Press Release  POTENTIAL OUT-OF-NETWORK PROVIDER PAYMENT BENCHMARKS FOUND TO VARY WIDELY

BOSTON — Wednesday, August 14, 2019 – Today, the Massachusetts Health Policy Commission (HPC) released a new DataPoints issue examining how provider payments would vary under different potential out-of-network payment benchmarks for services often involved in “surprise billing” scenarios. This new analysis builds on previous work the HPC has published in a policy brief and presentation on out-of-network or “surprise billing,” which remains a priority policy issue for the agency. The HPC has consistently recommended comprehensive state action to enhance out-of-network protections for Massachusetts consumers, including the establishment of a process for fair and reasonable reimbursement to providers.

This analysis illustrates how provider payments would vary under different out-of-network payment benchmarks, which are commonly used in state and federal legislative solutions to address out-of-network billing. These benchmarks may be based on provider charges (i.e., list prices), negotiated “allowed amounts” for in-network providers, and/or Medicare rates. Overall, the HPC found significant variation among the different benchmarks, with those based on charges typically much higher. Across a set of common services and procedures, payments based on charge benchmarks are typically two to three times higher than those based on negotiated allowed amounts or Medicare rates. For example, to repair simple wounds of the face, a procedure which often occurs in the emergency department, an out-of-network bill paid at the level of 80th percentile of charges would result in a payment of $371, three times higher than the median in-network allowed amount of $122, or the Medicare rate of $125.

“Addressing out-of-network billing is a critically important issue in Massachusetts and across the country,” said David Seltz, HPC Executive Director. “This new analysis contributes new data and information demonstrating the wide variation in payments under potential provider payment benchmarks. It is important to consider the impact of different payment benchmarks in order to ensure that any potential policy solution that protects Massachusetts patients from surprise bills does not have the unintended effect of increasing overall health care spending.”

While efforts around the country to address out-of-network billing generally show a growing consensus on protecting patients from surprise bills, there is continued disagreement regarding the determination of provider payment. State and federal legislative solutions have primarily focused on two approaches for determining out-of-network provider payments: setting default reimbursement rates and instituting a dispute resolution process. Payment benchmarks can be used in both approaches, either to establish the default payment rates or as reference points in independent dispute resolution processes.

The HPC worked closely with FAIR Health, Inc. a national, independent, non-profit organization whose mission is to increase transparency around health care costs and health insurance information, to obtain the data for this DataPoints issue. New York and Connecticut have both designated FAIR Health as the official benchmarking database in their out-of-network billing laws.

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The Massachusetts Health Policy Commission (HPC), established in 2012, is an independent state agency charged with monitoring health care spending growth in Massachusetts and providing data-driven policy recommendations regarding health care delivery and payment system reform. The HPC’s mission is to advance a more transparent, accountable, and innovative health care system through independent policy leadership and innovative investment programs.

Visit us at Mass.gov/HPC. Tweet us @Mass_HPC.

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