By Antonio Hernandez Conte, MD, MBA, FASA and Christine Doyle, MD, FASA
The America’s Health Insurance Plan (AHIP) study on the impact of California’s AB 72 law on surprise medical billing immediately brings to mind a famous quote by former British prime minister Benjamin Disraeli -- "there are three kinds of lies: lies, damned lies, and statistics."
Statistics may not literally lie, however they are often manipulated to bolster a weak argument. In many cases, this is especially disingenuous -- and even dangerous. In this particular study, AHIP’s statistics may form conclusions that could potentially be to the detriment of patients and physicians.
In our opinion, the new study from AHIP does just that….erroneously misleads the reader into erroneous conclusions.
AHIP examined the impact of Assembly Bill 72, the 2016 California law intended to address “out-of-network” billing. AB 72 required out-of-network services delivered at an in-network facility to be billed as “in-network,” with doctors paid either the physician’s “average contracted rate”, or 125% of the Medicare reimbursement rate.
The problem with this approach is that when anesthesiologists are forced to provide services at contracted rates, even though they are not contracting providers, it causes marketplace disruption, with health plans weeding through and cherry-picking their provider networks to drive down the average contracted rates paid to clinicians. That’s a short-sighted strategy that will greatly diminish the long term ability to attract physician anesthesiologists to practice in California.
AHIP claims its data suggest that in-network specialty physicians remained flat or increased since AB 72 took effect. It is not surprising that AHIP produced a study with more “evidence” to support its original claim that the law did not force physicians out of insurance networks. But it is disappointing that AHIP intentionally avoids addressing the underlying issues.
The issue is not simply whether more providers are in-network, but also whether insurance companies are using a patient protection measure as a weapon to wield their leverage by dropping longstanding contracts and refusing to renew or renegotiate standard cost of living adjustments. For example, following a year of negotiations, a group of 150 anesthesiologists (which staffs 18 of a particular payer's facilities) was ultimately forced to accept a 20% rate reduction in order to remain contracted with the payor. A recent study on the impact of AB 72 confirmed the market impact. While affirming that AB 72 may potentially “protect consumers in fully insured plans from surprise medical bills,” study author Erin Duffy notes that this approach, “…influenced the bargaining landscape for insurers and providers, affecting network breadth and in-network rates.”
While protecting patients from out-of-network provider costs was and remains a laudable goal, AB 72 focused on an imperfect solution: reimbursement caps for physicians, rather than holding insurers’ feet to the fire and forcing them to maintain fair and adequate contracts.
For some background context on why that is relevant, here are some more statistics. The biggest health insurers in the United States netted more than $11 billion in profit in Q2 2019. Combined, the CEOs of the eight largest publicly traded insurance companies made $143.5 million in total compensation in 2018, with almost all the largest publicly traded health insurance companies upping CEO pay last year (UnitedHealth Group CEO David Wichmann's total compensation topped $18 million).
At the same time, despite all that talk about protecting patients, insurers have not made it a priority to control consumer costs. In fact, a 2018 Kaiser Family Foundation study found that over a ten year period, average family premiums have increased 55 percent -- twice as fast as workers’ earnings and three times as fast as inflation.
The AHIP study is a red herring, a creative interpretation of data intended to simplify a complex issue. To protect both patients and the physicians that provide their care, the California legislature should revive the CSA-sponsored Assembly Bill 1174 (Wood). AB 1174 requires a health plan, insurer, or their delegated entity to demonstrate that it can continue to offer sufficient access to anesthesia providers when receiving those services at in-network healthcare facilities if it initiates the termination of a contract with an anesthesiology practice.
If the insurance industry is sincere in its desire to maintain patient access to medically necessary anesthesiology services, it will take seriously the need to fix AB 72 so that it doesn’t lead to contract cancellations and inadequate networks. Patients deserve safe, quality care, delivered through robust, quality healthcare networks. And stabilizing the marketplace for physicians creates certainty that is good for our current healthcare system, and also ensures that we can attract the best and brightest young doctors to practice in this state for years to come.
Dr. Antonio Hernandez Conte is a Partner with the Southern California Permanente Medical Group. He practices cardiac anesthesiology at Kaiser Permenente Los Angeles Medical Center. Dr. Hernandez Conte is the Chair of the Legislative and Professional Affairs Division for the California Society of Anesthesiologists (CSA) and also sits on the CSA Executive Board. He obtained his medical degree from Boston University School of Medicine and completed his anesthesiology residency and fellowship at the Yale University School of Medicine.
Dr. Christine Doyle is a partner in Vituity (formerly CEP America), and practices primarily at O’Connor Hospital where she is involved in Medical Staff Leadership. She is President of the California Society of Anesthesiologists, is an active member of the American Society of Anesthesiologists, and has achieved Fellowship in the society (FASA). She is Board Certified in Anesthesiology, with a Sub-Specialty Certification in Critical Care Medicine.