The No Surprises Act, passed as part of the COVID-19 relief package, ensures patients do not receive surprise bills after out-of-network care, including hospital-based physicians such as pathologists
Consumer demand for price transparency in healthcare has been gaining support in Congress after several high-profile cases involving surprise medical billing received widespread reporting. Dark Daily covered many of these cases over the years.
Now, after initial opposition and months of legislative wrangling, organizations representing medical laboratories and clinical pathologists have expressed support for new federal legislation that aims to protect patients from surprise medical bills, including for clinical pathology and anatomic pathology services.
The new law Congress passed is known as the No Surprises Act (H.R.3630) and is part of the $900 billion COVID relief and government funding package signed by President Trump on December 27.
The law addresses the practice of “balance billing,” in which patients receive surprise bills for out-of-network medical services even when they use in-network providers. An ASCP policy statement noted that “a patient (consumer) may receive a bill for an episode of care or service they believed to be in-network and therefore covered by their insurance, but was in fact out-of-network.” This, according to the ASCP, “occurs most often in emergency situations, but specialties like pathology, radiology, and anesthesiology are affected as well.”
Most portions of the No Surprises Act take effect on January 1, 2022. The law prohibits balance billing for emergency care, air ambulance transport, or, in most cases, non-emergency care from in-network providers. Instead, if a patient unknowingly receives services from an out-of-network provider, they are liable only for co-pays and deductibles they would have paid for in-network care.
New Law Bars Pathologists from Balance Billing without Advance Patient Consent
The law permits balance billing under some circumstances, but only if the patient gives advance consent. And some specialties, including pathologists, are barred entirely from balance billing.
The law also establishes a process for determining how healthcare providers are reimbursed when a patient receives out-of-network care. The specifics of that process proved to be a major sticking point for providers. In states that have their own surprise-billing protections, payment will generally be determined by state law. Otherwise, payers and providers have 30 days to negotiate payment. If they can’t agree, payment is determined by an arbiter as part of an independent dispute resolution (IDR) process.
Early Proposal Drew Opposition
An early proposal to prohibit surprise billing drew opposition from a wide range of medical societies, including the ASCP, CAP, and the American Medical Association (AMA).
All were signatories to a July 29, 2020, letter sent to leaders of the US Senate and House of Representatives urging them to hold off from enacting surprise billing protections as part of COVID relief legislation. Though the groups agreed in principle with the need to protect patients from surprise billing, they contended that the proposed legislation leaned too heavily in favor of insurers, an ASCP news release noted.
“Legislative proposals that would dictate a set payment rate for unanticipated out-of-network care are neither market-based nor equitable, and do not account for the myriad inputs that factor into payment negotiations between insurers and providers,” the letter stated. “These proposals will only incentivize insurers to further narrow their provider networks and would also result in a massive financial windfall for insurers. As such, we oppose the setting of a payment rate in statute and are particularly concerned by proposals that would undermine hospitals and front-line caregivers during the COVID-19 pandemic.”
However, in a letter sent to the committee chairs and ranking members, the AHA asked for changes in the dispute-resolution provisions, including a prohibition on considering Medicare or Medicaid rates during arbitration. “We are concerned that the IDR process may be skewed if the arbiter is able to consider public payer reimbursement rates, which are well known to be below the cost of providing care,” the association stated. However, legislators agreed to the change after last-minute negotiations.
Dispute Resolution for Pathologists
The CAP also expressed support for the final bill. In a statement, CAP noted that “As the legislation evolved during the 116th Congress, CAP members met with their federal lawmakers to discuss the CAP’s policy priorities.
“Through the CAP’s engagement and collaboration with other physician associations, the legislation improved drastically,” the CAP stated. “Specifically, the CAP lobbied Congress to hold patients harmless, establish a fair reimbursement formula for services provided, deny insurers the ability to dictate payment, create an independent dispute resolution (IDR) process that pathologists can participate in, and require network adequacy standards for health insurers.”
As laboratory testing was identified by thousands of respondents to the University of Chicago survey as the top surprise bill, it is likely that billing and transparency in charges for clinical pathologist and anatomic pathologist will continue to be scrutinized by law makers and healthcare associations.
Sophisticated cyberattacks have already hit hospitals and healthcare networks in Oregon, California, New York, Vermont, and other states
Attention medical laboratory managers and pathology group administrators: It’s time to ramp up your cyberdefenses. The FBI, the federal Department of Health and Human Services (HHS), and the federal Cybersecurity and Infrastructure Security Agency (CISA) issued a joint advisory (AA20-302A) warning US hospitals, clinical laboratories, and other healthcare providers to prepare for impending ransomware attacks, in which cybercriminals use malware, known as ransomware, to encrypt files on victims’ computers and demand payment to restore access.
The joint advisory, titled, “Ransomware Activity Targeting the Healthcare and Public Health Sector,” states, “CISA, FBI, and HHS have credible information of an increased and imminent cybercrime threat to US hospitals and healthcare providers.” It includes technical details about the threat—which uses a type of ransomware known as Ryuk—and suggests best practices for preventing and handling attacks.
In his KrebsOnSecurity blog post, titled, “FBI, DHS, HHS Warn of Imminent, Credible Ransomware Threat Against U.S. Hospitals,” former Washington Post reporter, Brian Krebs, wrote, “On Monday, Oct. 26, KrebsOnSecurity began following up on a tip from a reliable source that an aggressive Russian cybercriminal gang known for deploying ransomware was preparing to disrupt information technology systems at hundreds of hospitals, clinics, and medical care facilities across the United States. Today, officials from the FBI and the US Department of Homeland Security hastily assembled a conference call with healthcare industry executives warning about an ‘imminent cybercrime threat to US hospitals and healthcare providers.’”
Krebs went on to reported that the threat is linked to a notorious cybercriminal gang known as UNC1878, which planned to launch the attacks against 400 healthcare facilities.
Clinical Labs, Pathology Groups at Risk Because of the Patient Data They Keep
Hackers initially gain access to organizations’ computer systems through phishing campaigns, in which users receive emails “that contain either links to malicious websites that host the malware or attachments with the malware,” the advisory states. Krebs noted that the attacks are “often unique to each victim, including everything from the Microsoft Windows executable files that get dropped on the infected hosts to the so-called ‘command and control’ servers used to transmit data between and among compromised systems.”
Charles Carmakal, SVP and Chief Technology Officer of cybersecurity firm Mandiant told Reuters, “UNC1878 is one of the most brazen, heartless, and disruptive threat actors I’ve observed over my career,” adding, “Multiple hospitals have already been significantly impacted by Ryuk ransomware and their networks have been taken offline.”
Multiple Healthcare Provider Networks Under Attack
Hospitals in Oregon, California, and New York have already been hit by the attacks, Reuters reported. “We can still watch vitals and getting imaging done, but all results are being communicated via paper only,” a doctor at one facility told Reuters, which reported that “staff could see historic records but not update those files.”
Some of the hospitals that have reportedly experienced cyberattacks include:
Threat intelligence analyst Allan Liska of US cybersecurity firm Recorded Future told Reuters, “This appears to have been a coordinated attack designed to disrupt hospitals specifically all around the country.”
He added, “While multiple ransomware attacks against healthcare providers each week have been commonplace, this is the first time we have seen six hospitals targeted in the same day by the same ransomware actor.”
An earlier ransomware attack in September targeted 250 healthcare facilities operated by Universal Health Services Inc. (UHS). A clinician at one facility reported “a high-anxiety scramble” where “medical staff could not easily see clinical laboratory results, imaging scans, medication lists, and other critical pieces of information doctors rely on to make decisions,” AP reported.
Outside of the US, a similar ransomware attack in October at a hospital in Düsseldorf, Germany, prompted a homicide investigation by German authorities after the death of a patient being transferred to another facility was linked to the attack, the BBC reported.
CISA, FBI, HHS, Advise Against Paying Ransoms
To deal with the ransomware attacks, CISA, FBI, and HHS advise against paying ransoms. “Payment does not guarantee files will be recovered,” the advisory states. “It may also embolden adversaries to target additional organizations, encourage other criminal actors to engage in the distribution of ransomware, and/or fund illicit activities.” The federal agencies advise organizations to take preventive measures and adopt plans for coping with attacks.
The advisory suggests:
Training programs for employees, including raising awareness about ransomware and phishing scams. Organizations should “ensure that employees know who to contact when they see suspicious activity or when they believe they have been a victim of a cyberattack.”
Regular backups of data and software. These should be “maintained offline or in separated networks as many ransomware variants attempt to find and delete any accessible backups.” Personnel should also test the backups.
Continuity plans in case information systems are not accessible. For example, organizations should maintain “hard copies of digital information that would be required for critical patient healthcare.”
“Without planning, provision, and implementation of continuity principles, organizations may be unable to continue operations,” the advisory states. “Evaluating continuity and capability will help identify continuity gaps. Through identifying and addressing these gaps, organizations can establish a viable continuity program that will help keep them functioning during cyberattacks or other emergencies.”
Dark Daily Publisher and Editor-in-Chief, Robert Michel, suggests that clinical laboratories and anatomic pathology groups should have their cyberdefenses assessed by security experts. “This is particularly true because the technologies and methods used by hackers change rapidly,” he said, “and if their laboratory information systems have not been assessed in the past year, then this proactive assessment could be the best insurance against an expensive ransomware attack a lab can purchase.”
July data shows some volume gains for providers since June; however, analysts say current predictions depends on progress of the COVID-19 pandemic
Clinical laboratory managers preparing strategic plans for 2020 and 2021 face a basic and key question: when and if they can expect patient volumes and associated lab test referrals to return to pre-COVID-19 pandemic levels.
Some insights into how to answer that question can be found in two separate reports. Separately, healthcare analysts from Advisory Board and Kaufman Hall explored possible COVID-19 case scenarios and implications for providers’ volumes and operating margins for the remaining months of 2020.
The Advisory Board analysts do not see a snap back to pre-pandemic volume levels happening this year. However, they do envision a gradual volume increase that has already started, they reported in “Projecting Volume Recovery through 2020.”
Patient Volumes Depend on COVID-19 Cases
With 200 experts and more than 4,500 member organizations, the Advisory Board, according to its website, “helps leaders and future leaders in the healthcare industry work smarter and faster by providing provocative insights, actionable strategies, and practical tools to support execution.”
In a Radio Advisory broadcast concerning volume outlook for 2020, Anna Yakovenko, Advisory Board Practice Manager, said there are two likely scenarios for patient volumes, each based on COVID-19 having:
An overall plateau of cases;
A potential of a second wave in advance of influenza season.
What If There’s a Second Wave of COVID-19?
The Advisory Board predicts that, even if a COVID-19 second wave occurs earlier than the traditional mid-autumn influenza outbreak, a gradual recovery for providers will still happen. “But then we think we’ll see a dip in volumes—not remotely the level of dip that we saw in March and April—but a dip nonetheless,” Yakovenko said.
In a blog post, Yakovenko cited a Moody’s Investors Service report showing healthcare systems with more patient encounters in May. She wrote that providers need to overcome three pandemic-related issues to get volumes back on track in 2020:
Patients cancelling care because they are anxious;
Loss of jobs and insurance coverage resulting in decreased care demand;
Need for safety precautions, which could result in lower efficiency.
Kaufman Hall Report: Margins Could Go as Low as -11% in Q4 2020
The second report looked at hospital finances and patient volumes. It was done by Kaufman Hall, a Chicago firm providing management consulting services and software. The analysis by Kaufman Hall, released by the American Hospital Association (AHA) titled, “The Effect of COVID-19 on Hospital Financial Health,” predicted median hospital operating margin of -3% in the second quarter (Q2) of 2020, and a possible year-end range of -1% and -11% due to COVID-19. The report noted that—even before COVID-19—hospitals had a modest median margin (money made from operations) of 3.5%.
An AHA news release describes two COVID-19 case scenarios that could affect providers’ margins:
A steady decrease in cases could see median margin of -1% by the fourth quarter of 2020.
However, Kaufman Hall’s analysts spotted signs of recovery that were evidenced in data for June to July, when operating margins improved 24% due to pent-up demand for patient services, Healthcare Dive reported.
Their analysis also showed that providers in July had boosts in discharges and surgeries due to resumption of elective procedures. Other data for the seven months ending July 31, and for the month-to-month period June to July, showed:
Operating margins fell 5% year-over-year, but rose 12% month-over-month.
Discharges were down 7% year-over-year, but up 6% month-over-month.
Emergency Department visits fell 17% compared to first seven months in 2019 and were up 10% month-over-month.
Operating Room minutes were down 15% year-to-date and up 3% month-over-month.
Inpatient and outpatient revenues (without CARES funding) are down 5% and 11%, respectively, year-to-date. Inpatient and outpatient revenues June to July increased 6% and 5%, respectively.
“Hospitals saw flat year-over-year gross operating revenue performance, continued high-per-patient expenses, and a fifth consecutive month of volumes falling below 2019 performance and below budget across most metrics. Emergency Department volumes have been hardest hit. Even, so July volumes continued to show some signs of recovery month-over-month,” the Kaufman Hall analysts wrote.
One Provider’s Financial Tale
Allina Health System in Minneapolis, Minn., experienced financial struggles but is reportedly experiencing the type of turnaround the Advisory Board and Kaufman Hall analysts predicted. Allina had an $85 million operating loss in Q2 2020, compared to $14.4 million loss in Q2 2019. But it had positive income for June, according to the Minneapolis/St. Paul Business Journal.
Clearly, the researchers studying patient volumes recognize that it is possible for patient volumes to return to pre-pandemic levels. However, a surge in the number of COVID-19 cases would obviously discourage patients from returning to get routine care and schedule elective procedures with their local hospitals. In turn, that would restrict the volume of clinical laboratory test referrals flowing into the nation’s medical laboratories.
Pathologists and medical laboratory managers should take into account these expert predictions and the supporting data in these two research reports as they plan staffing schedules and consider major purchasing of instruments and test supplies.
Clinical laboratories are advised to continue developing methods for making prices for procedures available to the general public
Even as an effective treatment for COVID-19 continues to elude federal healthcare agencies, Medicare officials are pressing ahead with efforts to bring about transparency in hospital healthcare pricing, including clinical laboratory procedures and prescription drugs costs.
In FY 2021 Proposed Rule CMS-1735-P, titled, “Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2021 Rates; Quality Reporting and Medicare and Medicaid Promoting Interoperability Programs Requirements for Eligible Hospitals and Critical Access Hospitals,” the Centers for Medicare and Medicaid Services (CMS) proposes to “revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2021 and to implement certain recent legislation.”
The proposed rule suggests a 1.6% increase (about $2 billion) in reimbursement for hospital inpatient services for 2021, but also eludes to the possibility of payer negotiated rates being used to determine future payment to hospitals.
In its analysis of the proposed rule, Modern Healthcare noted that CMS is “continuing its price transparency push, to the chagrin of some providers.”
However, the provisions in the proposed rule do, according to the CMS news release, advance several presidential executive orders, including:
Controversial Use of Payer Data for Future Medicare Rates
This latest CMS proposed rule (comments period ended July 10) moves forward “controversial price transparency” and has a new element of possible leverage of reported information for future Medicare payment rates, Healthcare Dive reported.
The 1,602-page proposed rule (CMS-1735-P) calls for these requirements in hospital Medicare cost reports:
Median payer-specific negotiated inpatient services;
“In addition, the agency is requesting information regarding the potential use of these data to set relative Medicare payment rates for hospital procedures,” the CMS news release states.
Thus, under the proposed rule, the nation’s 3,200 acute care hospitals and 360 long-term care hospitals would need to start reporting requested data for discharges effective Oct. 1, 2020, a CMS fact sheet explained.
In the news release following the release of the proposed rule, CMS Administrator Seema Verma had a positive spin. “Today’s payment rate announcement focuses on what matters most to help hospitals conduct their business and receive stable and consistent payment.”
However, the American Hospital Association (AHA) articulated a different view, even calling the requirement for hospitals to report private terms “unlawful.”
During in-court testimony, provider representatives declared that revealing rates they negotiate with payers violates First Amendment rights, Becker’s Hospital Review reported.
Officials for the federal government pushed back telling the federal judge that they can indeed require hospitals to publish negotiated rates. Hospital chargemasters, they added, don’t tell the full story, since consumers don’t pay those rates, Modern Healthcare reported.
In addition to the increase in inpatient payments and price transparency next steps, the recent CMS proposed rule also includes a new hospital payment category for chimeric antigen receptor (CAR) T-cell therapy. The technique uses a patient’s own genetically-modified immune cells to treat some cancers, as an alternative to chemotherapy and other treatment covered by IPPS, CMS said in the news release.
The agency also expressed intent to remove payment barriers to new antimicrobials approved by the FDA’s Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD pathway). “The LPAD pathway encourages the development of safe and effective drug products that address unmet needs of patients with serious bacterial and fungal infections,” the CMS fact sheet states.
Clinical laboratories are gateways to healthcare. For hospital lab leaders, the notion of making tests prices easily accessible to patients and consumers will soon no longer be a nice idea—but a legal requirement.
Therefore, clinical laboratory leaders are advised to stay abreast of price transparency regulations and continue to prepare for sharing test prices and information with patients and the general public in ways that fulfill federal requirements.
Insurance industry claims new federal price transparency regulations cost each payer as much as $13.6 million in set up and maintenance costs
Price transparency in hospital, clinical laboratory, and other service provider costs marches ever closer to reality for America’s healthcare consumers. Meanwhile, some insurers and hospital groups are working to block implementation of federal rules they argue will confuse consumers and potentially lead to higher costs.
The first is a Proposed Rule, titled, “Transparency in Coverage Proposed Rule” (CMS-9915-P) that would require payers to make public on their websites negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Insurers also would be required to make an online “tool” available to members that would provide consumers with out-of-pocket cost estimates for “all covered healthcare items and services.” The 60-day public comment period for this rule went into effect November 15, 2019.
Medical laboratories and anatomic pathology groups may want to closely monitor ongoing efforts by payers and hospital groups to block these rules, since any changes will extend to their services, as well as extend price transparency to most employer-based group health plans and health insurance issuers offering group and individual coverage.
Will Transparency Lead to Higher Healthcare Costs?
In its story on insurer claims, FierceHealthcare reported that the rule would require payers to disclose a “staggering” amount of data, leading to implementation costs 26 times more than the Trump administration’s $510,000 estimate. To comply with the federal rule, an insurer will spend as much as $13.63 million on setup and maintenance. That prediction is based on an economic analysis from economic consulting firm Bates White, which conducted the survey on behalf of The Blue Cross Blue Shield Association (BCBSA).
“Some plans have indicated they would be forced to run two sets of tools—one designed to meet member shopping needs and another implemented only to meet the requirements of the proposed rule,” the BCBSA told FierceHealthcare.
Meanwhile, the Association for Community Affiliated Plans (ACAP) argued in a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma that cost-sharing liability estimates—which are not a price quote for care—could “lead to consumer confusion and frustration.” The ACAP also asserts the transparency plan could inadvertently lead to higher healthcare cost increases.
“In the absence of quality data, consumers may determine that high cost equates to higher value, select the higher-cost providers, and ultimately drive up medical expenses, especially in circumstances where the consumer’s out-of-pocket costs have been met,” wrote ACAP Chief Executive Officer Margaret A. Murray.
“We have long supported efforts to make quality and pricing information more accessible, understandable, and actionable for consumers,” the ACHP wrote. “But they need real-time, patient-specific information tied to individual coverage benefits, not a massive published list of prices that may only frustrate consumers and likely increase costs over time.”
Hospital Associations and Healthcare Systems Bring Lawsuit Against HHS
In December 2019, several hospital associations and healthcare groups filed a lawsuit to block next year’s implementation of the hospital price transparency rule. The plaintiffs included the:
These healthcare organizations and providers joined together to argue that HHS lacks the statutory authority to require and enforce public disclosure of individually negotiated rates between commercial health insurers and hospitals. They also say consumers are likely to be confused by the information they receive.
In its legal response, HHS contends that hospitals are adding to consumers’ confusion by failing to provide transparency.
“They do not dispute that consumers are casting about for accurate information about prices in a complex healthcare system, yet they rely on that same complexity as an affirmative reason to deprive patients of pricing information they need to figure out their out-of-pocket expenses,” HHS said in its brief.
DePaul University Professor Anthony LoSasso, PhD, who specializes in healthcare economics, admits to being “on the fence” regarding the pros and cons of transparency plans.
“I want to think that people can benefit from price transparency. But for a variety of reasons, people don’t look at pricing info even when it’s available,” LoSasso told WTTW News in Chicago.
Nevertheless, HHS vows to continue its push for price transparency.
“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” HHS Deputy Assistant Secretary and National Spokesperson Caitlin Oakley told Reuters in a response to the hospital groups’ lawsuit.
In light of the government’s push to make healthcare pricing more transparent, clinical laboratory and anatomic pathology leaders in hospitals and health systems would be wise to prepare for a future that includes price shopping by consumers.