Regulatory: Moody’s Warns on US Plans to Curb Surprise Medical Bills

Solutions put forward to resolve the problem of surprise medical bills are a growing social risk for the healthcare industry, Moody’s Investors Service says in a new report. Unexpected bills are generally received by insured patients who inadvertently receive care from out-of-network providers, mainly in emergency situations. As a result, the impact of any legislation to curb surprise medical bills would be most pronounced for companies that have a high level of interaction with out-of-network patients, including hospitals, air ambulances and physician staffing companies that specialize in emergency care.

“Curbing surprise medical bills, which is part of the conversation around the affordability and accessibility of US healthcare, has rare bipartisan support, raising the likelihood of legislative or regulatory action at the federal level,”said Jessica Gladstone, a Moody’s Associate Managing Director. “Even absent any action, surprise medical bills and the scrutiny around them represent a growing social risk for the healthcare industry and can ultimately harm some healthcare providers’ relationships with their customers.”

Solutions under consideration include capping out-of-network charges for emergency medical services at in-network levels, setting up an arbitration process to resolve out-of-network charges and requiring patients’ consent for out-of-network charges, Gladstone says. Other approaches would be to require a single, “bundled bill” for all care received in an emergency room or have hospitals guarantee that all their affiliated doctors and service providers are in-network.

Among those options, bundled billing/in-network guarantee would be the most negative for hospitals and staffing companies, given that many hospitals outsource all their emergency department operations and billing to staffing companies. Meanwhile, an in-network guarantee would present steep challenges, since many physicians and ancillary service providers aren’t employed or controlled by the hospital.

The largest providers would be least affected by any changes, Moody’s says. Their scale gives them significant negotiating leverage with insurers, making them more likely to be in-network. Out-of-network exposure across Moody’s-rated healthcare companies is therefore relatively limited, though legislation could indirectly affect how they negotiate in-network rates with insurers and could pressure prices over time. Further, some of the proposed changes are likely to lead to industry consolidation as independent or smaller scale providers look to become part of a larger in-network provider.

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