Testimony: Way to Further Strengthen Texas’ Surprise Billing Protections

September 8, 2020

House Insurance Committee

via email to Committee Clerk Sergio Cavazos at Sergio.Cavazos_HC@house.texas.gov

Re: Interim Charge 1 – Monitoring SB 1264

Chairman Lucio,

Please accept these comments from AARP Texas and Every Texan (formerly the Center for Public Policy Priorities) related to the implementation of SB 1264 and your efforts to protect consumers.

The new law ending surprise medical bills has been fully in place now for nine months and early results show the law is achieving its central aim to prohibit out-of-network health care providers from sending balance bills to patients for those health care services covered under the law. The Texas Legislature should consider improvements to the law and monitor the overall impact of the law on health care costs.

Expand SB 1264 to Include Ambulance Services

After the passage of SB 1264 health care providers may no longer balance bill patients for most services when the patient did not actively chose to receive out-of-network care. Unfortunately, this prohibition does not include ambulance services. We’ve heard from several patients about their experience with surprise medical bills from ambulance services and included in our comments (see attachment: Ambulance Bills) are the redacted bills from one patient showing the frustration created when a patient is pitted between an insurer and ambulance provider.  In summary:           

  • The patient contracted COVID-19 in March 2020 and had to be intubated for 20 days. His wife was told to make final preparations for him.
  • He came out of his coma on Good Friday — April 10 — and has since mostly physically recovered.
  • He was being cared for at Baylor Scott & White Medical Center (Temple, TX) and was scheduled to be transferred to a rehabilitation facility in Round Rock on April 16 – about a 30-40 minute drive.
  • The family offered to drive him themselves, but the hospital called an ambulance – Lone Star Ambulance LLC operated by Allegiance Mobile Health.
  • He was not put on oxygen during the drive.
  • Lone Star/Allegiance’s charges amounted to $3,565 – BCBS of Texas paid the “usual and customary rate” for the service which was $1,336.41.
  • The patient has received several bills now from Allegiance for the remaining balance of $2,228.59, has been sent to a collections agency, and is worried about his credit report.

SB 1264 was designed specifically to prevent this financial distress for patients but ambulance services were not included in the law. Clearly, this patient’s story indicates the need to bring ambulance services under the new law.

Monitor the Impact of Arbitration and Billed Charges

Additionally, we are concerned about new evidence that points to potential health care cost problems associated with Texas’ approach to resolving balance billing disputes, specifically related to the use of billed charges and arbitration.

AARP Texas and Every Texan proudly supported the passage of SB 1264 and remain committed to seeing that the law protect consumers from surprise medical bills and do so while avoiding unintended consequences of higher health care prices and overall spending. Ultimately, increased health care spending – even without surprise medical bills – contributes to increased monthly premiums and more exposure to meeting high cost sharing (deductible, co-insurance, co-pay).

During the legislative debate on SB 1264 there was scarce evidence about the market impact of using arbitration to resolve billing disputes. In a “working paper” published in 2018 prior to the legislative session, authors pointed to early data that suggested New York’s arbitration approach to surprise medical bills was potentially increasing network participation and lowering costs. Texas lawmakers had no other guidance to use in measuring the potential impact of a similar Texas law and ultimately included arbitration and a billed charges standard as elements of the law.

Unfortunately, more recent evidence points to potential problems on the horizon in Texas, and we encourage lawmakers to closely monitor the marketplace in Texas.  A Congressional Budget Office (CBO) accounting of the financial impact of a federal arbitration approach to ending surprise medical bills estimates over $20 billion in additional federal spending over 10 years.

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