in statute the allowance of a previously prohibited solicitation activity. 

Sec. 118.003 Disclosure of Health Care Prices of the substitute requires disclosure to the consumer the price of a health care service or a health care good before the commencement of the service or transfer of the good, including a drug or device. TMA is concerned that there is no guidance or definition of what is meant by “price”, which leads to uncertainty in terms of compliance.  .

What I do know is, my price is the charge I submit on the claim to various payers.  That charge is the same for the same service regardless of the payer. The payment I receive will be vastly different and is largely determined by the benefit design of the insurance coverage purchased by the patient; my contract rate if I am in-network; or if I am out-of-network, what the plan decides to pay.

The substitute REQUIRES a physician to disclose to the patient the price for the service prior to the commencement of the service.  It appears the way this is written, physicians must know in advance who they will be providing services to and provide that price in writing prior to services rendered, otherwise the physician will forfeit any payment that would be the patient’s responsibility, which could be all or a portion of the payment not made by the plan.  The only alternative left is for a physician to post on the Internet, ALL of his or her “prices”, whatever that number of services that may be for that practice.  Not all physicians have a web page.

Absent posting every possible procedure and its price on the Internet, the substitute as written seems to dismiss the immediacy that is at times present even in “routine,” planned procedures.  For example:  I may have discussed and quoted a price for an epidural and then at the time of the surgery, a circumstance arises that calls for total general anesthesia.  The substitute as written would disallow me to bill and collect for that unforeseen service based on any initial price quote previously provided to the patient.

As an anesthesiologist, I could not always comply with the provision of a written quote prior to the commencement of delivery of the service.  For example, on any given day, I may be pulled by the OR supervisor to administer anesthesia on a patient I have not previously met or had the opportunity to discuss price quotes.  Plus a quote provided the patient, may have been done by a completely different anesthesia group.  In addition, the substitute does not allow for exceptions in emergency situations. 

Possible Alternatives for Consideration
If the intent of this legislation is to make transparent the influences of the various amounts paid and then charged for health care services delivered, there are some alternatives that could be considered. These alternatives will at least begin to test how well and how often consumers actually compare and select health care providers prior to seeking health care as well as begin to show to what extent premiums are being used for provider payments, the amount a health care contractor is willing to pay versus the prevailing charge for the service in the market. TMA offers the following for legislative consideration:

  1. Voluntary posting of charges by health care providers
    Allow physicians and other health care providers to voluntarily disclose, without penalty, threat of discipline or forfeiture of payment, at least 25 services, supplies, or health care goods of their choosing, with their charges. These can be disclosed as a list in any reasonable manner they so choose.
  2. Protections for posting of charges
    To incentivize physicians and other health care providers to participate in the disclosure in (1.) above, provide in legislation antitrust protections for those physicians and other health care providers who voluntarily disclose 25 or more services, supplies, or health care goods. In addition, the legislation should be clear that any posting does not create a cause of action or a standard of care, obligation, or duty that provides a basis for a cause of action.
  3. Hold Harmless Contract Provisions Not Applicable
    Physicians and other health care providers would be allowed to collect the difference between the contract amount paid by the health care contractor and the voluntarily posted charges. By removing the “hold harmless” provisions in place today for insured patients, it will begin to make transparent the disparity between what is being charged by the health care provider and what is actually being paid by their health care contractor. The removal of the hold harmless protection for at least the voluntarily disclosed procedures will begin to allow an insured consumer to evaluate if their premium payment is really purchasing anything on their behalf.
  4. Agreed Upon Patient Payment Plan
    Testimony a few weeks ago in front of this committee told of unexpected medical debt and how it could ruin a consumer’s credit rating.  To assist patients with payment of a medical debt and lessen the likelihood of potential harm to their credit rating, legislation should be considered requiring ALL types of licensed health care providers to discuss and offer an agreed to payment plan between the patient and the health care provider.  For balance amounts $1000 or greater, after any deductibles, copayments or co-insurance  have been met, a physician or health care provider cannot report a patient to a consumer credit agency provided that the patient complies with the provisions of the agreed upon payment plan. However, if the patient fails to honor the terms of the payment plan, the provider can take necessary collection and reporting actions.

Chairman Smithee and members of the committee, thank you again for allowing me to testify today. We know some of our alternatives recommendations are unique, but they also illustrate another approach for making transparent how both premium and health care dollars are being spent in the market. I would be happy to answer any questions.

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