Good Faith Price Estimates Hinge on Health Insurers

TMA Testimony by David Bryant, MD

House Insurance Committee on Substitute House Bill 2700
April 16, 2013

Good afternoon, Chairman Smithee and members of the committee. My name is David Bryant. I am a practicing anesthesiologist in Dallas. I am 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 CSHB 2700 by Rep. Greg Bonnen.

As you have heard in earlier testimony presented on behalf of TMA, the requirement for the provision of a good-faith estimate by a physician or health care provider about the actual expected payments hinges on the ability to obtain that information from health plans.  This committee substitute has no such requirement. 

Under current law, for out-of-network services, as an anesthesiologist, I am required to provide an “estimate” upon request to an uninsured patient, provided the patient is proactive enough to request one. Unlike CSHB 2700 before you today, current law does not require me to provide an estimate to each and every patient.  In addition, current law requires an insured patient to inquire of their health plan, and the health plan to provide, both what the health plan will pay and what the patient’s out-of-pocket payment responsibility will be.

CSHB 2700 also introduces the provision of estimates to patients who are covered by Medicare, Medicaid, the Children’s Health Insurance Program, TRICARE and the Division of Workers’ Compensation (DWC).  The introduction of these programs into the mix brings a unique host of issues for health care providers whether participating or not participating in these programs.  The TRICARE and U.S. Department of Veterans Affairs government programs can be quite arcane in their benefit structure, and determining a payment under those programs requires some expertise in the specific coverage offered to those in the military or who have served in the military.  It is very unlikely that workers’ compensation companies would release any type of payment information to non-network or participating providers — and may not even acknowledge compensability when asked by a provider. As written, it would be impossible for physicians and health care providers to comply with the estimate provisions for any of the above mentioned programs in this bill as filed.

Sec. 326.155 Statement for Persons Paying Cash, Persons Receiving Charity Care and Indigent Persons is particularly challenging from an administrative perspective. It requires a health care provider to give these persons a statement of the average amount the health care provider was actually paid for a health care service or procedure by the five insurance carriers or government- sponsored programs mentioned in the previous paragraph. The intent of this extremely burdensome requirement is not entirely clear as to purpose or applicability. It also begs the question as to how physicians under a capitated arrangement would comply. If this exercise is to be used to determine an estimated amount to be collected, an unintended consequence would be a potential detrimental impact on access to care in government programs. This is because government programs often pay less than cost and will reduce the “average” that is required to be reported and possibly collected under this section.

The agreement to provide good-faith estimates on behalf of another health care provider under Sec. 326.052 further complicates the estimates required under Sec. 326.155 above and is fraught with complications.  For a facility to provide a good faith estimate on behalf of a facility-based physician, that facility must know the contract arrangements and payment policies of the physician for all possible scenarios, such as insured, uninsured, Medicare, Medicare Advantage, and charity care.

TMA has discussed, and Rep. Bonnen has acknowledged, the penalties and enforcement provisions in the bill as filed were too strident. Even in the committee substitute the penalty can still be quite large.  The penalty is $1000 per violation.  If a physician sees 40 patients in a day, and only 20 get an estimate, that is a potential penalty of $20,000 - for estimates that were not even requested (and maybe not desired). 

Again, TMA would reiterate its position that rather than offering “a stick” approach and imposing administrative penalties, that a “carrot” approach would be preferable.  We believe incentives, such as those mentioned in TMA testimony in CSHB 2360, would encourage the transparency sought in the health care market.

Chairman Smithee and members of the committee, thank you again for allowing me to testify today on CSHB 2700. I would be happy to answer any questions. 

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