March 13, 2019 Honorable Bill MD. The Honorable Tom Carper United States Senator United States Senator 520 Hart Senate Office Building 513 Hart Senate Office Building Washington, DC 20510 Washington, DC 25010 Honorable Todd Young Honorable Lisa Murkowskl United States Senator United States Senator 400 Russeh Senate Office Building 522 Hart Senate Office Building Washington, DC 20510 Washington, DC 20510 Honorable Michael F. Bennet Honorable Margaret Wood Hassan United States Senator United States Senator 261 Russell Senate Office Building 330 Hart Senate Office Building Washington, DC 20510 Washington, DC 20510 Re: Bl-Partisan Workgroup?s Request for Data and Information on Surprise Medical Billing Dear Senators Cassidy, Bennet, Carper, Young, Murkowskl and Hassan: On behalf of TeamHeaith and nearly 6,000 affiliated practicing physicians providing emergency department medical services to over 16 million patients per year km 39 states across the country, representing approximately 12% of the total US emergency department visits,l I'd like to take this opportunity to thank you for your workgroup' efforts in developing a comprehensive legblative solution to protect patients from surprise medical billing. As part of your workgroup's recent request to stakeholders seeking data and information to assist you in your efforts to pass meaningful surprise billing legislation, please accept this letter to supplement the narrative which the American College of Emergency Physicians (ACEP) submitted to your office on February 22, 2019. We submit this letter to you to document several Important factors that contribute to out-of-network balance and surprise billing in the emergency department. Balance Biking for TeamHeaith is a Contract Leveraging Tool and Not a Source of Revenue Balance billing yields immaterial revenue for TeamHeaith and is not performed with the objective of enhancing revenue. Rather, for TeamHeaith and for emergency medicine providers as a whole. balance billing is our only available source of contract negotiating leverage. in 2017, TeamHeaith balance billed 0.16% (16 BPS) of the patients who presented in our emergency departments. See the table below for 2017 frequency. Payer Type Balance Bl_ill_ng Freque? All Payers _0.1696 All Commercial 7?15? 0ut-of~Network Commercial 3.57% The average balance billed amount is $529, which excludes patient cost sharing amounts co-payments, co-insurance and deductibles). However, only 30% of the patients we balance billed actually remitted a full or partial payment for such amount. In aggregate, TeamHealth receives just 0.08% (8 BPS) of our commercial fee- for-service collections from balance billed amounts. Much of the public narrative and patient dissatisfaction results from a misunderstanding of health plan benefit design. The problem of surprise billing is often an issue of surprise lack of coverage. Our data indicates commercial patients are 9 times more likely to receive a bill greater than $750 that is the result of their copayment, co-insurance or deductible cost-sharing obligation as opposed to their receipt of an actual out-of- network balance bill. Escalating Bad Debt For 2016, TeamHealth billed commercially insured patients for co-payments, co-insurance and deductible balances under their plan bene?ts in the total amount of $237 million and successfully collected $98 million, for a yield of 41%. The balance of $139 million represented bad debt for these patients and equated to a 10.7% shortfall in our overall commercial fee-for-service collections. This uncollectible amount reflected in the commercially insured population is rising each year and represents a direct cost shift from insurers and employers to providers. Therefore, we ask you to require insurers to ful?ll their true role as the financial intermediary and insurer of health care services and remit in full their negotiated balances. Deferring patient collections to clinicians ultimately positions TeamHealth as the debt collector while ultimately interfering in the trusted relationship between patients and providers. Separately, uninsured patients account for 16% of our volume and that percentage has been steadily rising during recent years.1 For 2016, we treated 2.5 million uninsured patients and collected $85 million, for a collection rate of representing an average yield of $34 per patient. Even at Medicare rates, our uninsured bad debt represents an annual loss of revenue of $279 million. Economics of Emergency Medicine and Reliance on Commercial Insurance To fully understand the economic model associated with the delivery of emergency care, it is important to recognize that nearly 3 in 4 patients who visit an emergency department are either uninsured or carry fixed- rate government sponsored insurance that has not appropriately kept up with inflation or other factors that support the cost for delivering care. As referenced in the chart below, 74% of TeamHealth's emergency department patient encounters are reimbursed below our average cost of $150 per encounter, leaving the remaining commercial population with the responsibility of cross-subsidizing government sponsored reimbursement and uninsured patient populations. Rural and indigent markets with proportionately lower commercial coverage are by definition unsustainable without some form of subsidy payment from the hospital. Payer Percentage of Overall Volume Avg. Collection Amount (Per Patient Visit) Medicare 25% $145 Medicaid 33% $75 Uninsured 16% $34 7 7 Commercial 26% $350 Unlike primary care and specialty providers who deliver elective and/or scheduled care, and even urgent care centers, emergency departments cannot choose their patients, and must staff their facilities with qualified medical professionals, 24 hours a day, 7 days a week. Out-of-Network Reimbursement is Declining insurers are unilaterally reducing out-of?network reimbursement. This payer behavior increases the potential for increased balance billing frequency and for a higher patient balance billed amount. Prohibiting balance billing will only embolden insurers unless there are sufficient provider protections in place, such as a defined out-of-network payment standard. The table below shows a multi-year trend of allowables. It also illustrates that out-of-network reimbursement is now lower than in-network reimbursement, which provides an incentive for payers to terminate contracts and/or refuse to negotiate in good faith for in- network contracts. Muiti-Year Trend of Allowables 2015 2016 2017 2018 In Network Commercial $492 $513 $575 $587 96 Medicare 36596 37896 42096 42596 Out-of-Network Commercial $578 $528 $482 $429 96 Medicare 44196 38996 34996 30696 All aces Claims 3923;? $235 $254 $262 96 Medicare 17596 17696 18796 19296 All Private insurers Must Be Part of the Solution The table above also illustrates that any solution to balance billing must be applied to all categories of payers. Absent this, exempted insurers would have unequal standing in the market. Any legislation must cover the entire private insurance market. Additionally, we find that market-driven contract rates are further inhibited when there is no meaningful state regulation in effect that mandates honoring of a patient?s Assignment of Benefits.? In these situations, an insurer can process the claim and remit the amounts to the patient instead of the provider, forcing the provider to collect the remitted payment from the patient in addition to any patient cost sharing amounts. A comprehensive solution to protecting patients from large bills and removing them from the provider/insurer transaction would require insurers to honor the patient?s assignment of benefits which must also be applied in the states and federally for all out-of-network situations. Out of Network Reimbursement is Often Arbitrary Insurer adjudication of claims is unpredictable and varies widely, due to benefit plan design and changing payer behavior. The table below illustrates that payers adjudicate certain claims at or near Medicare rates and other claims at a high percentage of charges. However, aggressive payer behavior is shifting the distribution of claim adjudication in their favor. A defined payment standard is necessary to protect providers from unilateral insurer changes in reimbursement. Distribution of Allowable - Ali OON 96 of Medicare 2015 2016 2017 2018 10096 - 19996 2396 2696 3196 4596 20096 - 29996 2596 2496 2096 1196 30096 - 39996 896 896 696 696 40096 - 49996 1196 996 896 796 50096 3296 3396 _3596 3196 Teaml-lealth Supports the Cassidy Plan TeamHealth endorses a meaningful, comprehensive national solution. We follow your lead and support your working draft legislation, "Protecting Patients from Surprise Medical Bills Act? (aka the ?Cassidy Plan?) which calls for a defined usual, customary and reasonable (UCR) out-of-network payment amount. We support your working draft's proposal to adopt 12596 of the median allowed amount as determined by a ?htt rou health law blications aba health esourc 015- nationally recognized independent benchmarking database FairHealth Allowed Benchmarking Database Tool) as the basis for defining UCR. We recognize that this will result in short~term disruption to TeamHealth, but we believe the patient benefits outwe'gh the provider and insurer disadvantages. To effectuate a viable national solution, TeamHealth also recommends the implementation of a: ceiling on patient out-of?pocket cost-sharing for emergency care; (ii) a nationally imposed assignment of bene?ts provision; and stipulation requiring insurers and payers to collect patient out-of-pocket cost-sharing amounts from their insureds, which mitigates provider bad debt losses. In closing, we propose for your consideration an enhanced Cassidy Plan which creates: Interim Direct Reimbursement (IDR) - requiring health plans to remit an Interim Direct Reimbursement payment to the out-of-network provider at not less than 125% of the average allowed amount in accordance with the Fairi-lealth Benchmarking Database for Allowed Amounts,3 based on a base year of 2017, which shall then be adjusted annually for CPI inflationaryfactors, including geography and specialty; insurer Reimbursement that Includes the Patient Cost Sharing Amount - the payment remitted directly to the provider must also include the patient cost-sharing obligation, including deductibles and co- insurance, which the health plan would then collect from the patient or employer. This removes the provider from the role of patient debt collector and protects the provider from the increasing cost shift; Cap on Patient Cost-Sharing for Emergency Care at $1,000 a per incident patient cost-sharing cap of $1,000, speci?c to and exclusively limited to all emergency care, for both professional and facility care rendered during the emergency incident (as defined by which shall be paired with a honoring of the patient's assignment of benefits, irrespective of in or out-of-network status.; and Baseball Style Alternative Di5pute Resolution (ADR) - available to both payers and providers to provide either with a cost-effective mechanism to challenge the reasonableness of the Interim Direct Payment. It shall apply to enrollees in self-funded plans (ERISA) as well as state regulated fully-insured plans, if such state has not implemented an alternative dispute resolution program with a defined out-of-network payment standard. i believe your work is of utmost importance and must achieve a comprehensive solution that simultaneously protects patients and preserves the ?nancial health and sustainability of the emergency medical delivery system. Your draft legislation acknowledges the negative and harmful implications that would occur by de- coupling commerciai insurance?s cross-subsidization of emergency care from any balance billing solution while failing to address underfunded government sources of reimbursement, bad debt and the uninsured. Please do not hesitate to reach out to me at any time. I can be reached at (865) 293-5300 and i would be happy to travel to your office in Washington, DC to meet in person. Very truly yours, Leif Murphy President Chief Executive Officer 3 - uscode ex 4 1395dd