Clarifying the Debate

Myth: TeamHealth is actively lobbying to maintain the status quo.

Facts: TeamHealth has been actively engaged with federal lawmakers to develop a policy solution that protects patients and eliminates surprise medical billing.

• More than two-thirds of Americans worry about receiving a surprise medical bill, whether in the form of high deductibles and co-insurance, or out-of-network care resulting in unexpected balance bills. This leads many to delay and avoid medical care. TeamHealth believes that patients deserve better, and there are legitimate solutions that ensure patients can receive critical medical care when they need it.
• TeamHealth and other notable emergency medical care providers unequivocally want a solution to surprise medical billing. However, we object to federal legislative bills currently under consideration that claims to protect patients by creating an unsustainable rate setting standard that will alter the necessary reimbursement equilibrium that exists today. That equilibrium is needed to off-set or cross-subsidize uncompensated indigent care and underfunded Medicaid reimbursement.
• These two prominent federal bills (S.1895 and H.R. 3630) offer misguided solutions to protect patients from surprise medical billing but do so in a manner that will impose a median in-network rate on out-of-network providers. Rate setting will have devastating effects on the delivery of emergency care. Basing out-of-network reimbursement rates on a median in-network rate gives insurers the ability to drive down in and out-of-network costs by cancelling or drastically reducing in-network contracts.
• Recently, the Congressional Budget Office (CBO) released a study on the cost savings available to the federal government with the passage of S.1895. TeamHealth believes the CBO study fails to address many unintended consequences that are sure to result from the passage of this legislation.
  • The CBO study and associated projections fail to take into consideration many important facets of the underlying consequences of reduced clinician reimbursement while fundamentally changing the narrative on this subject.
  • A genuine effort to protect patients from the effects of surprise medical billing has now become an opportunity to reset clinician compensation in order to reduce federal spending.
  • TeamHealth supports reduced federal spending and lowering the overall costs of healthcare. However, that is a comprehensive effort that cannot be quickly addressed in one fell swoop through the passage of legislation to address surprise medical billing.
• According to a recent study published by NDP Analytics¹, there are a number of unintended consequences of the proposed House and Senate rate setting legislation:
  • Number of available clinicians will decrease
  • Patient quality will be reduced
  • Slight reduction in healthcare cost expenditures (reducing clinician compensation by 20 – 30%) cannot reliably be expected to translate in a slight reduction in health insurance premiums
  • Due to a decrease in clinicians, overall healthcare expenditures will ultimately rise
• Additionally, the NDP study asserts that CBO has failed to account for various factors that will arise with the loss of clinician compensation sought after in the Senate bill. It ultimately finds, “surprise medical bills … should be settled between insurers and health care service providers. There are different approaches to end surprise medical bills [without reducing physician compensation to unsustainable levels]. Policy makers and regulators should consider an approach to minimize the economic unintended consequences in the short and long-term for the patients and providers.”

¹NDP Analytics, “An Assessment of the CBO Cost Estimate of S.1895: The Unintended Economic Consequences of the Proposed Healthcare Price Control System”, Nam D. Pham, Ph.D., Mary Donovan, September 2019

• In turn, alternative legislation offered in the House (H.R. 3502) has the ability to achieve the desired results. H.R 3502 protects patients from surprise medical billing, ensures that patients are assessed at their in-network benefits only and ultimately ensures providers are reimbursed at a “commercially reasonable” standard through a direct interim payment coupled with IDR.

Myth: Emergency medicine groups hold enormous market power and use out-of-network reimbursement as a way to generate unjust revenue.

Facts: TeamHealth doesn't surprise bill and receives no revenue from such actions. Talk of surprise billing being lucrative is false and motivated by insurers attempting to leverage legislation to boost their own profits.

• We object to the so-called solutions that will have catastrophic underlying consequences. Certain federal bills will result in a “money grab” by insurers to reduce commercial reimbursement for both in and out-of-network care by as much as 20%. This will undermine emergency departments and completely disable our ability to deliver care in rural and indigent communities.
  • Out-of-network reimbursement is declining; commercial insurers are unilaterally reducing out-of-network payments for emergency services resulting in reimbursement rates that are below contracted in-network rates. A defined reimbursement payment standard is needed to protect both patients and providers and sustain the emergency medical delivery system.

Go Deeper

TeamHealth's Multi-Trend of Declining Out-of-Network Reimbursement

Myth: TeamHealth relies on surprise medical billing and excessively balance bills patients.

Fact: An ever-increasing number of insurers and payers request that TeamHealth send balance bills to their members, which would serve insurers well by reducing future utilization and spending. Despite this request, we refuse. Our dispute on reimbursement is with insurers and third-party payers, not with patients.

• We have supported a no balance billing policy long before it became a prominent political and policy statement.
• Payers have invoked an unreasonable stalemate in this debate by shifting it from a genuine attempt at protecting patients from the effects of surprise medical billing to an unreasonable attempt to reduce provider reimbursement.
• TeamHealth is opposed to this effort and its accompanying legislative proposals. However, that position does not alter in anyway our support for our federal prohibition on surprise medical billing/balance billing.

Myth: Emergency medicine providers have used surprise medical billing as a stick to coerce payers to reimburse them more than the value of their services and consequently allowed private investors to generate significant profits through this practice.

Studies recently published on the subject, and cited in media reports, including from USC-Brookings, generally state that emergency clinicians can remain out of network without losing volume because patients do not choose their emergency provider. This strong outside option maintains clinicians’ bargaining power with insurers. The studies in turn call for a median in-network rate, which in effect, resets the market.

Facts: Commercial insurance reimbursement does not exist in a vacuum. The studies fail to reflect the cost of treating the uninsured, Medicaid recipients and indigent populations.

• In fact, the reimbursement statistics quoted are only representative of one unnamed payer source who has selectively chosen isolated examples to identify commercial reimbursement patterns and suggest that provider manipulation is in play. Further, neither study takes into account the aggregated weighted reimbursement formularies reflected in this FAQ resource.
• TeamHealth has contacted both study authors seeking an opportunity to share our data that demonstrates aggregated reimbursements as opposed to isolated premium commercial reimbursement when used in a cost-shifting, cross-subsidized environment necessary to fund emergency care.
• The Yale Study shows that TeamHealth is out-of-network for 13% of its encounters and not that a balance bill is ever generated. It is a reflection of inadequate rates being offered for network participation and not a measure of surprise billing.

The American College of Emergency Medicine (ACEP) has recently published a comprehensive discussion on the shortcomings of a separately released study appearing in the Journal of the American Medical Association (JAMA). Its authors state they are “especially concerned that research on surprise billing recently published … is fundamentally flawed.” ”

Myth: Emergency care is often billed at excessive levels and/or are unsubstantiated.

Fact: Despite the pressures and costs to provide emergency care, emergency medicine groups typically yield margins lower than 10%. Emergency care is complicated, unique and specialized, but despite its complexity, the cost for staffing emergency department provider care is remarkably low.

• While it is expensive to provide qualified and trained emergency medicine clinicians to all patients, regardless of a patient’s ability to pay for that care, and to do so 24 hours a day/ 7 days per week, 365 days per year, the average cost to provide clinicians in an emergency department is $150 per encounter.

Myth: Emergency care is turn-key, with a built-in commercially insured patient population that yields excessive margins for the providers of care and their investor partners.

Fact: Seventy-Four (74%) percent of emergency department encounters are reimbursed below cost. Commercial insurers pay higher rates for ED care when compared to economically disadvantaged individuals who pay less or nothing. Without the premium payments, the system collapses for most.

• Emergency care requires cross-subsidization from higher levels of commercial insurance as a means to sustain the delivery system to offset losses attributable to government funded payer sources (Medicare and Medicaid) and the uncompensated components of care (uninsured and indigent).

Absent this, government back-stop spending is required to off-set losses, which are most acutely felt in rural and indigent communities. This backstop would require further government spending, making optimal commercial reimbursement essential.

Go Deeper

For TeamHealth, a typical ED environment is reflected below:

Myth: Emergency rooms are unaffected by uninsured patients due to their business structure.

Facts: The uninsured patient population greatly affects TeamHealth’s ability to deliver care.

• In 2016, uninsured patients accounted for 16% of TeamHealth’s overall volume of care delivered in the emergency department, representing 5 million patients; uninsured patients accounted for 16% of the overall volume of emergency department care (23.3 million patients).
  • Unlike hospitals, TeamHealth receives no government funds to provide care to the uninsured. Commercial reimbursement is essential to funding the care for those less fortunate.
• While the ACA made meaningful in-roads in reducing the number of uninsured, it was geographically skewed with limited impact in many regional markets particularly in many large population areas such as Texas, Florida and Tennessee, which have high uninsured populations, exacerbated by their state legislatures’ decisions to waive their opportunity to access federal funding to expand their eligible Medicaid populations.
• The 4% of physicians who staff emergency departments in the US manage 50% of all acute care provided to Medicaid and CHIP beneficiaries and 66% of the acute care provided to the uninsured. ¹
  • ¹https://www.rand.org/pubs/research_reports/RR280.html
• Unlike hospitals, emergency medicine clinicians do not have access to federal Medicare disproportionate share hospital (DSH) payments or the ability to draw from state/federal low-income pool (LIP) funding to offset bad debt attributable to uncompensated care.
• Rural hospitals are already failing; further pressures will have devastating effects in rural and economically disadvantaged communities.
• The effect of the uninsured cannot be overlooked; any national surprise billing solution must recognize the impact the uninsured have on the delivery system as whole.

Myth: Emergency departments have no collection risks nor anything that would impede their ability to generate profits.

Fact: Emergency medical providers must treat all patients and can’t ask about the patient’s insurance or collect copays in advance of treatment – even if they haven’t paid prior bills. The simple truth is we must rely upon payments from private insurers to adequately administer emergency medical care.

• Bad debt is an uncollected amount that remains outstanding for more than 180 days, either owed by the insurer or the patient. For the patient, it reflects the amounts owed for deductibles and co-insurance, which increasingly is a greater portion of the insurer’s determined allowed amount.
• As of December 2018, TeamHealth received, on average, 81% of the adjudicated allowed amount from the insurer and was responsible for the collection of the remaining 19% of the unpaid balance from patients.
• The average share of the patient’s cost-sharing balance is increasing annually by +7%.
• TeamHealth collected $98M from patient cost-sharing against a total outstanding after-insurance balance of $237M, reflecting a yield of 41%.
• For TeamHealth, after-insurance bad debt accounts for 7% of our total commercial fee-for-service revenue.
• TeamHealth’s bad debt yield for uninsured care when correlated to Medicare, represents an annual loss of revenue of $279 million
• The uninsured collection yield for TeamHealth per patient was 3.7%, or $34 per encounter (90% of uninsured patients pay zero).

Go Deeper

TeamHealth's uncollectible costs and component of bad debt:

Myth: Hospitals transfer revenue to emergency clinicians to offset their losses.

Facts: Emergency medicine groups must secure higher reimbursement from the commercial insurance market to offset the amounts that are received from underfunded and uncompensated sources, which are most acutely felt in rural and in disadvantaged communities that have a disproportionate share of indigent, uninsured and Medicaid patients.

• Sustaining commercial reimbursement is vital to the continued viability of the emergency medical delivery system. It is the only means currently available for avoiding increased government spending.
• Emergency medicine reimbursement rates are often grossly over-reported and reflect nowhere close to the misstated amounts portrayed by insurer stakeholders in media reports.
• Insurers regularly contract for emergency medicine services with providers at 3.5 to 4x of Medicare, but when aggregated by all payer sources, commercial reimbursement is generally 2.3x Medicare.
• Commercial insurers historically have recognized a social responsibility to build a premium into emergency medicine reimbursement to reflect losses attributable to rendering care to the uninsured/indigent and underfunded Medicaid population.
• Insurers have shifted an increasing amount of payment risk to consumers in the form of high deductible benefit plans resulting in continually decreasing amount that the insurer actually remits.
• Using a highly inflated reimbursement number attributed to emergency clinicians as a whole is disingenuous; when factoring in all sources of care and the care delivered to the uninsured, reimbursement is roughly 1.1 to 1.3x Medicare.
• Federal funding for disproportionate care (DSF) and low-income pool (LIP) was designed to offset hospital losses; there is no existing mechanism to offset clinician losses attributable to this same population.
• Many rural hospitals are recipients of federal funding to off-set the losses they incur in servicing these communities, but hospitals are unable or unwilling to transfer that federal funding to emergency clinicians to offset those losses. No such similar program exists for the delivery of professional services.

Go Deeper

 Profit/Loss Per Encounter Under Current Reimbursement Trends

• Unscrupulous shared savings tactics exist. It is common for certain payers who serve as administrator service organizations (ASOs) of self-insured employer-based benefit plans to terminate in-network provider contracts as a means to manipulate median in-network contract rates in anticipation of favorable surprise medical billing legislation.
• Further, these actions are also a means for implementing a profiteering pricing scheme in collusion with various third-party repricing organizations. As illustrated below, the scheme does not result in any material saving for the employer’s self-insured benefit plan (ERISA).
• Instead, it removes thousands of contracted, in-network providers to out-of-network status, and in the process exposes the employer’s members to significant risk of balanced billing as providers seek to stay whole with their prior contracted rate levels.
• What makes this practice even more undermined, is that it does not offer savings to employers by virtue of reduced employer costs; these savings are shared internally between the ASO and the third-party repricing entity.

Out-of-Network Shared Savings Model between ASO and Third-Party Repricing Entity.

Illustration Purposes Only – Emergency Medicine High Acuity (E/M Code 99285)