After California surprise billing law, fewer specialty services were out-of-network

By | September 28, 2019

Dive Brief:

  • After a surprise billing ban went into effect in California, the share of services delivered out-of-network by affected specialties declined by 17%, according to a new analysis by the USC-Brookings Schaeffer Initiative for Health Policy.
  • The drop was primarily focused in the third quarter of 2017, immediately after the law was implemented. The change fluctuated among specialties. The smallest decline was 15% in pathology services and the largest was 31% for neonatal-perinatal medicine.
  • Researchers did not find a similar reduction in out-of-network emergency services, which weren’t included in the law. They cautioned, however, that limited data and lack of other available research should limit assumptions of causation.

Dive Insight:

The findings add to a pile of growing research on surprise billing as more states consider taking on the issue and federal lawmakers also pursue legislation banning the practice. On Thursday, a new coalition of patient advocacy and labor groups launched the No Surprises campaign to put pressure on Congress.

Major provider groups have lobbied against proposals that set a benchmark rate for out-of-network services as favored by many health policy researchers. They argue it would be a slippery slope toward all-out rate setting and say it would give providers too much leverage to exclude providers from networks.

Deep-pocketed private equity firms have backed their fight, bankrolling an ad blitz to oppose some of the legislative attempts to curb surprise billing. Congressional leaders recently said they are investigating the role of the PE companies.

Amid the intense opposition, federal legislation has stalled. Congress is also dealing with the recently announced impeachment inquiry and has a two-week recess scheduled to begin Monday. Analysts have said that if a bill doesn’t pass by the end of the year, the proposals will be essentially dead in the water as the 2020 election draws nearer.

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Two key policy mechanisms for a ban on surprise billing are included in legislation introduced in Congress so far. Providers back an arbitration clause while payers favor a set rate, which is the approach California took.

One of the Brookings researchers wrote on Twitter the new report “strongly contradicts” the California Hospital Association’s claims the law is destroying provider networks. “The analysis is observational in nature, but it’s interesting to see such a pronounced shift in-network for each of the affected specialties, precisely timed to the implementation of CA’s law,” Loren Adler, associate director of the health policy initiative, said.

Previous research from another of the researchers found evidence of an additional change after enforcement of the California law began. It showed stakeholders viewed the law as pushing leverage toward payers in contract negotiations.

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