How California's surprise billing policy led to healthcare consolidation

CALAAEM News Service calaaem.news.service at gmail.com
Mon Aug 26 09:41:30 PDT 2019



 

August 26, 2019

 

How California's surprise billing policy led to healthcare consolidation

 

 
<https://www.beckershospitalreview.com/finance/how-california-s-surprise-bil
ling-policy-led-to-healthcare-consolidation.html> Beckers Hospital Review

 

Morgan Haefner

 

August 14th, 2019

    

A California law aimed at addressing surprise medical bills influenced
bargaining leverage between payers and providers, and led to greater
consolidation, according to a study published in The American Journal of
Managed Care.

 

For the study, Erin Duffy, PhD, a researcher with the RAND Corp., examined
the early effects of a California policy implemented in 2017. The policy
addressed surprise medical bills for out-of-network nonemergency physician
services at in-network hospitals. Dr. Duffy completed a case study of how
the policy affected stakeholders within the first six to 12 months after the
policy implementation. Twenty-eight policy experts, advocates and executives
of physician groups, hospitals and health plans participated in interviews
for the study. 

 

The stakeholders reported the out-of-network payment standard "set at
payer-specific local average commercial negotiated rates has changed the
negotiation dynamics between hospital-based physicians and payers,"
according to the study. "Interviewees report that leverage has shifted in
favor of payers, and payers have an incentive to lower or cancel contracts
with rates higher than their average as a means of suppressing OON prices.
Physicians reported that this experience of decreased leverage is
exacerbating provider consolidation."

 

The author concluded that California's policy shows how out-of-network
payment standards may change the bargaining landscape between payers and
providers, as well as affect the breadth of networks and negotiated rates.
Dr. Duffy noted the "findings may not be directly generalizable to states
with markedly different regulatory and market contexts."

 

 

 

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

 

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