    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                     NO MORE SURPRISES: PROTECTING PATIENTS
                          FROM SURPRISE MEDICAL BILLS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON HEALTH

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 12, 2019

                                   __________

                               Serial No. 116-43

          Printed for the use of the Committee on Energy and Commerce

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                       govinfo.gov/committee/house-energy
                            energycommerce.house.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    41-118 PDF                 WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                        COMMITTEE ON ENERGY AND COMMERCE

                         FRANK PALLONE, Jr., New Jersey
                                     Chairman
    BOBBY L. RUSH, Illinois              GREG WALDEN, Oregon
    ANNA G. ESHOO, California              Ranking Member
    ELIOT L. ENGEL, New York             FRED UPTON, Michigan
    DIANA DeGETTE, Colorado              JOHN SHIMKUS, Illinois
    MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
    JAN SCHAKOWSKY, Illinois             STEVE SCALISE, Louisiana
    G. K. BUTTERFIELD, North Carolina    ROBERT E. LATTA, Ohio
    DORIS O. MATSUI, California          CATHY McMORRIS RODGERS, Washington
    KATHY CASTOR, Florida                BRETT GUTHRIE, Kentucky
    JOHN P. SARBANES, Maryland           PETE OLSON, Texas
    JERRY McNERNEY, California           DAVID B. McKINLEY, West Virginia
    PETER WELCH, Vermont                 ADAM KINZINGER, Illinois
    BEN RAY LUJAN, New Mexico            H. MORGAN GRIFFITH, Virginia
    PAUL TONKO, New York                 GUS M. BILIRAKIS, Florida
    YVETTE D. CLARKE, New York, Vice     BILL JOHNSON, Ohio
        Chair                            BILLY LONG, Missouri
    DAVID LOEBSACK, Iowa                 LARRY BUCSHON, Indiana
    KURT SCHRADER, Oregon                BILL FLORES, Texas
    JOSEPH P. KENNEDY III,               SUSAN W. BROOKS, Indiana
        Massachusetts                    MARKWAYNE MULLIN, Oklahoma
    TONY CARDENAS, California            RICHARD HUDSON, North Carolina
    RAUL RUIZ, California                TIM WALBERG, Michigan
    SCOTT H. PETERS, California          EARL L. ``BUDDY'' CARTER, Georgia
    DEBBIE DINGELL, Michigan             JEFF DUNCAN, South Carolina
    MARC A. VEASEY, Texas                GREG GIANFORTE, Montana
    ANN M. KUSTER, New Hampshire
    ROBIN L. KELLY, Illinois
    NANETTE DIAZ BARRAGAN, California
    A. DONALD McEACHIN, Virginia
    LISA BLUNT ROCHESTER, Delaware
    DARREN SOTO, Florida
    TOM O'HALLERAN, Arizona
                                     ------

                               Professional Staff

                       JEFFREY C. CARROLL, Staff Director
                    TIFFANY GUARASCIO, Deputy Staff Director
                    MIKE BLOOMQUIST, Minority Staff Director
                             Subcommittee on Health

                           ANNA G. ESHOO, California
                                    Chairwoman
    ELIOT L. ENGEL, New York             MICHAEL C. BURGESS, Texas
    G. K. BUTTERFIELD, North Carolina,     Ranking Member
        Vice Chair                       FRED UPTON, Michigan
    DORIS O. MATSUI, California          JOHN SHIMKUS, Illinois
    KATHY CASTOR, Florida                BRETT GUTHRIE, Kentucky
    JOHN P. SARBANES, Maryland           H. MORGAN GRIFFITH, Virginia
    BEN RAY LUJAN, New Mexico            GUS M. BILIRAKIS, Florida
    KURT SCHRADER, Oregon                BILLY LONG, Missouri
    JOSEPH P. KENNEDY III,               LARRY BUCSHON, Indiana
        Massachusetts                    SUSAN W. BROOKS, Indiana
    TONY CARDENAS, California            MARKWAYNE MULLIN, Oklahoma
    PETER WELCH, Vermont                 RICHARD HUDSON, North Carolina
    RAUL RUIZ, California                EARL L. ``BUDDY'' CARTER, Georgia
    DEBBIE DINGELL, Michigan             GREG GIANFORTE, Montana
    ANN M. KUSTER, New Hampshire         GREG WALDEN, Oregon (ex officio)
    ROBIN L. KELLY, Illinois
    NANETTE DIAZ BARRAGAN, California
    LISA BLUNT ROCHESTER, Delaware
    BOBBY L. RUSH, Illinois
    FRANK PALLONE, Jr., New Jersey (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, opening statement...............................     1
        Prepared statement...........................................     3
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, opening statement..............................     4
        Prepared statement...........................................     5
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     6
        Prepared statement...........................................     8
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     9
        Prepared statement...........................................    11

                                   Witnesses

    Sonji Wilkes, Patient Advocate...................................    12
        Prepared statement...........................................    15
    Sherif Zaafran, M.D., Chair, Physicians for Fair Coverage........    18
        Prepared statement...........................................    21
        Answers to submitted questions...............................   268
    Rick Sherlock, President and CEO, Association of Air Medical
      Services.......................................................    29
        Prepared statement...........................................    31
        Answers to submitted questions...............................   270
    James Gelfand, Senior Vice President, Health Policy, The Erisa
      Industry Committee.............................................    42
        Prepared statement...........................................    44
        Answers to submitted questions...............................   273
    Thomas Nickels, Executive Vice President, American Hospital
      Association....................................................    52
        Prepared statement...........................................    54
        Answers to submitted questions...............................   277
    Jeanette Thornton, Senior Vice President of Product, Employer,
      and Commercial Policy, America's Health Insurance Plans........    70
        Prepared statement...........................................    72
        Answers to submitted questions...............................   278
    Vidor E. Friedman, M.D., President, American College Of Emergency
      Physicians.....................................................    86
        Prepared statement...........................................    88
    Claire McAndrew, M.P.H., Director of the Campaigns and
      Partnerships, Families USA.....................................   115
        Prepared statement...........................................   117

                               Submitted Material

    H.R. 3630, the No Surprises Act..................................   175
    Letter of June 10, 2019, by A. J. Wilhelmi, President and CEO,
      Illinois Health and Hospital Association, to Mr. Shimkus,
      submitted by Ms. Eshoo.........................................   197
    Report of Air Ambulance Memorial, New Mexico, Office of
      Superintendent of Insurance, to Mr. Lujan, submitted by Ms.
      Eshoo..........................................................   199
    Statement of Taken for a ride: Your medical emergency end in
      bankruptcy, February 21, 2019, by Larry Barker, submitted by
      Ms. Eshoo......................................................   217
    Statement of National Observation Stays Coalition, June 12, 2019,
      submitted by Ms. Eshoo.........................................   221
    Statement of American Medical Association, June 11, 2019,
      submitted by Ms. Eshoo.........................................   223
    Statement of College of American Pathologists, et al., 2019,
      submitted by Ms. Eshoo.........................................   231
    Statement of Association of American Medical Colleges, et al.,
      submitted by Ms. Eshoo.........................................   236
    Statement of William T. Thorwrath, Jr., M.D., FACR, Chief
      Executive Officer, June 12, 2019, American College of
      Radiology, submitted by Ms. Eshoo..............................   243
    Statement of Blue Cross Blue Shield Association, of June 11,
      2019, submitted by Ms. Eshoo...................................   248
    Statement of Partnership for Employer-Sponsored Coverage, et al.,
      submitted by Ms. Eshoo.........................................   257
    Statement of Scott Frey, Director of Federal Government Affairs,
      June 12, 2019, American Federation of State, County, and
      Municipal employees, submitted by Ms. Eshoo....................   261
    Letter of June 12, 2019, from David Certner, Legislative Counsel
      and Legislative Policy Director, Government Affairs, AARP, to
      Ms. Eshoo and Mr. Burgess, submitted by Ms. Eshoo..............   264
    Statement of Blue Shield of California, Pacific Business Group of
      Health, SEIU United Healthcare Workers West, June 11, 2019,
      submitted by Ms. Eshoo.........................................   267

       NO MORE SURPRISES: PROTECTING PATIENTS FROM SURPRISE MEDICAL BILLS

                                  ----------

                            WEDNESDAY, JUNE 12, 2019

                      House of Representatives,
                                Subcommittee on Health,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:02 a.m., in
    the John D. Dingell Room 2123 Rayburn House Office Building,
    Hon. Anna G. Eshoo (chairwoman of the subcommittee) presiding.
        Members present: Representatives Eshoo, Butterfield,
    Matsui, Castor, Sarbanes, Lujan, Schrader, Kennedy, Cardenas,
    Welch, Ruiz, Dingell, Kuster, Kelly, Barragan, Blunt Rochester,
    Pallone (ex officio), Burgess (subcommittee ranking member),
    Upton, Shimkus, Guthrie, Griffith, Bilirakis, Long, Bucshon,
    Brooks, Mullin, Hudson, Carter, and Walden (ex officio).
        Also present: Representative Soto.
        Staff present: Waverly Gordon, Deputy Chief Counsel;
    Tiffany Guarascio, Deputy Staff Director; Zach Kahan, Outreach
    and Member Service Coordinator; Josh Krantz, Policy Analyst;
    Una Lee, Senior Health Counsel; Aisling McDonough; Policy
    Coordinator; Meghan Mullon, Staff Assistant; Kaitlyn Peel,
    Digital Director; Samantha Satchell, Professional Staff Member;
    C. J. Young, Press Secretary; Mike Bloomquist, Minority Staff
    Director; S. K. Bowen, Minority Press Assistant; Adam Buckalew,
    Minority Director of Coalitions and Deputy Chief Counsel,
    Health; Jordan Davis, Minority Senior Advisor; Margaret Tucker
    Fogarty, Minority Staff Assistant; Melissa Froelich, Minority
    Chief Counsel, Consumer Protection and Commerce; Peter Kielty,
    Minority General Counsel; Bijan Koohmaraie, Minority Counsel,
    Counsel, Consumer Protection and Commerce; Ryan Long, Minority
    Deputy Staff Director; and Brannon Rains, Minority Staff
    Assistant.
        Ms. Eshoo. Good morning, everyone. The Subcommittee on
    Health will now come to order.
        The Chair now recognizes herself for five minutes for an
    opening statement. Welcome to all of our witnesses. That's
    quite a table--quite a lineup, and we are eager to hear from
    you.

     OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Today is a bipartisan hearing about solutions to end
    surprise medical billing. Patients receive surprise bills when
    they receive care from providers who are not part of the health
    plan they are insured by, often referred to as out-of-network
    providers, and they are caught between insurers, hospitals, and
    doctors.
        [Sounds gavel.]
        Ms. Eshoo. The committee will come to order, please. There
    are staffers that want to have a great conversation. We have
    lots of side rooms for them.
        These are often people who play by the rules. They bought
    an insurance plan, they paid their premiums, and they go to
    providers in their network.
        Now, we all expect to receive medical bills, but the
    ``surprise'' in a surprise bill is a shock--it should be called
    shock billing--because it can amount to more than what most
    people have in a savings account, if they even have one.
        In a recent Kaiser Family Foundation poll, 67 percent of
    the American people said they are worried about being able to
    afford their own or a family member's unexpected medical bills.
        And it makes sense for them to be worried because receiving
    a surprise bill--medical bill--is incredibly common,
    regrettably. It has become incredibly common.
        One in 5 emergency department visits result in a surprise
    medical bill. If you need a ground or air ambulance, you are at
    an especially high risk for a surprise bill.
        More than half of all ambulance rides are billed out of
    network and the GAO found that nearly 70 percent of air
    ambulance trips were billed out of network.
        In my region, a young woman by the name of Nina Dang broke
    her arm while she was riding her bike. Paramedics took her to
    the emergency room at Zuckerberg San Francisco General
    Hospital.
        According to Vox reporter Sarah Kliff, who wrote a series
    of articles exposing surprise bills, Nina Dang left with a cast
    and a few months later received a bill for $20,243.
        That's because Zuckerberg San Francisco General was not in
    her insurance network. Under current Federal law, providers are
    permitted to bill privately--insured patients for the balance
    not paid by the insurance plan.
        California, New York, and several other States already have
    strong State protections for out-of-network emergency patients.
    But State law cannot regulate self-funded employer plans that
    cover about 100 million Americans, thus, our joint presence
    here today.
        That means that without action from Congress, millions of
    Americans will be left unprotected from surprise bills.
        Today, we will hear testimony from those who represent each
    part of the system that produces surprise bills, and we welcome
    each one of you.
        In reading the written testimonies, I found that there was
    a tendency to confuse the surprise billing issue with other
    concerns: large deductibles, narrow networks, or the pressure
    of high healthcare costs for both patients and what it costs
    our country.
        I think that those are all big concerns and I want our
    subcommittee to tackle them. But they are not today's agenda.
    Our work today is not exactly simple, but I think that it is
    very clear. We have to protect every American from a surprise
    medical bill.
        I am proud of the bipartisan work our subcommittee has
    tackled so far on this Congress. In our drug pricing hearings,
    we were able to put the finger pointing aside and get to the
    root of the issue and pass legislation to help patients, and I
    believe we will continue to do that.
        So here is my ask of our witnesses. We need you to help us
    to find the best policy. We all look forward to your testimony
    and look forward to working--I look forward to working with my
    colleagues to develop a bipartisan solution to end surprise
    billing.
        [The prepared statement of Ms. Eshoo follow:]

                    Prepared Statement of Hon. Anna G. Eshoo

        Today is a bipartisan hearing about solutions to end
    surprise medical billing. Patients receive surprise bills when
    they receive care from providers who are not part of the health
    plan they're insured by--often referred to as out-of-network
    providers--and they're caught between insurers, hospitals, and
    doctors.
        These are often people who play by the rules. They bought
    an insurance plan, they paid their premiums, and they go to
    providers in their network. We all expect to receive medical
    bills, but the ``surprise" in a surprise bill is a shock that
    can amount to more than people have in their savings account.
        In a recent Kaiser Family Foundation poll, 67% of Americans
    said they are worried about being able to afford their own or a
    family member's unexpected medical bills.
        It makes sense why people are so worried. Receiving a
    surprise medical bill is incredibly common.
        One in five emergency department visits result in a
    surprise medical bill. If you need a ground or air ambulance,
    you are at an especially high risk for a surprise bill. More
    than half of all ambulance rides are billed out of network, and
    the GAO found that nearly 70% of air ambulance trips were
    billed out of network.
        In my region, a young woman, Nina Dang, broke her arm while
    riding her bike. Paramedics took her to an emergency room at
    Zuckerberg San Francisco General Hospital. According to Vox
    reporter Sarah Kliff, who wrote a series of articles exposing
    surprise bills, Nina Dang left with a cast and a few months
    later received a bill for $20,243. That's because Zuckerberg
    San Francisco General was not in her insurance network.
        California, like New York and several other states, already
    has strong State protections for out-of-network emergency
    patients, but State law cannot regulate self-funded employer
    plans that cover about 100 million Americans. That means that
    without action from Congress, millions of Americans are
    unprotected from surprise bills.
        Today, we'll hear testimony from the many who are part of
    the system that produces surprise bills. Hospitals, physicians,
    and health insurers know that patients can't control where they
    are treated in an emergency. They know that patients don't
    expect to receive an out-of-network bill when they go to an in-
    network facility. However, they still participate and
    contribute to a system that can bankrupt a person.
        In some of our witnesses' testimony, I've seen a tendency
    to confuse the surprise billing issue with other concerns--
    large deductibles, narrow networks, or the pressure of high
    healthcare costs for both patients and the nation. I want our
    subcommittee to tackle these problems, but they are not today's
    agenda. Our work today is not simple, but it is clear. We must
    protect every Americans from a surprise medical bill.
        I'm proud of the bipartisan work our Subcommittee has
    tackled so far this Congress. In our drug pricing hearings,
    we've been able to put the finger pointing aside, get to the
    root of the issue, and pass legislation to help patients.
        I ask our witnesses to do the same. Help us find the best
    policy. I look forward to your testimony, and I look forward to
    working with my colleagues to develop a bipartisan solution to
    end surprise billing.

        Ms. Eshoo. With that, I would like to now recognize Dr.
    Burgess, the ranking member of the Subcommittee on Health, for
    five minutes for his opening statement.

    OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
                  IN CONGRESS FROM THE STATE OF TEXAS

        Mr. Burgess. Thank you, and good morning to all of our
    witnesses and thank you for being here today to testify on this
    important topic of out-of-network billing.
        It is an issue that has hit home in our districts and our
    states and, certainly, it's a topic of conversation when I go
    home to Texas.
        One of the most prominent out--of--network billing stories
    in Texas is that of Drew Calver, a 44-year-old high school
    teacher in Austin, Texas, who suffered a heart attack and was
    rushed to the emergency room at St. David's Medical Center.
    Good for them.
        He was stented and his heart muscle was saved. And so this
    was an individual who was otherwise healthy. He had competed in
    an Ironman triathlon earlier in the year, and he was told at
    the outset that the hospital would accept his insurance.
        He has insurance through his school district and he was
    billed a total of $110,000 for his 4-day hospital stay. That's
    more than two times his annual pay.
        So problems with out-of-network billing is not an easy
    problem to solve but it's one where many of the stakeholders
    disagree on the solution.
        But it is quite intentional that we have called those
    stakeholders who might not agree to testify at the same table
    today. If there is anything upon which we should all agree it
    is that the patient should be held harmless so that they can
    avoid massive bills like the one Mr. Calver received,
    especially in emergency situations.
        And I just want to underscore what the chairwoman of the
    subcommittee said, and while you all are all very smart--you
    have differences of opinion about this--we need your help. We
    solicit your help.
        That is why you are here today. And if you don't help us
    solve the problem, we will solve the problem and none of you
    will like it.
        In addressing this issue, I hope that the stakeholders here
    today--physicians, insurers, hospitals, and patients--come to
    an agreeable conclusion, even if it is not their first choice.
        My State of Texas just passed a new bill in the State
    legislature because the first legislative fix passed 2 years
    ago did not adequately address out-of-network billing.
        While Texas and numerous other states have made efforts to
    mitigate the billing issues, states are unable to legislate
    what happens in cases involving multi-state employer-sponsored
    plans.
        This is why the Energy and Commerce Committee is looking to
    address this issue and why the president has been so vocal in
    putting forth a set of guiding principles in addressing
    surprise medical bills.
        President Trump's principles include protecting patients
    without increasing Federal health expenditures while
    maintaining choice for patients. I, largely, agree with
    President Trump's principles and I hope that Congress can come
    to a consensus upon the best way to execute a legislative
    effort and send something to the president's desk.
        As a physician I understand the payment issues at hand when
    it comes to billing for healthcare services and I am really
    grateful that we have two physicians on our panel today.
        It is important that throughout this conversation we
    consider the potential effect of shifting payment incentives
    for physicians, for insurers, for hospitals, and that we are
    not driving payment rates too far in one direction or another.
        I do think it is critical that on such an important issue
    we take into account the various perspectives of the
    stakeholders and I am encouraged that we do have such a robust
    panel before us this morning.
        The committee released a discussion draft a few weeks prior
    to this hearing and my understanding is the committee has
    received a lot of comments on the discussion draft.
        So I am hopeful that this subcommittee will lead the charge
    on addressing out-of-network billing. But I think the number of
    proposals that members have produced shows there is serious
    interest to accomplish something legislatively.
        Patients deserve better than to receive bills they were not
    expecting for the care that they needed, especially when that
    care is non-elective or emergent in nature.
        Again, I want to thank all of our witnesses for being here
    today and look forward to a lively and productive discussion.
        Thank you, and I will yield back.
        [The prepared statement of Mr. Burgess follow:]

                 Prepared Statement of Hon. Michael C. Burgess

        Good morning and thank you to all of our witnesses for
    being here today to testify on the important topic of surprise
    billing. This is an issue that has hit home in our districts,
    and it has certainly been a topic of conversation when I go
    home to Texas.
        One of the most prominent surprise billing stories in Texas
    is that of Drew Calver, a 44-year-old high school teacher in
    Austin, who suffered a heart attack and was rushed to the
    emergency room at St. David's Medical Center. Mr. Calver was
    healthy and had completed an ironman triathlon earlier in the
    year. Despite being told that the hospital would accept his
    insurance, Mr. Calver was billed a total of nearly $110,000 for
    his 4-day hospital stay. This amount is more than two times his
    annual pay.
        Surprise billing is not an easy problem to solve, and it is
    one where the many stakeholders disagree on the solution. It is
    quite intentional that we have called all those stakeholders to
    testify at the same table today. If there is anything upon
    which we should all agree, it is that the patient should be
    held harmless so they can avoid massive bills like the one that
    Mr. Calver received, especially in emergency situations.
        In addressing this issue, I hope that the stakeholders--
    physicians, insurers, hospitals, patients, and others--are able
    to come to an agreeable conclusion, even if it is not their
    first choice. My home State of Texas just passed a new bill in
    the State legislature because the first legislative fix did not
    adequately address surprise billing. While Texas and numerous
    other states have made efforts to mitigate surprise billing,
    states are unable to legislate what happens in cases involving
    employer-sponsored plans. This is why the Energy and Commerce
    Committee is looking to address this issue, and why the
    President has been so vocal in putting forth a set of guiding
    principles in addressing surprise medical bills. The
    President's principles include protecting patients without
    increasing Federal healthcare expenditures, while maintaining
    choice for patients. I largely agree with these principles and
    hope that Congress can come to a consensus upon the best way to
    execute a legislative effort and send something to the
    President's desk.
        As a physician, I understand the payment issues at hand
    when it comes to billing for healthcare services, and I am glad
    that we have two physicians on our panel today to represent the
    physician perspective. It is important that throughout this
    conversation we consider the potential effect of shifting
    payment incentives for physicians, and for insurers, such that
    we are not driving payment rates too far in one direction or
    the other.
        I do think it is critical that on such an important issue
    we take into account the various perspectives that the
    stakeholders have. I am encouraged that we have such a robust
    panel before us this morning, and that the Committee has
    received more than 60 comments on the discussion draft.
        I am hopeful that this Committee will lead the charge on
    addressing surprise billing, but I think the number of
    proposals that Members have produced shows that there is
    serious interest to accomplish something legislatively.
    Patients deserve better than to receive surprise bills for the
    care they needed, especially non-elective or emergency care. I
    would like to thank our witnesses for being here today, and I
    look forward to a productive discussion.

        Ms. Eshoo. I thank the gentleman, and he yields back.
        The Chair now recognizes Mr. Pallone, the chairman of the
    full committee, for five minutes for his opening statement.

    OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Madam Chair.
        I came in when Dr. Burgess was giving his opening statement
    and I thought, well, maybe I have to revise my remarks to be
    more evil. I am not usually playing good guy to his bad guy,
    but whatever. Maybe I didn't hear everything correctly.
        [Laughter.]
        Mr. Pallone. But anyway, it's long past time for Congress
    to take decisive action to protect patients from the
    unreasonable and unacceptable practice of surprise billing.
        Every day we hear new stories about American families being
    devastated financially and put through the tremendous emotional
    toll of surprise medical bills.
        Stories like Stefan Kappas-Rocha of California who went to
    the emergency room for a kidney infection at Zuckerberg
    Hospital in San Francisco. She spent one night in the emergency
    room and was sent home a day later with Ibuprofen. Two months
    later, she received a bill for more than $27,000.
        Then there's a story in my county of Joseph from Sea Girt
    who went to an in-network hospital for an emergency surgery on
    his leg, only to later receive a $60,000 bill from a surgeon
    who was out of his network.
        And then there's the story of Drew Calver of Dallas, Texas,
    who received a $108,000 surprise medical bill from St. David's
    Medical Center after treatment for a heart attack.
        These stories highlight a clear market failure. I know we
    will see a lot of finger pointing today about who's at fault
    for this failure, and this is the same finger pointing that has
    resulted in patients going into debt, ruining their credit, and
    questioning whether they should take their child to the
    hospital.
        But let me be clear. I am interested in fixing this problem
    for consumers, not for the stakeholders who have allowed this
    problem to persist for decades while consumers continually paid
    the price.
        It is clear that the private sector is not going to fix
    this problem on its own and that Congress needs to step in and
    provide relief to consumers.
        That being said, I want to commend the stakeholders here
    today for all agreeing that it's no longer acceptable to have
    patients in the middle of their disputes. People who need
    emergency care who were treated by a doctor they did not choose
    should be held harmless.
        Now, fortunately, there's a bipartisan agreement on the
    committee that we must act. Ranking Member Walden and I have
    worked together to craft a common-sense bipartisan solution for
    the problem of surprise billing.
        Our draft legislation would ensure that consumers with all
    types of private insurance are protected from surprise bills.
    It holds the patient harmless in surprise bill situations by
    ensuring that an individual's cost sharing for out-of-network
    care is limited to what the individual would have paid if the
    services were provided by an in-network provider.
        This would ensure that patients are no longer penalized by
    the provider and the insurer's failure to contract, which is no
    fault of their own.
        Providers would no longer be able to balance bill patients
    for out-of-network emergency services or for scheduled services
    from providers the patient was not aware would be involved in
    their treatment.
        For the vast majority of cases, our discussion draft is
    simply asking providers to be more transparent about their
    billing practices and charges.
        Insurers and hospitals also have a large role to play in
    making sure consumers understand their coverage. It is critical
    that we build some basic transparency and fairness into a
    system I think we all agree is incredibly difficult for
    consumers to navigate.
        Providers, hospitals, and insurers should share this goal
    because the status quo is severely damaging the reputation and
    trustworthiness in the eyes of consumers.
        Now, the discussion draft proposes resolving the payment
    dispute between the provider and the insurer by requiring the
    insuring plan to pay at a minimum the median in-network rate
    for that service in that geographic area.
        This ensures that in the absence of balance billing every
    provider will be guaranteed some payment for their services and
    this would also create a predictable transparent means of
    resolving these disputes between providers and insurers who
    have failed to contract. It would also place little or no
    administrative burden on states, the Federal government, or the
    parties involved in the dispute.
        So I look forward, Madam Chair, to hearing constructive
    feedback in the draft proposal. But I strongly believe that any
    viable solution in this space cannot result in rising
    healthcare costs.
        This debate has shed light on the fact that some providers'
    charges and hospital fees are inexplicably high and I worry
    that if Congress chooses the wrong approach, consumers will
    simply end up paying those costs through higher premiums and we
    simply can't allow this to happen.
        So I hope that today we can have a productive discussion
    without pointing fingers and passing the buck. We should
    instead focus on policy solutions that protect consumers.
    Ideally, such a solution will not only take the patient out of
    the middle and hold him financially harmless from surprise
    billing.
        It'll also help create a lower cost, more rational
    healthcare system for all Americans, and I believe that the
    discussion draft accomplishes these goals and look forward to
    the feedback from our witnesses.
        Obviously, Madam Chair and Dr. Burgess, you know, this
    discussion draft doesn't have to be the end all, and that's the
    reason we are having the hearing today and will continue to
    have discussions with people who may have alternative ideas or,
    you know, improving on what this discussion draft has here
    today.
        So thank you, Madam Chair, and I--back to Dr. Burgess
    again, I am not used to being--he was like the bad guy today
    and I felt like I was----
        Ms. Eshoo. No, he wasn't.
        Mr. Pallone. He wasn't?
        Ms. Eshoo. No.
        Mr. Pallone. Oh, then I misunderstood then. Oh, very even
    tempered. OK. All right. Thank you. I yield back.
        [The prepared statement of Mr. Pallone follow:]

                 Prepared Statement of Hon. Frank Pallone, Jr.

        It is long past time for Congress to take decisive action
    to protect patients from the unreasonable and unacceptable
    practice of surprise billing. Every day, we hear new stories
    about American families being devastated financially and put
    through the tremendous emotional toll of surprise medical
    bills. Stories like Stefan Kappes-Rocha's of California, who
    went to the emergency room for a kidney infection at Zuckerberg
    Hospital in San Francisco. She spent one night in the emergency
    room and was sent home a day later with ibuprofen. Two months
    later, she received a bill for more than $27,000. Then there's
    the story of Joseph from Sea Girt, New Jersey who went to an
    in-network hospital for anemergency surgery on his leg only to
    later receive a $60,000 bill from a surgeon who was out of his
    network. And then there's the story of Drew Calver of Dallas,
    Texas, who received a $108,000 surprise medical bill from St.
    David's Medical Center, after treatment for a heart attack.
        These stories highlight a clear market failure. I know we
    will see a lot of finger pointing today about who is at fault
    for this failure--this is the same finger pointing that has
    resulted in patients going into debt, ruining their credit, and
    questioning whether they should take their child to the
    hospital. But let me be clear--I'm interested in fixing this
    problem for consumers not for the stakeholders who've allowed
    this problem to persist for decades while consumers continually
    paid the price.
        It is clear that the private sector is not going to fix
    this problem on its own, and that Congress needs to step in and
    provide relief to consumers. That being said, I want to commend
    the stakeholders here today for all agreeing that it's no
    longer acceptable to have patients in the middle of their
    disputes. People who need emergency care or who are treated by
    a doctor they did not choose should be held harmless.
        Fortunately, there is bipartisan agreement on this
    Committee that we must act. Ranking Member Walden and I have
    worked together to craft a commonsense, bipartisan solution to
    the problem of surprise billing. Our draft legislation would
    ensure that consumers with all types of private insurance are
    protected from surprise bills. It holds the patient harmless in
    surprise bill situations, by ensuring that an individual's cost
    sharing for out-of-network care is limited to what the
    individual would have paid if the services were provided by an
    in-network provider. This would ensure that patients are no
    longer penalized by the provider and the insurers failure to
    contract, which is no fault of their own.
        Providers would no longer be able to balance bill patients
    for out-of-network emergency services or for scheduled services
    from providers the patient was not aware would be involved in
    their treatment. For the vast majority of cases our discussion
    draft is simply asking providers to be more transparent about
    their billing practices and charges.
        Insurers and hospitals also have a large role to play in
    making sure consumers understand their coverage. It is critical
    that we build some basic transparency and fairness into a
    system I think we all agree is incredibly difficult for
    consumers to navigate. Providers, hospitals, and insurers
    should share this goal--because the status quo is severely
    damaging their reputation and trustworthiness in the eyes of
    consumers.
        The discussion draft proposes resolving the payment dispute
    between the provider and the insurer by requiring the insurance
    plan to pay, at a minimum, the median in-network rate for that
    service in that geographic area. This ensures that in the
    absence of balance billing, every provider will be guaranteed
    some payment for their services. This would also create a
    predictable, transparent means of resolving these disputes
    between providers and insurers who have failed to contract. It
    would also place little to no administrative burden on States,
    the Federal Government, or the parties involved in the dispute.
        I look forward to hearing constructive feedback on the
    draft proposal, but I strongly believe that any viable solution
    in this space cannot result in rising healthcare costs. This
    debate has shed light on the fact that some provider's charges
    and hospital fees are inexplicably high, and I worry that if
    Congress chooses the wrong approach, consumers will simply end
    up paying those costs through higher premiums. We simply cannot
    allow this to happen.
        I hope that today we can have a productive discussion
    without pointing fingers and passing the buck. We should
    instead focus on policy solutions that protect consumers.
    Ideally, such a solution will not only take the patient out of
    the middle and hold them financially harmless from surprise
    billing, but will also help create a lower-cost, more rational
    healthcare system for all Americans. I believe that the
    Pallone-Walden discussion draft accomplishes these goals, and I
    look forward to feedback from our witnesses.
        I yield back.

        Ms. Eshoo. He was in great form today, even better form.
    He's always in good form.
        The gentleman yields back. Now I'd like to recognize my
    friend, the ranking member of the full committee, Mr. Walden,
    for five minutes for his opening statement.

       OPENING STATEMENT OF HON. GREG WALDEN A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Walden. Well, thank you, Madam Chair, and thanks to Dr.
    Burgess and you for this hearing and to Mr. Pallone for working
    in the bipartisan way we are to address this surprise billing
    issue.
        The hearing really is about patients, first and foremost.
    We are actually going to put them first. We have all heard the
    stories and you heard some more today.
        Patients who followed the rules, they pay their premiums,
    and then through no fault of their own following some sort of
    emergency situation or surgery, receive a 6-digit bill in the
    mail weeks later, which they have no way of paying.
        It is not fair. It should not happen and we are going to
    put a stop to it one way or the other. We must protect patients
    from these bills and we want to get it right.
        Since we released this draft last month, Chairman Pallone
    and I have received more than 60 comment letters on this draft
    from stakeholders across the healthcare industry.
        That feedback is critical as we work to take the patient
    out of these surprise billing scenarios without raising overall
    healthcare costs.
        I'd also like to thank all of our witnesses for being here
    today, many of whom have provided helpful feedback on this
    legislation and I'd particularly like to thank Ms. Wilkes.
        Unfortunately, you have had to become an expert on this
    topic the hard way by living through it with your children. As
    a parent, I share your frustration and your desire to fix
    surprise billing once and for all.
        Unfortunately, as you know, your experience is not unique,
    and I recently spoke with a doctor whose daughter's case has
    become pretty well known. The president had her down at the
    White House.
        She had been in the hospital and on the way out her
    provider suggested she take a simple drug test. Little did she
    know that that test then was sent to an out-of-network lab and
    she soon received a bill for $17,850 in the mail. She had no
    reason to know or even to think to ask if the lab was in or out
    of network. She was just following her doctor's advice.
        Situations like hers and yours, Ms. Wilkes, are why we are
    here today. We are going to stop this and it's why Chairman
    Pallone and I are moving forward with legislation to protect
    patients.
        I am also pleased the president has taken on this issue. He
    was very serious about fixing surprise billing when we had a
    bipartisan event at the White House a couple weeks ago and I am
    encouraged our draft legislation lines up pretty well with the
    principles the president has set forth for a solution that
    could get his signature and into law.
        So we are moving forward on this. The draft before us
    today, the No Surprises Act, would take a number of steps to
    address surprise medical bills.
        First and foremost, this bill prohibits balance billing of
    patients and limits a patient's bill to their in-network cost-
    sharing amount in emergency situations.
        This is common sense when a patient has little or no
    control over who gives them lifesaving care and can hardly be
    expected to make sure everyone is in network.
        For scheduled care like elective surgeries, patients must
    receive both verbal and written notice of any out-of-network
    providers who will be involved in their care, and if they don't
    consent to that notice, they cannot be balance billed.
        Under our draft bill, providers who would currently balance
    bill the patient will instead be paid to by the patient's
    insurer at the median in-network rate for the service they
    provided in that geographic area.
         And by the way, my home State of Oregon passed legislation
    on surprise billing last year with a similar approach and other
    states have passed their own models that create an arbitration
    process for providers and insurers to come to an agreement on a
    reasonable payment, and there are combinations of the two.
        Under our draft, these State laws, by the way, would remain
    in effect, and we know what many of the organizations
    represented in this room said when Oregon took up its law and
    what they've said since, and we know how it's playing out.
        There are a number of options on how to deal with the
    payments to providers and I look forward to hearing from our
    panel on their experience with these different models.
        In closing, I want to stress again this is an issue that is
    important to us and to our constituents and to all consumers in
    America. I understand there are competing interests here today.
    I expect we will have plenty of back and forth on the policies
    in this draft and that's what we are seeking.
        Protecting patients, however, must be put at the forefront
    of this discussion and I'll continue to work with my colleagues
    on both sides of the aisle to do just that. We are going to
    resolve this once and for all.
        With that, I yield back.
        [The prepared statement of Mr. Walden follow:]

                     Prepared Statement of Hon. Greg Walden

        Thank you, Madam Chair, and Dr. Burgess for holding this
    hearing. I'd also like to thank the Chairman of the full
    committee, Mr. Pallone, for working in good faith and in a
    bipartisan manner to release a discussion draft to address
    surprise billing.
        This hearing is really about patients. We've all heard the
    stories from our constituents. Patients who follow the rules,
    pay their premiums, and then through no fault of their own,
    following an emergency situation or surgery receive a 6-digit
    bill in the mail weeks later, which they have no way of paying.
    It is not fair. It should not happen.
        We must protect patients from these bills, and we want to
    get it right. Since we released this draft last month, Chairman
    Pallone and I have received over 60 comment letters on this
    draft from stakeholders across the healthcare industry. That
    feedback is critical as we work to take the patient out of
    these surprise billing scenarios without raising overall
    healthcare costs.
        I'd like to thank all our witnesses for being here today,
    many of whom have provided that helpful feedback on this bill.
    I'd particularly like to thank Ms. Wilkes--unfortunately you've
    become an expert on this topic the hard way, by living through
    it with your children. As a parent I share your frustration and
    your desire to fix surprise billing once and for all.
        Unfortunately, as you know, your experience is not unique--
    I recently spoke with a doctor whose daughter's case has become
    pretty well-known: She had been in the hospital, and on the way
    out her provider suggested that she take a simple drug test.
    Little did she know, that test was sent to an out-of-network
    lab and she soon received a $17,850 bill in the mail. She had
    no reason to know, or even think to ask, if the lab was in- or
    out-of-network. She was just following her doctor's advice.
    Situations like hers and yours, Ms. Wilkes, are why we're here
    today, We have to stop this. And it is why Chairman Pallone and
    I are moving forward with legislation to protect patients.
        I'm also pleased that the President has taken on this
    issue. He was very serious about fixing surprise billing at a
    bipartisan event at the White House a few weeks ago. I am
    encouraged that our draft legislation lines up well with the
    principles the White House has set forth for a solution that
    could get the President's signature and become law.
        The draft before us today, the No Surprises Act, would take
    a number of steps to address surprise medical bills. First, and
    most importantly, this bill prohibits balance billing of
    patients and limits a patient's bill to their in-network cost-
    sharing amount in emergency situations. This is commonsense
    when a patient has little to no control over who gives them
    life-saving care and can hardly be expected to make sure
    everyone is in-network. For scheduled care like elective
    surgeries, patients must receive both verbal and written notice
    of any out-of-network providers who will be involved in their
    care--if they don't consent to that notice, then they can't be
    balance billed.
        Under our draft bill, providers who would currently balance
    bill the patient will instead be paid by the patient's insurer
    at the median in-network rate for the service they provided in
    that geographic area. My home State of Oregon passed
    legislation on surprise billing last year with a similar
    approach, and other states have passed their own models that
    create an arbitration process for providers and insurers to
    come to an agreement on a reasonable payment--and there are
    combinations of the two. Under our draft, these State laws
    would remain in place.
        There are a number of options on how to deal with the
    payment to providers, and I look forward to hearing from our
    panel on their experience with these different models.
        In closing, I would like to once again stress how important
    this issue is to our constituents. I understand there are
    competing interests here today and I expect plenty of back and
    forth on the policies in the draft. Protecting patients,
    however, must be put at the forefront of this discussion and I
    will continue to work with my colleagues on both sides of the
    aisle to do just that.
        Thank you, Madam Chair, and I yield back.

        Ms. Eshoo. The gentleman yields back. The Chair would like
    to remind Members that pursuant to committee rules, all
    Members' written statements--opening statements will be made
    part of the record.
        I now would like to introduce all of our witnesses that are
    here today.
        Ms. Sonji Wilkes, who is a patient advocate--thank you very
    much for being here; Dr. Sherif Zaafran, thank you for you
    being here--he is the chair for Physicians for Fair Coverage;
    Mr. Rick Sherlock, the president and CEO for the Association of
    Air Medical Services--thank you to you; Mr. James Gelfand,
    executive--senior vice president to health policy, the ERISA
    Industry Committee; Mr. Thomas Nickels, the executive vice
    president of the American Hospital Association--it's nice to
    see you again; Ms. Jeanette Thornton, the senior vice president
    of product, employer, and commercial policy, America's Health
    Insurance Plans--welcome to you and thank you; Ms. Claire
    McAndrew, director of Campaigns and Partnerships at Families
    USA--thank you to you and the work that the organization does;
    Dr. Vidor--is it Vitor or Vidor?
        Dr. Friedman. Madam Chairwoman, it's Vidor.
        Ms. Eshoo. Vidor.
        Dr. Friedman. Thank you.
        Ms. Eshoo. Thank you. Vidor Friedman. Dr. Friedman,
    president of the American College of Emergency Physicians.
        So we thank all of our witnesses for joining us today and
    we look forward to your testimony.
        The Chair is going to begin by recognizing our first
    witness.
        Each one of you have five minutes to give your opening
    statement, and you're probably all pretty familiar with what
    the light system.
        The one you really have to pay attention to is red because
    it's over then, OK? So when it's yellow you have 1-minute
    remaining to wrap up your point.
        So, Ms. Wilkes, again, thank you for being here. Tell us
    your story. You're recognized for five minutes.

     STATEMENTS OF SONJI WILKES, PATIENT ADVOCATE; SHERIF ZAAFRAN,
    M.D., FASA, CHAIR, PHYSICIANS FOR FAIR COVERAGE; RICK SHERLOCK,
     PRESIDENT AND CEO, ASSOCIATION OF AIR MEDICAL SERVICES; JAMES
       GELFAND, SENIOR VICE PRESIDENT, HEALTH POLICY, THE ERISA
     INDUSTRY COMMITTEE; THOMAS NICKELS, EXECUTIVE VICE PRESIDENT,
     AMERICAN HOSPITAL ASSOCIATION; JEANETTE THORNTON, SENIOR VICE
        PRESIDENT OF PRODUCT, EMPLOYER, AND COMMERCIAL POLICY,
      AMERICA'S HEALTH INSURANCE PLANS; CLAIRE McANDREW, M.P.H.,
     DIRECTOR OF THE CAMPAIGNS AND PARTNERSHIPS, FAMILIES USA; AND
    VIDOR E. FRIEDMAN, M.D., FACEP, PRESIDENT, AMERICAN COLLEGE OF
                          EMERGENCY PHYSICIANS

                       STATEMENT OF SONJI WILKES

        Ms. Wilkes. Thank you, Madam Chairwoman.
        My name is Sonji Wilkes and I am a mom from Englewood,
    Colorado. I would like to thank the chairwoman, Congressman
    Burgess, and members of the subcommittee for the opportunity to
    discuss my family's experience with surprise billing and ask
    you to end this practice.
        When my husband and I became first-time parents as health
    20 somethings, neither of us had much experience with
    insurance. But we had a valuable lesson when we received a bill
    double what we expected.
        Seems the insurance company counted me and my newborn
    daughter as two separate patients. Though surprised, we paid
    the claim and moved on.
        Two years later, we decided to grow our family. A little
    wiser, we made sure to ask specifically if we would incur two
    co-pays. We double checked that our OB/Gyn and the facility
    that we were to deliver at were in network.
        Per the documentation from our insurance provider, we were
    covered. My son, Thomas, was born full term. By all appearances
    he was a healthy boy.
        Several hours after Thomas was circumcised, our
    pediatrician called to say that he was concerned that the
    circumcision site continued to bleed. The next day he called us
    in tears to say that Thomas had severe hemophilia A, a genetic
    disorder that prevents his blood from clotting.
        Our doctor told us that hemophilia was a rare--excuse me,
    Thomas was taken to the neonatal intensive care unit so that he
    could be closely observed. Within the hour, a specialist from
    the local hemophilia treatment center was standing in our
    hospital room and, after asking if we had good insurance, spent
    the next few hours explaining hemophilia to us.
        She brought a dose of clotting factor for Thomas to stop
    the bleeding as the hospital did not stock that medication. In
    the NICU, the hematologist started an IV line in my son's scalp
    while the NICU staff intently watched. They had never treated
    hemophilia.
        While the hematologist was not part of the hospital or the
    NICU staff, we never saw a bill for the medication she
    administered or for her time or services.
        Thomas remained in the NICU overnight for observation.
    Neither my husband or I left our son's side, and other than
    monitoring his vitals, there was no direct care give to Thomas.
    As a nearly 10-pound baby, he was a bit out of place in the
    NICU.
        We were discharged within the normal post-partum period and
    went home to come to grips with an unexpected chronic disorder
    diagnosis for our baby boy.
        A few weeks later, we received another shock--a $50,000
    bill for Thomas' stay in the NICU. We were dumbfounded. We had
    been at an in-network facility. How could we possibly be
    responsible for that amount?
        My husband and I felt we should not be held responsible. We
    did some research and found out that the hospital had
    subcontracted the NICU out to a third-party provider. This
    third-party provider was the one demanding payment.
        We had made a good faith effort to stay in network. We
    refused to pay the bill and, subsequently, were sent to
    collections. Our credit was ruined.
        Sometime later our minivan lease was expiring. As we headed
    to the dealership, we knew we wouldn't qualify for a new lease.
    I had to have a car. Thomas was being seen at the hemophilia
    treatment center multiple times a week. At the finance
    manager's desk, my husband and I explained the surprise bill.
    As I emptied the Kleenex box sitting on his desk, he started
    tapping on his computer, wiped a tear of his own, and said, we
    will make something happen for you. It might be at a crazy high
    interest rate and you'll have to keep the car until the day it
    dies. But I understand your situation because something similar
    happened to my family.
        I am still driving that minivan.
        When you are told your baby's body lacks the ability to
    stop bleeding and that he needs immediate specialized
    treatment, your first reaction isn't, gee, I wonder if that's
    in-network.
        Your first reaction is, do whatever it takes to save my
    baby. Why would I check if the NICU, just 50 steps away from
    the room that I gave birth in, was in network? I think any
    reasonable person would assume it to be because it seems
    reckless and cruel that it would not be.
        No family should face financial ruin because they are duped
    into thinking that they are at an in-network facility or
    because the in-network provider contracts out services like
    radiology, lab services, imaging, or more without the patient's
    knowledge.
        While transparency and disclosure of any out-of-network
    subprovider is critical, it's not enough. Navigating health
    insurance is extremely difficult and especially so in crisis or
    for the inexperienced.
        According to a recent Kaiser Family Foundation poll, four
    out of ten respondents said they had received an unexpected
    bill from a hospital, lab, or doctor in the past year.
        But surprise billing is not a new issue. My personal story
    is from 2003. Patients need you to pass protections to stop
    these harmful practices.
        I wish this wasn't mine or anyone else's stories to share.
    Please protect Americans from excessive bills and medical debt
    by ending this surprise billing.
        My family and millions of others thank you in advance.
        [The prepared statement of Ms. Wilkes follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Ms. Eshoo. Thank you, Ms. Wilkes.
        How is your son today?
        Ms. Wilkes. He's very good.
        Ms. Eshoo. Good. That's great.
        Ms. Wilkes. Fifteen years old and learning how to drive in
    that minivan.
        Ms. Eshoo. Isn't that wonderful? Isn't that great? Isn't
    that great? I just want to make a suggestion. I think that the
    witnesses all need to direct their comments attached to Ms.
    Wilkes' story. I mean, this is--I don't know--I don't think
    there's anyone here that can defend it. But it's just a
    suggestion.
        I am now pleased to recognize Dr. Zaafran for five minutes
    for his testimony. Thank you and welcome.

                   STATEMENT OF SHERIF ZAAFRAN, M.D.

        Dr. Zaafran. Thank you. Good morning, Chairman Eshoo,
    Ranking Member Burgess, and distinguished members of the
    committee.
        Thank you for inviting me to testify today on behalf of
    Physicians for Fair Coverage. My name is Sherif Zaafran and I
    serve as chair of the board of PFC and I am a practicing
    anesthesiologist.
        PFC is a non-profit nonpartisan multi-specialty association
    of tens of thousands of physicians partnered with patient
    advocates to end surprise medical billing.
        We are committed to finding a solution that creates strong
    patient protections, ensures access to care, and improves
    transparency.
        To be clear, PFC-affiliated physicians prefer to be in-
    network and are actually in-network with the vast majority of
    the patients we see. These numbers are actually representative
    of the larger market for emergency medicine, anaesthesiology,
    radiology, and other hospital-based physicians.
        On behalf of PFC, I want to commend all of you for working
    to address out-of-network surprise billing for our patients. As
    a physician, I live and work by the creed do no harm and
    believe that any solution to surprise billing should meet this
    test as well.
        In this spirit, PFC believes that protecting patients from
    potential financial stress by eliminating balance billing for
    unanticipated out-of-network care and ensuring patients pay no
    more than their in-network cost sharing is the right thing to
    do.
        It is important, however, to understand what causes
    surprise billing before we talk about the solution. There are
    two key factors: an increasing proliferation of high deductible
    plans, many of which can be $5,000 or more, which has resulted
    in a significant financial burden on patients that is
    unanticipated; and two, complicated plan designs with tiered
    and narrowing networks which force doctors to be out of network
    and in many instances not by their choice.
        Understandably, a Federal solution is key to solving the
    problem of unanticipated out-of-network costs. We want to
    recognize the leadership of Congressmen Ruiz and Bucshon for
    putting for a very thoughtful proposal, and we appreciate the
    proposal offered by full committee Chairman Pallone and Ranking
    Member Walden.
        PFC does have concerns, however, that the median in-network
    benchmark currently in the full committee's discussion draft
    could have the unintended consequences of potentially driving
    more patients and their physicians out of network.
        Our recommendation is to turn the benchmark payment concept
    into an interim payment with the ability of either side to go
    to a baseball-style independent dispute resolution process if
    there is a disagreement.
        The care provided by different physicians is not always
    uniform. There can be variability in quality and the cost of
    providing high-value care, especially when providing certain
    types of care in different geographical areas.
        While there may be a desire by some to reduce spending in
    critical pinnacle areas for patients in order to increase their
    own profitability, physicians would prefer to decrease overall
    healthcare costs by investing in resources that allow for
    better patient outcomes.
        To be sure, the best arbitration process is one that does
    not need to be utilized. We believe an appropriate interim
    payment will resolve most disputes. For those that it does not,
    IDR provides the opportunity to appeal the payment in a fair
    and expedited way.
        And this cut both ways. Plans and providers alike will have
    the opportunity to appeal. PFC has been very involved in the
    debate on this issue in the states and we note that solutions
    incorporating IDR such as New York and, most recently, in
    Texas, have proven successful.
        Indeed, in New York, such a process resulted in out-of-
    network rate dropping from 20.1 percent to 6.4 percent after
    IDR solution was put in place. According to a recent study by
    the Georgetown University Center on Health Insurance Reforms,
    the independent dispute resolution process has resulted in a
    decrease in out-of-network claims, a dramatic decline in
    consumer complaints about surprise bills, and no indication of
    an inflationary effect on insurers' annual premium rate
    filings.
        The law has also led to stronger protections for patients
    and more patient-centric health plans, enhanced transparency
    from health insurers, and increased network participation and
    fewer out-of-network claims.
        We believe a Federal solution should build on this proven
    success and we encourage the committee to include the IDR
    process in future iterations of the legislation.
        Doing so will preserve existing in-network arrangements,
    ensure both providers and payers have the ability to achieve a
    fair rate, take the patient out of the middle, and avoid
    significant disruption that would result from moving the market
    to a set benchmark rate.
        On the other hand, a poorly constructed untested solution
    could threaten patients' access to quality care and the
    provider's ability to serve their communities.
        For example, the experience in California shows that a
    benchmark approach does not work. The law has had unintended
    consequences, resulting in insurers refusing to renew
    longstanding contracts or offering significantly reduced rates
    that undermine good faith contracts.
        Insurers in the State now have little incentive to contract
    with physicians.
        Finally, we urge you to reject the false narrative advanced
    by some that arbitration necessarily involves a choice between
    so-called reasonable rate and providers' full billed charges.
        Arbitration guardrails can and should be designed to guide
    the parties to market-based rates while preserving appropriate
    variation based on performance and local conditions which
    economic studies have shown is the outcome produced with
    baseball-style former in particular.
        In conclusion, PFC advocates for and supports a ban on
    balance billing for unanticipated out-of-network care with
    strong patients' protections, fair reimbursement backed by an
    IDR process to ensure access to care, greater network adequacy
    standards, and improved transparency for all patients.
        Madam Chair, members of the committee, we appreciate your
    leadership on this important issue and thank you for the
    opportunity to testify.
        PFC stands ready to work with you in the best interests of
    our patients and physicians who care for them, and I am happy
    to answer any questions you may have.
        [The Prepared Statement of Dr. Zaafran follows:]

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        Ms. Eshoo. Thank you, Doctor.
        The Chair now is pleased to recognized Mr. Sherlock for
    five minutes for your oral testimony, and thank you for being
    here again.

                       STATEMENT OF RICK SHERLOCK

        Mr. Sherlock. Thank you. Good morning, Chairwoman Eshoo,
    Ranking Member Burgess, and distinguished members of the
    subcommittee.
        On behalf of the association of Air Medical Services, we
    look forward to working with you to ensure everyone in America
    has access to lifesaving emergency air medical services when
    they need it most.
        Emergency air medical services are highly effective medical
    interventions appropriate in cases where getting a patient
    directly to the closest most appropriate medical facility can
    make a significant difference in their survival and recovery.
        Today, because of air medical services, 90 percent of
    Americans can reach a level one or level two trauma center
    within an hour. However, since 2010, 90 hospitals have closed
    in rural areas and an estimated 20 percent more are at risk of
    closing.
        Our members fill the gap created by closures, but this
    lifeline is fraying as 31 air medical bases have also closed in
    2019. Emergency air medical providers never make the decision
    on who to transport. That decision is always made by a
    requesting physician or medically trained first responder.
        Air medical crews then respond within minutes, 24 hours a
    day, 7 days a week without any knowledge of a patient's ability
    to pay for their services.
        Our members are unique in the healthcare system. The
    service is heavily regulated by the states for the purposes of
    healthcare as ambulances and the Federal government for
    aviation safety and services as air carriers. It is their
    status as air carriers that allow rapid transport of patients
    over significant distances.
        Over 33 percent of our flights cross State lines every day.
    For that reason, the Airline Deregulation Act's uniform
    authority over the national airspace is essential to the
    provision of this lifesaving service.
        Exemption air medical services from the ADA would allow
    states to regulate aviation services including where and when
    they are able to fly, limiting access to healthcare for
    patients in crisis.
        Congress took significant action on emergency air medical
    billing in 2018. In the FAA reauthorization act, Congress
    established the Advisory Committee on Air Ambulance and Patient
    Billing.
        Congress would benefit from reviewing the work of the
    Advisory Committee, which was tasked to recommend actions to
    provide relief for patients while taking into account the
    unique operational, regulatory, and financial aspects of
    emergency air medical services.
        To prevent balance billing, our members are actively
    negotiating with insurance companies to secure in-network
    agreements. One member alone has increased their participation
    from five percent to almost 43 percent in the last three years.
        Despite that, some insurers have refused to discuss in-
    network agreements. That hurts both patients and caregivers.
    Air medical services are not a cost driver for insurance.
    According to testimony before the Montana legislature Joint
    Economic Affairs Subcommittee in 2016, supported by national
    health insurance data, covering air medical services in full
    represents about a $1.70 of the average monthly premium. More
    than 70 percent of the 360,000 patients transported by
    helicopter air ambulances each year are covered by Medicare,
    Medicaid, or are uninsured. According to a study conducted by
    Xcenda in 2017, $10,199 was the median cost of providing a
    helicopter transport, while Medicare paid $5,998, Medicaid paid
    $3,463 and the uninsured paid $354.
        This results in an ongoing imbalance between actual costs
    and government reimbursement and is the single biggest factor
    in increasing costs.
        AAMS strongly supports legislation that would increase
    transparency regarding air medical services and reform the
    Medicare reimbursement system for those services, which is a
    primary driver of balance billing.
        Legislation introduced in the 115th Congress supported on
    this committee by Congressman Ruiz and Johnson and co-sponsored
    by Chairwoman Eshoo, the Ensuring Access to Air Ambulance
    Services Act, would mandate 100 percent industry reporting of
    comprehensive cost data to the Centers for Medicare and
    Medicaid and then rebase Medicare fees for emergency air
    medical transport using that data, which would address the gap
    between reimbursements and costs.
        Additionally, there are reported incidents where
    individuals receive high bills for cases of prescheduled
    nonemergent private airplane transports. AAMS refers all such
    inquiries and reports to the Department of Transportation
    consumer protection division in the hopes that the agency
    exercises its already existing authority to protect consumers.
        Finally, AAMS would ask the committee to recognize the
    tremendous commitment our industry members and caregivers make
    who have dedicated their life's work to serving others and to
    ensure critical emergency medical response is always available
    to the communities they serve.
        AAMS believes in protecting patients. Our members protect
    them every day. AAMS thanks the committee for the opportunity
    to offer this testimony and asks the committee to recognize the
    unique aspects of this essential service and not to curtail
    access to healthcare for patients in crisis.
        [The Prepared Statement of Mr. Sherlock follows:]

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        Ms. Eshoo. Thank you, Mr. Sherlock.
        Now I would like to recognize Mr. Gelfand for five minutes
    for your testimony.

                       STATEMENT OF JAMES GELFAND

        Mr. Gelfand. Chairwoman Eshoo, Ranking Member Burgess, and
    members of the subcommittee, thank you for this opportunity to
    testify.
        I am James Gelfand, senior vice president for health policy
    at the ERISA Industry Committee, a trade association
    representing large employer plan sponsors.
        Our member companies offer comprehensive health benefits
    and as self-insured plans pay around 85 percent of healthcare
    costs for our beneficiaries. About 181 million Americans get
    insurance through a job and surprise billing fundamentally
    frustrates the goal of providing quality affordable employer-
    sponsored coverage.
        The vast majority of our employees are not doctors, HR
    executives, or medical billing experts, nor should they have to
    be. But patients are falling victim to impossible complexities.
    Employers are ready to work with Congress to right the ship. We
    are focused on three scenarios in which patients end up with
    big bills they couldn't see coming or avoid.
        Number 1, a patient receives care at an in-network facility
    but is treated by an out-of-network provider. Number 2, a
    patient requires emergency care, but the provider's facility or
    transportation are out of network. And number 3, a patient is
    transferred or handed off without sufficient information or
    alternatives. It is usually not the providers you're planning
    to see.
        It is the anesthesiologists, radiologists, pathologists, or
    emergency providers or transport for an unexpected trip to the
    NICU.
        Many work for outsourced medical staffing firms that have
    adopted a scam strategy of staying out of networks, practicing
    at in-network facilities, and surprise billing patients. It is
    deeply concerning but the problem is narrowly defined and
    therefore we can fix it.
        ERIC applauds the committee for taking the lead on solving
    this. The No Surprises Act nails it. It takes patients out of
    the middle and creates a market-based benchmark rate to pay
    providers fairly.
        The benchmark is not developed by government and it is not
    price setting. The committee might also consider network
    matching. It is simple.
        If a provider practices at an in-network facility, they
    take the in-network rate, or they go work somewhere else. Or
    base the benchmark on Medicare. You could set the rate higher,
    say, 125 percent of Medicare, and still make the system more
    affordable, sustainable, and simpler.
        These approaches will eliminate the surprise bills. That's
    a huge win for patients and improves the system by creating
    certainty for payers and fair pay for providers.
        But not everyone wants to stop surprise bills. Some
    provider specialties are saying, let us keep doing what we are
    doing--just use binding arbitration to make someone else pay
    these bills. They're asking for a nontransparent process that
    could force plans and employers to pay massive and fake medical
    list prices.
        It is essentially setting money on fire. Funds that would
    have been used to pay for healthcare will instead be spent on
    administrative costs such as lawyers, arbitrators, facility
    fees, and on unreasonable settlement amounts. Make no mistake,
    patients will pay these costs.
        The ground and air ambulance companies are asking Congress
    to let them keep surprise billing, too. Do nothing, wait for
    another study, another report, and there have already been
    four.
        They know patients cannot shop for them and many
    participate in no networks. State insurance commissioners are
    begging for help with air ambulances. But Congress has tied
    their hands.
        Employers think Congress should end this. Treat medical
    transport the same as emergency care. We should end surprise
    billing in the ER and on the way there.
        Other providers figure they're willing to stop surprise
    billing but only if they can increase in-network rates. They're
    calling for network adequacy rules to force insurers and
    employers to add more providers to their networks, even if
    those providers demand astronomical payments.
        Does anyone here actually believe that these hospital-based
    doctors whose services cannot be shopped for, who are
    guaranteed to see our patients, are begging to be included in
    our networks but nobody will return their calls? That they have
    no choice but to go and join these out-of-network Wall Street-
    owned firms?
        It doesn't make sense. Employers design health benefits to
    help our beneficiaries. We don't sell insurance. We want
    networks that meet our patients' needs. Why would we want to
    cover an operation but leave out the anaesthesia?
        We want our employees to be able to afford their health
    insurance, too, and that means we must be able to say no when
    providers are gaming the system. We are here to solve a
    specific problem, not to create new ones. Network adequacy is a
    distraction. Let's focus on protecting patients from surprise
    medical bills.
        In conclusion, thank you for this opportunity to share our
    views. The ERISA Industry Committee is eager to work with
    Congress towards a bipartisan comprehensive solution that
    protects access to care and ends the surprise billing crisis
    without driving up health insurance costs.
        And I am happy to answer any questions.
        [The prepared statement of Mr. Gelfand follows:]

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        Ms. Eshoo. Thank you, Mr. Gelfand.
        Mr. Nickels, you are now recognized for your five minutes
    of testimony.

                      STATEMENT OF THOMAS NICKELS

        Mr. Nickels. Thank you, Madam Chair. I appreciate the
    opportunity. My name is Tom Nickels. I am executive vice
    president of the American Hospitals Association here
    representing our 5,000 member hospitals and health systems.
        Our bottom line is that we must protect patients like Ms.
    Wilkes from surprise medical bills and the AHA supports Federal
    legislation to do so.
        Congress must act, as has been mentioned, to protect the 60
    percent of Americans who are in employer-sponsored plans under
    ERISA and those who live in states that have not enacted
    protections to address the issue of surprise medical bills.
        Patients should not be subject to balance billing when they
    have access to emergency services outside their network or have
    acted in good faith to obtain in-network care. They also
    shouldn't be surprised by coverage denials from their insurers
    when they access any emergency services in network or out of
    network.
        I would like to respond to a few of the ideas put forward
    in the Energy and Commerce discussion draft. First, we agree
    with that legislation should explicitly prohibit balance
    billing in the scenarios I just outlined and make sure that
    patients are kept out of the process to determine
    reimbursements between the payer and the provider. I would
    encourage you to also improve the standards for provider
    networks and ensure adequate oversight to prevent instances of
    out-of-network care.
        Once the patient is protected, we believe Congress should
    allow providers and payers to determine fair and appropriate
    reimbursement.
        We oppose a national rate or benchmark for out-of-network
    services such as a median contracted in-network rate even if
    geographically adjusted as it would not be able to capture the
    many factors that specific health plans and providers consider.
        We are also concerned at setting a reimbursement standard
    in law would serve as a disincentive for insurers to maintain
    adequate provider networks.
        We've already seen an increase in the use of no-network
    reference-based pricing models in the commercial market and
    this could accelerate should insurers have the option to
    default to a government-established out-of-network rate.
        Health plans should not be absolved of their core function
    of establishing provider networks including negotiating rates
    with providers.
        The committee's discussion draft provides $50 million
    grants for state-level all payer claims databases--APCD--that
    would presumably assist in determining a median contracted in-
    network rate.
        While we appreciate the committee's efforts to develop
    APCDs, we do not believe that the committee should rely on them
    for the purposes of this policy.
        While the AHA believes that hospitals and payers are able
    to negotiate reimbursement for out-of-network claims without
    government involvement, there may be a role for a dispute
    resolution process not for hospital services but for physician
    claims.
        The baseball-style of arbitration similar to what New York
    State has implemented, which does not include hospitals,
    appears to be an inefficient process that places the
    responsibility to initiate the request with the provider or
    health insurer and not the patient.
        Studies have shown a 34 percent reduction in out-of-network
    billing. Physicians have been largely split between the
    providers and payers, and there has not been a noticeable
    inflationary impact on premium insurance rates.
        The National Association of Insurance Commissioners has
    also put forward a model act that outlines a mediation process
    to resolve disputes. Again, these are state-level solutions.
    They do not resolve surprise bills under ERISA.
        However, they could be successfully deployed at the Federal
    level with some modification. The committee's discussion draft
    requires providers at the time of scheduling to give patients
    both oral and written notice about the provider's network
    status and any potential charges they could be liable for if
    treated by an out-of-network provider. While we believe
    providing the patient with this information on network status
    is important, it is not in and of itself a solution to surprise
    medical bills.
        Should the committee move forward with legislative language
    requiring notice and disclosure, we would ask that you include
    physicians and insurance plans in any requirements as they also
    have a role to play in keeping patients informed about their
    status.
        Lastly, I would like to address the concept of network
    matching, which is not in the committee's draft but has been
    suggested previously, in surprise medical billing. In this
    scenario, the facility-based practitioner will be required to
    contract with every plan for which the facility has a contract.
        AHA opposes this approach because it would interfere with
    the fundamental relationship between hospital and physician
    partners and severely limits providers' ability to negotiate
    contract terms with insurers.
        If you require hospitals to enforce this approach it would
    raise anti-trust concerns as it could be seen as an effort by
    hospitals to restrict the physicians' ability to practice.
        Madam Chair, we have an opportunity to protect patients
    from surprise bills as a consensus has developed among all
    parties. We should not risk moving forward by adding other
    policies that could put passage at risk.
        I look forward to working with the committee and the
    subcommittee to make sure that patients are protected from
    surprise medical bills.
        Thank you very much.
        [The prepared statement of Mr. Nickels follows:]

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        Ms. Eshoo. Thank you, Mr. Nickels.
        I know would like to recognize Ms. Thornton for five
    minutes for your testimony.

                     STATEMENT OF JEANETTE THORNTON

        Ms. Thornton. Thank you.
        Chairwoman Eshoo and Ranking Member Burgess, and members of
    the subcommittee, I am Jeanette Thornton, senior vice president
    of product, employer, and commercial policy for America's
    Health Insurance Plans.
        I appreciate this opportunity to testify on solutions to
    protect the American people from surprise medical bills. We
    want to end surprise medical bills so that patients like Ms.
    Wilkes and her family have the peace of mind in an emergency
    that they will not receive inflated bills from doctors they did
    not seek out for care.
        We applaud the leaders of the House Energy and Commerce
    Committee for developing a bipartisan discussion draft of the
    No Surprises Act. This draft bill takes important steps to
    protect patients, ensure that doctors are paid fairly, support
    health plan networks, and use market-based approaches to ensure
    affordable high-quality care.
        Our written testimony focuses on the following: a review of
    how surprise medical bills occur along with data demonstrating
    the frequency and magnitude, recommendations we support to
    protect patients, information on how surprise medical billing
    legislation will not weaken health plan networks, our concerns
    regarding arbitration and how this approach would increase
    healthcare costs for everyone, and a discussion of State laws
    in California, Texas, and New York that provide important
    lessons for Federal legislation.
        We have all heard personal stories that demonstrate the
    need for Federal legislation to protect patients from surprise
    medical bills: the Yoder family whose child experienced a
    $142,000 snake bite at summer camp, including a $55,000 air
    ambulance ride; Nellie Lu, who faced a $28,000 bill for her
    fall on her gym's climbing wall from a hospital at which at
    that time did not contract with any private insurers and was
    her only option; Dr. Kahn, whose ride in the ATV resulted in a
    $56,000 air ambulance ride and a balance bill of $44,000. He
    was one of dozens of patients across the country who have faced
    air ambulance bills from $28,000 to $97,000, and we have all
    heard the stories of American families who are afraid to seek
    treatment for fear of the high bills they will experience.
        These stories make it clear that surprise medical bills are
    creating financial hardship for the American people and that
    Federal legislative action is needed.
        Here is what we support. First, a balance billing should be
    banned in situations where patients are involuntarily treated
    by an out-of-network provider. This includes ER services
    provided at any hospital, any healthcare services that are
    provided at an in-network hospital by an out-of-network
    provider, and ambulance transportation in an emergency.
        Second, health insurance providers should be required to
    reimburse out-of-network providers an appropriate and
    reasonable amount in these scenarios.
        Third, states should be required to establish a dispute
    resolution process that works in tandem with the established
    payment benchmark.
        And fourth, hospitals and other healthcare providers should
    be required to furnish advanced notice to patients of the
    network status of treating providers.
        These protections must apply for self-funded plans and for
    people who live in states without adequate protections. The
    reason surprise medical bills are a problem is not a lack of
    network adequacy that some may suggest.
        Surprise bills are caused by a small subset of medical
    specialists who lack the financial incentives to participate in
    health plan networks.
        We urge you to reject proposals that would use arbitration
    to determine payments to out-of-network providers. This
    approach imposes administrative burdens on the entire
    healthcare system including employers that offer self-funded
    coverage.
        It also fails to address the root cause of surprise medical
    bills--exorbitant bills from certain specialty doctors.
        We appreciate that the committee's discussion draft and the
    Trump administration have rejected arbitration in favor of a
    market-based approach--an in-network payment benchmark.
        It is also important to look at State laws addressing this
    issue. Based on our analysis of laws enacted in California,
    Texas, and New York, we urge Congress to pursue a California
    style solution that both protects patients and consumers with
    common sense rules, does not undermine networks, and does not
    lead to higher cost-sharing or premiums.
        I thank you for this opportunity to testify. AHIP and our
    member health plans stand ready to work with the committee to
    alleviate the financial burdens imposed by the American people
    by surprise medical bills.
        Thank you.
        [The prepared statement of Ms. Thornton follows:]

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        Ms. Eshoo. Thank you.
        Dr. Vidor Friedman, you have five minutes for your
    testimony.

                   STATEMENT OF VIDOR FRIEDMAN, M.D.

        Dr. Friedman. Thank you, Madam Chair and members of the
    Health Subcommittee.
        On behalf of the American College of Emergency Physicians--
    ACEP--and our 38,000 members, I would like to thank you for the
    opportunity to speak with you today about this critical issue
    of surprise medical bills.
        The reason emergency physicians like myself do what we do
    first and foremost is to take care of patients in their moments
    of greatest need. This is not the time where patients should be
    worrying about verifying who their provider is, are in network,
    or what their deductible is, or what the cost of--the total
    cost of treatment might be.
        I care for each and every one of the patients that comes to
    my emergency department regardless of ability to pay. I do this
    not just because of the oath that I took as a physician but
    because it is appropriately required by Federal law.
        Unlike most physicians, emergency physicians are prohibited
    by Federal law from discussing with a patient any potential
    costs of care or insurance details until they are screened and
    stabilized.
        This important patient protection, known as EMTALA, ensures
    physicians focus on the immediate medical needs of patients.
    However, it also means that patients cannot fully understand
    the potential cost of their care or the limitations of their
    insurance coverage until they receive the bill.
        We understand that this can cause frustration, confusion,
    and, frankly, even be scary for patients. We agree with the
    committee's commitments to take patients out of the middle of
    surprise billing disputes and I would like to emphasize 3 key
    principles that ACEP urges Congress to consider as it works to
    address surprise billing.
        The first, and above all, is protecting patients. Congress
    should limit patients' out-of-pocket responsibility for
    emergency care, so they won't pay any more than the in-network
    amount.
        Currently, this protection only applies to co-payments and
    co-insurance, not to deductibles. We support the committee's
    intent on this provision in the discussion draft but urge you
    to go further than simply counting co-payments and co-insurance
    towards any deductible or out-of-network max.
        Rather, we urge you to require deductibles for out-of-
    network emergency services to be treated as if they were in
    network.
        The second principle is to improve transparency. While
    EMTALA prohibits me from discussing potential costs of care
    with my patients in advance, there are other ways Congress can
    improve transparency for emergency patients. Insurers should
    more clearly convey plan details to their enrollees. This will
    help patients better understand the limitations of their
    insurance coverage and all potential out-of-pocket costs.
        Insurers should also be required to explain to enrollees
    what their rights are under Federal law related to emergency
    care in easy to understand clear language.
        Third, now that we have taken the patient out of the
    middle, Congress should ensure fair and transparent dispute
    resolution between physicians and insurers. The goal should be
    a system in which everyone is in network or essentially that.
        That requires a level playing field between providers and
    insurers. Insurers are concerned that bench marking even median
    charges favors providers. Providers are concerned that bench
    marking the median in-network rates favors insurers. What's
    Congress to do?
        ACEP supports a system that has already proven to be
    balanced between insurers and providers. That is a baseball-
    style independent dispute resolution process similar to that
    used in New York and noted in the legislative proposal put
    forth by Drs. Ruiz, Roe, and Bucshon.
        In New York this simple and effective solution has almost
    completely eliminated surprise bills. It incentivizes
    physicians to charge reasonable rates and it also incentivizes
    insurers to compensate at appropriate levels. Insurance
    premiums and healthcare costs in New York have actually grown
    more slowly than the rest of the nation.
        This model would be the least disruptive to the current
    system. It is the only model with empirical data detailing the
    positive impact it has had for patients and all stakeholders.
        To be clear, this model has not been extraordinarily
    bureaucratic, costly, burdensome, or inflationary. More must be
    done to protect patients and their families from unexpected
    medical bills, and we stand with you in this regard.
        On behalf of the 150 million Americans my members care for
    every year, I thank you for your consideration and the
    opportunity to speak with you today.
        [The prepared statement of Dr. Friedman follows:]

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        Ms. Eshoo. Thank you, Doctor.
        Now I have the pleasure of recognizing Ms. McAndrew for
    five minutes for your testimony.

                      STATEMENT OF CLAIRE McANDREW

        Ms. McAndrew. Chairwoman Eshoo, Dr. Burgess, and members of
    the subcommittee, I am Claire McAndrew, the director of
    Campaigns and Partnerships at Families U.S.A., where I lead the
    organization's work on surprise billing.
        For nearly 40 years, we have served as a leading voice for
    healthcare consumers and our mission is to ensure that every
    individual can access the healthcare and the best health in
    order to ensure that no matter where you live or who you are
    you can have the life that you need to--based on achieving the
    best health and healthcare.
        And so high and rising healthcare costs are truly an
    affront to our mission as they are forcing people to choose
    between getting the healthcare they need and affording their
    other most basic necessities, and we heard about that from Ms.
    Wilkes.
        Surprise bills are a particularly egregious form of
    healthcare costs because families who are doing everything,
    they can to navigate our overly complex healthcare system,
    working to go to only in-network providers, going to only in-
    network facilities are still receiving these egregious bills.
        And, unfortunately, these bills are incredibly common. One
    in five emergency visits results in a surprise bill. But these
    bills are also occurring outside our emergency situations.
        For examples, families who welcome a new baby, ensuring
    that they're getting an in-network OB/Gyn in an in-network
    facility are still getting surprise bills 11 percent of the
    time.
        So, what's causing these bills? Surprise bills are the
    result of a systemic problem in our healthcare system placing
    families directly in the middle of a tug of war between
    healthcare providers and health insurers fighting over the
    price of services.
        While health systems and insurers are vying for leverage
    including because of consolidation, consumers are completely
    trapped between these industries.
        What does not cause surprise bills, despite claims by some
    stakeholders, evidence does not conclude that narrow networks
    are a driving factor behind surprise bills.
        We know that people who are covered in plans that tend to
    have narrower networks and people covered in plans that tend to
    have broader networks are actually getting surprise bills at
    about the same rate.
        And so, I want to be clear that Families USA does support
    network adequacy standards. It is something we have advocated
    for. But we understand that in this particular situation around
    surprise bills network adequacy standards aren't going to solve
    the problem alone.
         Another common misperception I want to raise that we heard
    about from Ms. Wilkes is the fact that this is not a new
    problem. Consumers have been subjected to unexpected and
    unaffordable costs from surprise bills for literally decades,
    and the proof is real for us because Families USA has been
    working on this for decades.
        We actually joined with other stakeholders in 1997
    recommending banning surprise bills in emergencies as part of
    President Clinton's efforts around the Consumer Bill of Rights.
    So this is a very longstanding problem and for far too long
    it's warranted congressional action.
        Only Congress can fix this, because even when states
    address this problem, many consumers are left out because they
    are in ERISA-regulated plans.
        So we commend the Energy and Commerce Committee for
    responding to this urgent need with the release of the No
    Surprises Act. This legislation takes really important steps.
        It holds consumers harmless from surprise bills and it sets
    a reasonable benchmark to pay providers from insurers at a rate
    that's not inflationary so that families don't experience
    increased premiums.
        We support the No Surprises Act, but we are concerned. So
    much of this debate has been about making insurers and
    providers happy based on a payment rate. This legislation is
    supposed to be about consumers.
        And so, we want to ensure that this discussion is not
    consumed about what makes powerful industries happy and that
    the needs of consumers are not lost, and the pace of this
    legislation is not slowed based on appeasing insurers and
    providers.
        And so we want to make two recommendations about the needs
    of consumers. First, we urge the subcommittee to broaden the
    scope of the providers included in the legislation so that no
    loopholes remain.
        We want to make sure that there's not just a discrete set
    of providers and facilities subject to the legislation but that
    any facility or provider that could incur a surprise bill is
    included.
        And second, we urge the subcommittee to strengthen the
    bill's notice requirements. We are concerned that just 24
    hours' notice could be too short for a consumer to find out
    that nonfacility-based providers are out of network.
        We would urge looking at more like a week because if you
    have scheduled medical leave, if you're about to undergo an
    important medical procedure, 24 hours might be too short of a
    time to learn that you have to find another option.
        We are so grateful to the subcommittee for taking on this
    issue. This is such an important hearing. We urge Congress to
    very swiftly take action. Our number-one recommendation is not
    to wait.
        This legislation must pass this year. I really appreciate
    what you said, Chairwoman Eshoo. If stakeholders can't agree,
    Congress has to solve the solution because consumers cannot
    wait any longer and Families USA is with you to help you solve
    this problem in any way possible.
        Thank you very much.
        [The prepared statement of Ms. McAndrew follows:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Ms. Eshoo. Terrific. Thank you very much to each one of our
    witnesses. So now we have concluded all the statements and move
    to members' questions.
        Each member will have five minutes to ask questions of our
    witnesses and I will begin by recognizing myself for five
    minutes.
        To the panel, does everyone here agree that patients should
    not receive surprise billing? Is there anyone that disagrees
    with that?
        A hundred percent. Well, that's a good beginning.
        Mr. Nickels, are there hospitals in your association that
    send patients surprise medical bills and, if so, why?
        Mr. Nickels. The statistic that we like to quote the most
    is most of our member hospitals are in network. The Federal
    Trade Commission did a study recently that showed----
        Ms. Eshoo. Well, do you have any hospitals in your
    association that send surprise medical bills, yes or----
        Mr. Nickels. You mentioned one a little earlier, I
    believe--San Francisco General.
        Ms. Eshoo. Yes.
        Mr. Nickels. To the best of my knowledge, they are the only
    ones who were doing what you described.
        Ms. Eshoo. And how many hospitals do you represent in the
    country?
        Mr. Nickels. Five thousand.
        Ms. Eshoo. Five thousand. So 4,999 do not send any surprise
    bills?
        Mr. Nickels. Where the hospital services--the facility
    charge, no, they do not, and coming to one of our----
        Ms. Eshoo. Do you have any hospitals that have--well,
    you're saying that 4,999 of your hospitals have successfully
    stopped sending surprise billing?
        Mr. Nickels. For the facility--for the hospital facility
    fee, that is correct.
        Ms. Eshoo. What does that mean, what you are saying? I
    don't get it.
        Mr. Nickels. Well, the examples that have been given have
    been physician examples and we are not absolving ourselves from
    responsibility here. These are physicians who practice in our
    institutions.
        Ms. Eshoo. Well, using your own words in the way you
    describe your systems--your hospitals--how many actually do
    surprise billing?
        Mr. Nickels. If you're saying are there--are you asking if
    there are physicians in our facilities who are surprise
    billing?
        Ms. Eshoo. You're representing hospitals.
        Mr. Nickels. Right. Hospitals----
        Ms. Eshoo. Hospitals are a part of the problem, right?
        Mr. Nickels. Well, the----
        Ms. Eshoo. We have hospitals, we have insurance providers,
    we have physicians. You're 1 of the stakeholders. So I don't
    want to spend all of my time questioning you, but it doesn't
    seem to me that you can give me--perhaps you can give me a
    better answer in writing.
        Mr. Nickels. Sure.
        Ms. Eshoo. Let me go to Dr.--to the Drs. Zaafran and Dr.
    Friedman. Have you or any physician you know billed a patient
    with what we would consider a surprise bill----
        Dr. Zaafran. So the company that I work----
        Ms. Eshoo [continuing]. And why, if you have?
        Dr. Zaafran. The company that I work for has a policy of
    not sending surprise bills. What I will tell you, though, is
    that in instances where we don't know that we are actually out
    of network, and that's one of the things that I wanted to make
    sure that I brought up is that this out-of-network providers
    concept is a little bit of a misnomer.
        I may be in network with every single insurance carrier out
    there but happen to be out of network with one plan of one
    carrier, and in many instances, I may not know that.
        And as much as we try to know if we are out of network with
    that specific plan, we may not know that right away and we may
    actually inadvertently send a bill.
        But once the patient contacts us, we take care of that
    right away. So that's where there's some discrepancy as far as
    whether we know we are actually in network or not out of
    network with a specific plan of a specific carrier.
        Ms. Eshoo. I can't help but wonder what Ms. McAndrew and
    Ms. Wilkes are thinking so far in terms of the question I asked
    and the answers we have gotten. Think about it for a moment.
        To Ms. Thornton, I want to ask you the same question. Are
    there any health plans in your association that where patients
    are not protected from surprise billing and, if so, why?
        Ms. Thornton. Yes. So patients who receive coverage through
    their employer through a self-funded plan are not protected by
    the various State laws that are out there.
        Ms. Eshoo. Which is one of the main reasons that Congress
    has to act. Right. But there is surprise billing, though, in
    terms----
        Ms. Thornton. Yes. There have been widespread reports. Yes.
        Ms. Eshoo. Yes. Right. So I want to go to the patient
    advocates. Tell us what you think--I think I know what you
    think but it's worth stating it for the record. We've heard a
    lot of testimony. They're all stakeholders. These are all good
    people with a system that's really messed up.
        So what would you like to tell the committee? You want us
    to do it pronto. We all agree with that. Patients are being
    subjected to absurdities. What else would you like to say,
    having heard everyone else's testimony?
        Ms. Wilkes. Well, I believe that, as I said, insurance is
    very, very difficult to navigate. My husband and I consider
    ourselves to be pretty health literate and we still don't
    understand our insurance plan.
        So in the case of an emergency, that's not your first
    thought. Your first thought is take care of my baby--take care
    of myself, and I feel like it should just be go to your doctor,
    get the care that you need, and not have to worry about the
    business side of things.
        Ms. Eshoo. Right. Ms. McAndrew?
        Ms. McAndrew. I think the data speaks for itself. This is
    happening in urban areas, rural areas, non-profit hospitals,
    for-profit hospitals. Everyone agrees the patient should be
    held harmless, but the patient isn't being held harmless. This
    is not going to stop unless we have a policy solution.
        So I understand that everybody, you know, wants to stop
    this problem. But there's money involved. There's not going to
    be any voluntary cessation of this problem unless we have a
    congressional solution.
        Ms. Eshoo. It is always about money. That's just the way it
    is.
        I now would like to recognize the ranking member for his
    five minutes of questioning, Dr. Burgess.
        Mr. Burgess. Thank you, and Ms. Wilkes, let me just say
    your testimony was very compelling this morning and it
    underscores why not just this discussion this morning is
    important but we are also having discussions on drug pricing.
        I guess the good news in the realm of illnesses such as
    your son's is there are some very promising therapies right on
    the horizon with gene therapies. These may be single
    administration therapies that produce long-term benefits, and
    we have no frame of reference on how to price.
        And the work we are doing on drug pricing becomes so
    important because everyone on this committee voted for a bill
    called CURES for the 21st Century. We want those cures to be
    put in the hands of doctors. They don't do any good if no one
    can afford them when they arrive.
        So the work that this subcommittee does, yes, on this issue
    is important and on the larger issue of drug pricing in general
    and how do we--how do we price these new breakthrough
    therapies--hemophilia, sickle cell disease, spinal muscular
    atrophy. All of these are big deals that are happening, and we
    are grateful that they're happening.
        They're happening largely because of work done in this
    subcommittee. We've got to be--the same type of forward-leaning
    thought that went into CURES for the 21st Century also needs to
    be there on the pricing of those therapies.
        So, Dr. Zaafran and Dr. Friedman, let me just talk to you
    all for a moment. Now, I had a medical practice. I didn't use a
    billing service in my medical practice. I just billed through--
    we had our own billing department.
        I never turned anyone over to collections because you never
    knew down the road when someone's going to have a problem and
    if they got a bill the same day they would say, hey, it's your
    fault, and being an OB I practice defensive medicine as one of
    my specialties.
        But you have--Dr. Zaafran, I am going to assume that
    you're--you have got a big anaesthesia group--you have a
    billing service, correct?
        Dr. Zaafran. Correct.
        Mr. Burgess. And, Dr. Friedman, in your ER group?
        Dr. Friedman. That's correct.
        Mr. Burgess. So are you doing anything with the billing
    services that you employ to at least begin to mitigate this
    issue or do you have a patient ombudsman who will look into
    these things if they're brought to your attention?
        Dr. Zaafran. Dr. Burgess, we have a customer service line
    to make sure that if Ms. Wilkes ever received a bill that she
    was not expecting that we would work with her directly to make
    sure that if it was an out-of-network bill, for example, in the
    very, you know, small percent of cases where it might be the
    case that we would--that we would not let her have to get
    involved in that.
        There are other instances where because, again, of high
    deductible plans where if we happen to be 1 of the first ones
    who have billed and the patient's responsibility for the
    deductible is the entire amount that's there, there may be some
    difficulties there.
        And part of the problem is that physicians are responsible,
    or hospitals, are responsible for having to collect those
    deductibles and co-pays, and as those numbers have been
    increasing, as those deductibles have been increasing to, in
    many instances, more than $5,000, it has put a significant
    burden on us having to work with patients to collect that.
        I mean, I think since it's a contract between the payer and
    the consumer, it would be better for the payer to collect what
    they contractually agreed to collect and not have to put that
    burden on us where I may not have any idea at what portion of
    the deductible that patient has been paid.
        Mr. Burgess. Yes. You never want to be first. That's right.
        Dr. Friedman?
        Dr. Friedman. Yes. The companies that I've worked for--and
    I've worked for 3--we have all had customer service folks that
    will work with people when they get an out-of-network bill.
        One of the things that I want to emphasize to the committee
    I happen to work in Orlando, Florida at the hospital closest to
    Disney World.
        Forty percent of my patients come from out of the state.
        Mr. Burgess. Sure.
        Dr. Friedman. So 40 percent of my patients are out of
    network.
        Mr. Burgess. And can you just comment a little bit on
    EMTALA and how that intersects with all of this discussion,
    having----
        Dr. Friedman. Well, as I mentioned in my testimony, both my
    written and my oral, EMTALA prohibits us from discussing
    anything about payment.
        In my 30 years of practice as an emergency physician, I've
    never asked a patient if they have insurance. I take care of
    the patient.
        I get them to the place they need to be, whether that's
    home or admitted to the hospital or an observation unit, and
    then afterwards they get a bill.
        But I don't know if they're in network. I don't know if
    they even have insurance, and that's the way we operate in
    emergency medicine.
        And one of the concerns that we have is that while folks
    have talked about the fact that high deductibles may not be the
    root cause of this, high deductibles, unfortunately, give an
    incentive for insurers to not negotiate in good faith with
    emergency providers.
        They know we are going to take care of their enrollees. We
    are obligated by Federal law to do that.
        Mr. Burgess. And you do obligate then the downstream--the
    cardiologist, the OB/Gyn to whom you refer--they also are
    obligated under those--without having a contract?
        Dr. Friedman. The boundaries in EMTALA are a little bit----
        Ms. Eshoo. Please wrap up. The gentleman's time has
    expired. Just quickly.
        Dr. Friedman. Oh, OK.
        Mr. Burgess. Please answer the question.
        Dr. Friedman. The boundaries of EMTALA are complicated. It
    would make it a lot simpler if it was when the patient was
    discharged from the hospital that EMTALA ended.
        Mr. Burgess. All right. Thank you.
        Ms. Eshoo. The gentleman yields back.
        I now would like to recognize the chairman of the full
    committee, Mr. Pallone, for his five minutes of questions.
        Mr. Pallone. Thank you, Madam Chair.
        Healthcare costs are one of the top issues on the minds of
    all our constituents and this discussion has really highlighted
    the shocking costs people are dealing with, and when you look
    at some of these bills they're very unclear about what services
    were provided and why the services cost as much as they do.
        So I wanted to ask some questions. Ms. Wilkes, when you
    received that $50,000 bill, was it easy to understand what you
    were being charged for and were you able to compare costs and
    determine if you were being billed fairly?
        Ms. Wilkes. No. The bill was not itemized at all. It just
    was a dollar amount.
        Mr. Pallone. You know, I have to say, you know, this is,
    totally anecdotal but a few years ago--it might be, like, 15
    years ago--I remember talking to one hospital administrator who
    told me that, you know, that basically they just assign costs,
    you know, on a bill without any reference to what the actual
    cost is.
        And so that's why you can have an ice bag that's, you know,
    $150 at one place and $15 at another because it's really not
    based on the actual cost.
        But who knows? You know, hopefully that's not true.
        Dr. Zaafran or Dr. Friedman, could you briefly explain who
    determines provider charges and how they are set? Start with
    Dr. Zaafran.
        Dr. Zaafran. Thank you, Mr. Pallone.
        Our charges are based on an aggregate cost of what it costs
    us to deliver service. So in anaesthesia it's a little unique
    because it's time based. So we charge based on a unit of time
    for every 15 minutes.
        So it's not an arbitrary cost. We know exactly how much we
    are billing, depending on whether the surgeon takes 15 minutes
    or an hour or hour and a half.
        We, from our standpoint, because we try to focus on quality
    care, our expenses include nursing, having an opioid-free type
    of perioperative type of environment because we know it reduces
    overall cost. So all of that is built into how much we charge
    per unit of time.
        Mr. Pallone. And it's not broken down?
        Dr. Zaafran. Actually, if a patient calls us and asks us
    what that is, we do break it down because, again, it's based on
    the specific type of surgery. We can tell them exactly----
        Mr. Pallone. They'd have to ask you?
        Dr. Zaafran. We can provide it, and if it's on a piece of
    paper it may not make sense because we don't know how long a
    surgery is going to take. But we tell them that it took about
    an hour and a half, it was this kind of surgery, it was this
    many units and this much unit per time, and this is what the
    total cost was.
        Mr. Pallone. OK.
        Dr. Friedman?
        Dr. Friedman. So in emergency medicine, Chairman, it's a
    little bit different. We bill typically by what's called E&M
    codes, which are levels of service.
        There are five E&M codes from a level one, which is we
    hardly ever use--it's basically a suture removal or recheck on
    something minor--up to a level 5, which would be someone that
    would be going to a critical care unit.
        Maybe you are having a heart attack. You're receiving
    significant amounts of care. And then we can also bill a
    critical care charge, which would supersede that if you do
    receive critical care treatment in the emergency department.
        Mr. Pallone. All right. Thanks.
        Now, we have all heard stories about patients being billed
    for hospital fees. One Vox article tells a story of a man who
    took his one-year-old daughter to the emergency room after a
    minor accident, as many worried parents do. For five minutes of
    the provider's time, water, gauze, and a Band-Aid for his
    daughter's finger, led to a $629 bill from the hospital's
    emergency department.
        So I am going to go back to Dr. Nickels. But, again, I use
    the example where, you know, a few years ago a hospital
    administrator told me, you know, we just assign these things--
    they're not actually referencing, you know, actual costs for
    the--you know, in this case for the Band-Aid or the gauze or
    the water or the provider's time.
        You know, could you give us a sense, Mr. Nickels, of how
    much hospitals charge and facility fees on average and what are
    hospitals doing to make these fees more transparent?
        And, you know, maybe if you want to dispute what I just
    said, you know, like in this case would they actually figure
    out how much it costs for these different things, or not?
        Mr. Nickels. Yes. I mean, the charge system is obtuse, to
    be kind, and I think it's a broken system. We are trying to
    work--we have a committee.
        We are working with the Trump administration. We need to
    figure out a way to fix it. But most people, almost anyone who
    is insured is not paying charges. The Government doesn't pay us
    charges. We negotiate with insurers. They don't pay charges----
        Mr. Pallone. Well, I only--30 seconds. So it's very
    possible that in this case, or using my example, you know,
    there's really no breakdown for those five minutes of the
    provider's time, the water, the gauze, the Band-Aid. It is not
    done that way.
        Mr. Nickels. Correct. It may be but it may not, if that's--
    --
        Mr. Pallone. Right. So very possible that what I talked
    about, you know, 10 or 15 years ago, we just assign things--
    very possible.
        Mr. Nickels. Yes.
        Mr. Pallone. All right. That's pretty sad, Madam Chair.
        But thank you.
        Ms. Eshoo. Thank you, Mr. Chairman.
        I now would like to recognize my friend, the ranking member
    of the full committee, Mr. Walden, for his five minutes of
    questions.
        Mr. Walden. Thank you, Madam Chair, and we have this other
    hearing going on upstairs I had to go up to on FERC--Federal
    Energy. So we are back.
        Ms. Thornton, the comments submitted to the committee as
    well as Dr. Zaafran's testimony providers have argued that
    California's benchmark has led to payers refusing to renew
    long-standing contracts or offering lower rates.
        But in your testimony you mentioned that California's
    benchmark has led to an increase in network participation and
    the Blue Shield of California has told us that current State
    laws on network adequacy still apply and, in fact, since their
    surprise billing law went into effect they have increased their
    number of contracted physicians by five percent overall and six
    percent specifically at acute care hospital facilities.
        Can you help this committee better understand what's taking
    place in California by sharing a bit more about those
    preliminary reports? And what about other states such as mine,
    Oregon, with benchmark solutions? What can you tell us about
    that?
        Ms. Thornton. Thank you. So yes, so there's been a lot of
    debate around the California law, and the California law just
    took effect in January of 2019. So it's very new.
        Mr. Walden. Right.
        Ms. Thornton. And so we have been talking with our plans
    and their experience with implementation of the law and they
    have not reported to us that they've seen, you know, decrease
    in network participation.
        In fact, as you have mentioned. One of our plans has
    actually seen an increase in providers participating. So I
    don't think the California law can be used as a reason why
    we'll see decreasing networks. We want strong networks for our
    members.
        Mr. Walden. And have you seen something similar in Oregon?
        Ms. Thornton. No, I have not.
        Mr. Walden. OK. So you don't have any data on what's
    happening in Oregon? All right.
        Doctor, do you want to address this from your point of
    view?
        Dr. Zaafran. Yes, sir. Thanks, Mr. Walden. We know of
    actually 2 of the largest groups in California. One of them who
    has been in network for many, many years have not had actually
    any kind of cost of living increase or anything like that.
        We were told point blank that they're going to have to take
    a big cut or they can simply just go out of network and they'll
    be paid a very low benchmark based on Assembly Bill 72.
        We also know of a very large group in the northern part of
    California where they have not been in network, have wanted to
    be in network, have been told that they have no desire to be
    allowed to be in network and, again, that they would be paid a
    very low benchmark based on Assembly Bill 72.
        Again, I know that it's a new law that just started in
    January. But the anecdotal evidence that we have from the
    groups that are being affected by this is that they've been
    impacted.
        Mr. Walden. And who is telling them that?
        Dr. Zaafran. The specific insurance carriers that they're
    negotiating with to try to be in network.
        Mr. Walden. I suppose you don't really want to identify
    those specific insurers here before us today?
        Dr. Zaafran. I would rather just talk in general
    statements, but yes.
        Mr. Walden. Uh-huh. All right. Several stakeholders suggest
    requiring plans to update their provider network directories in
    a more timely manner. Seems pretty practical. I think Texas was
    working on--oh, you're no longer from Texas.
        [Laughter.]
        Mr. Walden. You're changing out on me. I know Texas was
    working on some of that disclosure language as well. I don't
    know where that ended up through the system.
        But how regularly do plans update their directories right
    now? And I've heard from people that go, great, I signed up for
    the plan. I am in the system. The provider is in the system.
        Then something changes and I can't change my insurance and
    now I am stuck in a plan that my provider used to be in and now
    they are not. Now I am out of network. Now I am going to get
    one of these nutty bills. That is not putting the consumer
    first. Ms. Thornton, can you address this, please?
        Ms. Thornton. Sure, of course, and I think one of the
    things I first want to set aside is that in an emergency
    situation we don't want anybody to have to worry about the
    provider directory. We want the patients to be protected in
    that situation.
        But I will say to your question it is very important to our
    plans that we have accurate and reliable data for consumers
    for--in the provider directories when they are seeking care,
    scheduled care, et cetera, and are working very hard to make
    sure that that occurs.
        Mr. Walden. Can you put all of that online on a regular
    basis? How do these directories work? Do I have to get a
    printed copy sent to me in the mail?
        Ms. Thornton. Oh, they're all online. You can also call our
    plan's customer service to get information via the phone if you
    don't have access online.
        Mr. Walden. Do you notify policy holders when things
    change?
        Ms. Thornton. If a patient has been seeing a particular
    provider there is also often a notification that takes place.
        Mr. Walden. Often. All right. Because I think you ought to
    be notified. I think you ought to--how do you know? How do you
    keep up with this stuff? You think you're covered. I am just
    telling you that you're headed to a big train wreck here.
        Ms. Thornton. Information changes daily. I understand.
        Mr. Walden. And you know it because you know how to send a
    bill out. The consumer ought to know it because they're the
    ones getting the surprise bill.
        That's where I am coming from here, as a consumer and
    representing consumers. How do we know? I will tell you 1 quick
    story, and I know I am going to go over. Just a second, Madam
    Chair, with your indulgence.
        A guy at a think tank here--this is second hand--who goes
    in for a colonoscopy, is on the table prepped and ready to go--
    and those of you who are old enough to have been through this
    you understand what's at stake here--asked the doc, is the
    anesthesiologist in my network. I don't know. Well, before I
    sign this I need to know.
        Well, I can't tell you--I don't know. Do you want the
    procedure today or not, because I've got five more of these to
    do? The guy signs it, goes under, boom, done. Is that what we
    are doing to consumers? I think this is nuts.
        Ms. Thornton. I mean, that's horrible and that's why we
    need this legislation.
        Mr. Walden. And this is going on every day in America and
    it shouldn't be. You forgot who you serve and it's the
    consumer.
        Thank you, Madam Chair, for your indulgence.
        Ms. Eshoo. Thank you for your important questions. I don't
    know--I just want to throw something out here. This business of
    notification, and you just put a spotlight on it. Who's going
    to be notified when, and then what the heck do they do once
    they're informed?
        What, you're in labor and then you find out that the--
    whomever, the anesthesiologist is--exactly--well, I will hold
    on to this child and try to get to another place. I don't know
    what this notification--most of this is in an emergency room
    setting, at least that's what the statistics show.
        So I don't know if it's really very smart to be focusing on
    notice. Yes, people should be noticed. But let's use some
    common sense about how notice is--how effective, quote,
    ``notice'' is going to be.
        I mean, given the settings, it's not making too much sense
    and it's making it sound as if we throw that in there that
    it's, boy, is this really going to do something. So I am not--
    you can tell I am not convinced.
        All right. With that, I would like to recognize a total
    gentleman from North Carolina--yes, it's you. It is you. Mr.
    Butterfield for five minutes of his questions.
        Mr. Butterfield. I will wake up, Madam Chair. Thank you.
    Thank you so very much for those kind words. Thank you for
    convening this very important hearing today.
        Thank you to the eight witnesses for your testimony. Like
    Mr. Walden said, I've been bouncing between hearings today and
    knew that my time was coming up pretty soon and so I am back
    here with you.
        While I am on the thank you trail, let me also thank Mr.
    Pallone and Mr. Walden for their bipartisanship in putting
    forth this discussion draft. I think it's going to lead to good
    legislation which is ultimately going to protect every consumer
    in America.
        Let me begin with Mr. Nickels. Mr. Nickels, I represent a
    very low-income district in eastern North Carolina. It is not
    unlike any other rural community in America. We face unique
    challenges when it comes to healthcare.
        In some areas in my district there isn't a hospital for
    many, many miles, and you have heard that before and it's not a
    surprise. These markets have little competition. Residents have
    few facilities to choose from.
        The small hospitals that do serve these areas are often
    operating at a loss or near loss and they rely on
    reimbursements as their primary revenue source.
        In your opinion, how would the imposition of statutory
    rates impact small rural hospitals?
        Mr. Nickels. Yes. We do worry about, as you said, the
    imposition of those kinds of rates. One-size-fits-all won't
    work because there are unique circumstances----
        Ms. Eshoo. Can't hear you.
        Mr. Nickels. OK. I certainly agree with what you're saying
    there. One of the reasons we don't like national rates is
    because they don't take into consideration local conditions
    like the ones you describe and it's really important that that
    be more of a function of negotiation between the hospital and
    the insurer who will be, hopefully, persuaded of the importance
    of those facilities. And there is a crisis in rural America.
    There's a crisis of rural hospitals. It is a whole different
    issue but it's another one that we need to solve.
        Mr. Butterfield. We have competing interests here between
    small rural hospitals and the need to protect the consumer, and
    as legislators we have got to work through that tension and
    find a good solution.
        Mr. Friedman, can you help me with that a little bit?
        Dr. Friedman. Well, I would agree with you that there is a
    conflict there. But I would suggest that one of the things that
    the Congress consider is that access is vital.
        If you have a mechanism that goes into place, as you
    suggested, that would decrease access, particularly in rural
    communities, that doesn't serve consumers either.
        If they can't get--they don't get a surprise bill but
    there's no provider or hospital to provide that service, we
    have done them a service.
        Mr. Butterfield. Ms. McAndrew, can you help us with this?
        Ms. McAndrew. I would just call attention to the fact that
    the reason we are having this discussion right now is that this
    is already a problem in rural areas. I actually pulled some
    data in advance of this hearing and I just want to draw
    attention to how many consumers are already suffering because
    there are not in-network providers and consumers are getting
    surprise bills in rural areas.
        I looked at your State of North Carolina and already
    consumers are--in-network hospital admissions are getting out-
    of-network claims more than 10 percent of the time. So what
    that tells me is that providers are staying out of network
    already and consumers are suffering.
        So while I acknowledge the fact that we want to study this
    as we move forward on the legislation, I would urge against
    hesitating because consumers are suffering from this problem in
    rural areas. So we already know status quo this is a problem.
        And so while we can worry about unintended consequences, we
    know the current consequence is that consumers are getting out-
    of-network bills in rural areas. That's also true more than 10
    percent of time. Consumers in in-network hospitals are getting
    out-of-network claims and rural states like Indiana, Kentucky,
    Oklahoma are represented on this committee so I would not
    hesitate to solve this problem because of unintended
    consequences in this.
        Mr. Butterfield. Well, you know, I've seen both
    consequences. I've seen rural hospitals close for lack of
    revenue. That's at one end of the debate. I've seen consumers
    go bankrupt because of their inability to pay those statements
    when they arrive. I've seen it from both extremes and, as
    legislators, we have got to reconcile those two interests.
        Ms. Thornton, let me--let me conclude with you. What role
    does the lack of network adequacy play in the occurrence of
    surprise bills?
        Ms. Thornton. Thank you. So health plans need networks to
    function. We want our members to have access to a large and
    high-quality network.
        However, you cannot control when you have an emergency, you
    know, where you are across the country. And so we really don't
    think the network adequacy is directly related to the issue of
    surprise billing.
        Claire--Ms. McAndrew, excuse me--mentioned that you're just
    as likely to experience a surprise medical bill if you're in a
    large employer plan with a broad network in a narrow--more
    narrow network individual market plan.
        Mr. Butterfield. Thank you.
        Madam Chair, I yield back and right on time. Thank you.
        Ms. Eshoo. I thank the gentleman.
        I recognize the gentleman from Illinois, Mr. Shimkus, for
    his five minutes of questioning.
        Mr. Shimkus. Thank you, Madam Chairwoman.
        Madam Chairwoman, I also asked--I was happy that you asked
    about Ms. Wilkes' son. I am sure he's very proud of you today,
    and if he's not had him talk to me because you did a wonderful
    job.
        I would also like to ask unanimous consent that this letter
    sent to me on June 10th by the Illinois Hospital Association be
    submitted for the record.
        Ms. Eshoo. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Shimkus. Thank you, Madam Chairman.
        You know, a lot of this debate and a lot of testimony
    referenced specific State attempts to address this issue and
    baseball, apparently, and we are getting close to the
    congressional game so a lot of us are focused on baseball.
        For example, Illinois does use the baseball-style
    arbitration method in the event a dispute arises between
    providers and health plans. Each party must submit a proposed
    best and final offer to the arbiter who then chooses one of the
    two without modification, thus keeping the consumer out of that
    fight. You really have different sizes of big versus the small
    individual in that process.
        However, these State laws don't apply to self-insured ERISA
    plans, as has been highlighted by the testimony, used by,
    roughly, 100 million Americans.
        I was also interested to hear a number of witnesses
    mentioned another Federal law involved in this debate, the
    Emergency Medical Treatment and Labor Act--EMTALA.
        I talk about it quite a bit because it--we all need them.
    We all use emergency rooms. Cost shifting at the hospitals to
    help pay for the emergency room, and what's occurred, as you
    all know because you live in this world, is that we are really
    pushing our citizens and constituents to go to urgent care
    centers, you know, if they're not emergent.
        We need emergency rooms, but we need--we need to encourage
    that.
        But EMTALA, the Federal law right now is unique to
    emergency care and it's an important element of our nation's
    safety net.
        But in choosing to require providers to treat patients
    regardless of their ability to pay presents unique challenges
    of its own in some States like Texas and Colorado through free-
    standing emergency center operations with a State license, not
    a Federal license.
        So, Dr. Zaafran, in states with free-standing emergency
    centers do those facilities have to abide by a similar standard
    to EMTALA since they're not Federally licensed?
        Dr. Zaafran. If they are licensed as an emergency center,
    they do. Urgent care centers, of course, have a little bit of a
    different definition. They're not necessarily looked at as
    emergency centers by that definition so they wouldn't fall
    under that category.
        Mr. Shimkus. Yes, and I am following guidance by staff and
    I talk about urgent care centers, but I really was interested
    about state-licensed emergency centers not under the Federal
    guidelines and that's what I am trying to get to.
        Dr. Zaafran. State-licensed emergency centers are--they
    have to abide by EMTALA. That's correct.
        Mr. Shimkus. You also referenced the difference between
    hospital-based physicians and physicians not bound by EMTALA.
    Can you please walk the committee through the justification for
    having one resolution process for facilities and another for
    providers?
        Dr. Zaafran. Yes, sir. One of the things that EMTALA does
    very specifically is that it asks for emergency room physicians
    to make sure that they have to see every patient regardless of
    costs or anything like that.
        But, again, you have a patient who may come in and the
    emergency room physician decides that this person needs to be
    seen by a surgeon because they have an infected appendix.
        Well, that person is going to have to have surgery by the
    surgeon. They're going to have to have anaesthesia by the
    anesthesiologist and, you know, they many not necessarily be
    specifically bound by EMTALA but once you're admitted into that
    hospital and you're in an emergency setting where it is
    impractical, unreasonable, and unsafe to transfer that patient,
    all the physicians that are on call during the time period
    where that physician has been admitted and has to be treated in
    a very short fashion by all those different providers, all
    those different physicians have to be--it has to be done in a
    timely fashion.
        So even though EMTALA may not directly apply to them, we
    have to take care of them and the way we operate as
    anesthesiologists is you're taking care of many of these
    facilities 24 hours a day, 7 days a week, regardless of whether
    they have insurance, don't have insurance. We don't even ask.
        Mr. Shimkus. So my final question for you--in supporting a
    benchmark concept with an arbitration backdrop you mentioned
    that four recent State adoptions enjoyed the support of
    providers, insurers, and patients.
        So I want to clarify if your hospital partners supported
    these State efforts, too.
        Dr. Zaafran. So yes, they did. In Texas, specifically,
    which the bill recently passed several weeks ago, all the
    stakeholders--emergency room physicians, Texas College
    emergency physicians, the Texas Medical Association, the Texas
    Society of Anesthesiologists, the Texas Association of Health
    Plans, the consumer advocacy groups including AARP--all
    supported the bill.
        It was a consensus bill. It was an excellent bill that was
    passed that involves baseball-style arbitration with specific
    guardrails to make sure that costs were contained within that
    framework.
        Mr. Shimkus. Thank you, Madam Chairman. I yield back my
    time.
        Ms. Eshoo. The gentleman yields back.
        The gentlewoman from California is recognized for five
    minutes for her questions--Ms. Matsui.
        Ms. Matsui. Thank you very much, Madam Chair.
        I thank you all for being here today. This is a very
    important issue. I kept hearing about it in my roundtables back
    home.
        As you may know, my home State of California already has
    some of the country's most robust protections against balance
    billing patients for certain procedures.
        In my district, I've already heard from many hospitals that
    in an increasingly fragmented healthcare system there is
    concern that a Federal policy that may further discourage
    contracting between insurers and providers will have the
    unintended consequence of decreasing innovation and
    partnerships that are facilitating better and more coordinated
    care and reducing costs.
        As Congress considers solutions modelled after California
    law, I would like to discuss how our State effort is working to
    influence market dynamics between healthcare purchasers and
    providers and how those changes are ultimately impacting
    patients.
        Specifically, the reimbursement model in California
    benchmarks payments for out-of-network physicians at the
    greatest of 125 percent of Medicare, or the average contracted
    rate.
        Dr. Zaafran, can you discuss how using a median in-network
    rate as a benchmark may put downward pressure on future
    contracted rates offered by insurers?
        Dr. Zaafran. Yes, ma'am. Thank you for that question.
        So median, by definition, means that you have certain
    contracts that are above that number and certain contracts that
    are below that number, and there's a reason for that.
        As I have mentioned in my testimony, there's a
    differentiator for why certain physicians have contracts that
    pay more than others.
        In fact, in Washington State my specific company, Blue
    Cross Blue Shield, actually put out a press release touting a
    value-based contract that they signed from the standpoint that
    they're paying a premium, but they understand that the overall
    cost of care is actually less.
        So the ability to make sure that you're able to
    differentiate based on quality metrics that a higher payment is
    due is something that has to be preserved. If you keep
    everything at the median and not allow for those
    differentiators to exist, you're essentially kind of bringing
    everybody down to that number.
        And the other problem is, is that as new contracts are
    negotiated, if they're negotiated in a downward fashion, that
    median actually starts going down also.
        Ms. Matsui. OK.
        Dr. Friedman and Mr. Gelfand, from each of your
    perspectives, if Congress were to establish a Federal default
    fixed rate, what benchmark metric should we consider that would
    preserve the incentive for future contracting between plans and
    providers?
        Dr. Friedman? Mr. Gelfand?
        Dr. Friedman. Yes, thank you for the question,
    Congresswoman Matsui. We firmly believe, as I pointed out in
    our testimony, that it would be virtually impossible to find
    the perfect rate, one that both providers would be happy with
    and insurers would be happy with, and that's why we think that
    going back to an independent dispute resolution to work out
    agreements between providers of care and the insurers--the
    payers of care is the most cost effective and evidence-based
    model that we have.
        Ms. Matsui. Mr. Gelfand?
        Mr. Gelfand. Congresswoman, we support the California
    model. The perfect should not be the enemy of the good. The
    data bears out that the California model is working and, in the
    end, a benchmark that works is a benchmark that is rarely used
    because it brings parties to the table to get in network and
    that's our goal.
        Ms. Matsui. Mr. Nickels, from the hospital perspective, is
    setting a default rate for emergency and other services
    necessary to stop patients from being balance billed?
        Mr. Nickels. Yes. I mean, I think there should be no
    balance billing in the emergency department. There should be no
    balance billing when a patient in good conscience and knowledge
    comes in to an in-network facility. They should not get
    anything from an out-of-network physician where they don't have
    to pay any more than their in-network co-insurance.
        Ms. Matsui. OK. What effect might a Federal fixed payment
    rate have on a hospital's ability to ensure adequate staffing
    and patient access to care?
        Mr. Nickels. Yes, we are not supportive of any kind of
    benchmark or any kind of rate like that, and I think it would
    have all the negative consequences that were outlined already.
        I mean, our members negotiate with insurers. We talk
    quality. We talk volume. We talk all kinds of things that, I
    think, would--especially with innovation would be really
    hindered by kind of a one-size-fits-all approach.
        So we do not support that. If Congress is going to do
    anything, we do think that the baseball-style arbitration
    approach is the best one. But let's let, you know, the
    negotiation between us and the insurers continue.
        Ms. Matsui. OK. Probably I am running out of time here to
    ask the next question, but I wanted to ask about ERISA. You
    know, states like California are taking on important steps to
    address surprise bills.
        Congress needs to enact a Federal solution to expand these
    protections to all privately-insured patients. But some 25
    states have already enacted some form of balance billing
    protections at payment dispute resolutions.
        And I am running out of time, but when crafting a Federal
    balance billing solution how should Congress consider existing
    State laws for determining out-of-network payment for surprise
    bills? Should State law always supersede a new Federal law? And
    I am out of time.
        Anyone want to comment on that in one second?
        Ms. McAndrew. So we do acknowledge that some states have
    done a good job, including California, of enacting
    comprehensive legislation. However, there are consumers who
    would be left out.
        We also worry that if laws that are less comprehensive were
    to be allowed to supersede Federal law, you will have a race to
    the bottom. You pass a comprehensive law here in Congress, you
    will see a flood of lobbyists trying to pass less comprehensive
    laws in the State if they are to supersede it. So we recommend
    that Federal law take precedent unless a State law is more
    comprehensive. Also, Federal law wraparound to cover ERISA when
    State law cannot.
        Ms. Matsui. Thank you very much, and thank you, Madam
    Chair.
        Ms. Eshoo. Thank you.
        Pleased recognize the gentleman from Kentucky, Mr. Guthrie,
    for his five minutes.
         Mr. Guthrie. Thank you very much, and it's--thanks for
    everybody being here. Thanks to Ms. Wilkes for being here with
    your story.
        And, you know, it's kind of frustrating. It gets to kind of
    a larger thing. I am on Oversight investigations. We are
    looking at insulin pricing and it kind of looks at the
    difference in net price and list price, and it seems here--I
    have an incidence--we all have instances in our area. Emergency
    situation wasn't emergency room physicians where a person in my
    district who's actually an insurance broker so he's very
    sophisticated--talk about insurance literate. Had an emergency
    situation with his son and was billed over $30,000 for a
    service, and if he had an insurance that had been in network it
    would have been less than $10,000. And he actually sat down--he
    wanted to. They would refuse to do it.
        He said, if you will sit down with me and show me your
    price and your charge and some kind of reasonable return, I
    would pay it. But they wouldn't sit down and go through the
    pricing charged.
        So that's just a big issue. He said, I will write you a
    check today if you will let me--if you can show to me that it's
    really part of it, and that's the source of the problem that we
    are getting at, just the overall system here.
        Mr. Gelfand, getting back to the notice of out of network,
    in your testimony you mentioned the need to tighten the
    requirements in the discussion draft on patient consent for
    out-of-network procedures.
        Could you elaborate what you think this should be?
        Mr. Gelfand. Yes. We associate ourselves with the remarks
    of Families USA in that you cannot simply give 24 hours and
    allow the physician to surprise bill as long as you have 24
    hours' notice that a surprise bill is coming because oftentimes
    you may be going to a facility but you literally have no choice
    about some of those ancillary providers that will be present at
    that facility.
        Mr. Guthrie. So I guess to Ms. Thornton, Ranking Member
    Walden said that a person asked about is the anesthesiologist,
    before I sign this form, in network and the provider there
    didn't--I am sure it was the gastroenterologist or whoever is
    doing--didn't know.
        I mean, how do the health insurance plans fit into notice?
    How--we are trying to figure out how this would work. Somebody
    walks in, I need service. If they're out of network, how do we
    know and how would the health insurance plans be involved in
    this?
        Ms. Thornton. So in the first place, it's important--when
    you have an emergency or you're at an in-network facility
    patients are protected, right. The Federal --this Federal law
    would sort of swoop in.
        So you wouldn't have situations where consumers are getting
    that bill because they would be protected by the payment
    benchmark that we are talking about today.
        Now, in scenarios that aren't covered by the bill we do
    think there is an important role to get notice, to be able to
    call the health plan and say, hey, I've got this procedure next
    week--can you let me know, you know, what the network status of
    my provider will be, and we think that process can work for
    more things that are scheduled in advance, and not emergency
    care when you have no control over who's going to see you and
    you're in no position to have that discussion.
        Mr. Guthrie. Well, it couldn't be just in the emergency
    room because Ms. Wilkes wasn't in--she was in a labor and
    delivery room, I assume, and next thing you know you're in a
    NICU. So, I mean, it's not just EMTALA type of situation.
        Ms. Thornton. No, exactly.
        Mr. Guthrie. I understand that, you know, we talk about
    just don't look at unintended consequences--we just have to
    move forward. But it is an issue with emergency room physicians
    because they have to take care. They can't talk about price,
    and that is different than other things, moving forward.
        I do have a question, Ms. Thornton. You're subject to the
    medical loss ratio requirements, and those are requirements
    that require a minimum percentage of premium dollars taken to
    be spent on paying claims.
        Can you speak to how an arbitration system might have an
    impact on MLR requirements?
        Ms. Thornton. Sure, happy to do that.
        So there are two different components of a medical loss
    ratio--sort of what we are spending on medical care and what we
    are spending on administrative costs.
        On the medical cost side, it's really important here that
    any solution that we are talking about to end surprise billing
    does not increase medical spending. That $30,000 bill that you
    mentioned, right, that's reflected in people's premiums that
    they pay every month for coverage. So that's sort of one piece.
        But on the other side, if you're taking kind of a
    bureaucratic process and inserting it into the healthcare
    system--Dr. Friedman mentioned 150 million ER visits a year.
    Even if you took a percentage of those and threw that to
    arbitration with those administrative costs, that would be
    adding a lot of costs to the system.
        Mr. Guthrie. So we would have to--your argument would be
    that we'd have to take that out of the medical loss ratio
    calculation?
        Ms. Thornton. It would be administrative costs borne by the
    health plan, yes.
        Mr. Guthrie. OK. So this really isn't for everyone but I
    just have a few--less than a minute. But so once a bill is put
    into place, there's a Federal --if there is becomes a Federal
    arbitration system, what do you think congressional oversight
    should be and I don't know if that would be something Ms.
    Wilkes wants to talk about or----
        Ms. Wilkes. Well, I've been sitting here listening,
    thinking, I pay my insurance premiums. I do my part and I
    expect the bill to be paid. I mean, there's only so much I can
    do to control that.
        I don't really care how the reimbursement works and, quite
    frankly, I think the insurance industry is doing probably
    better in their bottom line than my bottom line. I want to go
    to the best provider possible and I want the best care. I don't
    really care how the payment works.
        Mr. Guthrie. OK. Thanks. And I won't go on down the list
    because my time has expired. But I do hope things are going
    well, and the other part of our area we are looking at genetics
    and things like that and some really great things that are
    happening in hemophilia. So, hopefully, your son will qualify
    for those as well as they--his genetics will qualify, not just
    your insurance. Your genetics will qualify is my point.
        Thanks. Appreciate it.
        Ms. Eshoo. The gentleman yields back.
        I now would like to recognize the gentlewoman from Florida,
    Ms. Castor.
        Ms. Castor. Well, thank you, Madam Chair, for holding this
    important hearing and thank you to the witnesses for your
    expert recommendations to the committee.
        Ms. Wilkes, thank you so much for sharing your personal
    story. My home State of Florida adopted a balance billing law
    in 2016 and my understanding of the law is that first and
    foremost it works to protect the patient and then establishes a
    process for the payer and the provider to resolve a payment
    issue.
        So that if a patient receives care from a provider that is
    out of network, the patient will only be responsible for in-
    network cost sharing and then providers and the insurance plans
    have to go through a State-arranged voluntary dispute
    resolution process where a penalty is assessed to the party
    that refused to accept an offer that was close to the final
    arbitration order.
        And I understand that the negotiation is based on the usual
    and customary rate in that particular geographic area and then
    it binds the parties, going forward.
        Florida's law is relatively new; but I wanted to see if any
    of the witnesses have feedback on how my State is doing.
        Dr. Friedman, you practice in the State of Florida. What's
    your view?
        Dr. Friedman. Yes, thank you for the question,
    Congresswoman Castor.
        It is untested, frankly. The history of balance billing in
    Florida and dispute resolution in Florida is not necessarily
    one that is particularly good and the pervious--we have had a
    balance billing for a long time for HMO products in Florida and
    there was an attempt to--some time ago to add PPO products to
    that.
        The dispute resolution process as the State used turned out
    to be very insurer friendly and providers refused to use it
    after a while. So this new law has been tweaked and we hope
    that it will be more provider friendly and it will be one that
    both providers and insurers are happy to use.
        It has not been tested yet. I know that within the
    emergency medicine community at least it is due to be tested
    very shortly and we look forward to seeing the results of that
    experiment.
        Ms. Castor. So what will happen if the Pallone bill with
    Mr. Walden passes in my----
        Dr. Friedman. Some of that refers to the earlier question
    around Federal pre-emption of State law and we believe, first
    of all, that the Federal law should apply if the State law does
    not have at least the same level of protections, certainly for
    patients, but also for the providers' system.
        We have to support our providers that are taking care of
    patients.
        Ms. Castor. Ms. McAndrew, what's your view of the--a
    dispute resolution process versus bench marking?
        Ms. McAndrew. Thank you very much for your question,
    Congresswoman Castor.
        At Families USA our preferred approach would be the
    benchmark approach. I think the initial reports on a CBO score
    of the various approaches were quite telling--that the
    benchmark approach is--produces the largest cost savings, and
    cost savings that come from these various approaches trickle
    down to consumers.
        The reason that we think this matters to consumers is that
    when we have any surprise bill law that could potentially
    result in any inflationary costs within the system, those will
    trickle down to consumers in their premiums.
        So our goal is to have a payment rate that is as least
    inflationary as possible. However, I will say, you know, at the
    end of the day what matters most to us is the consumer
    protection part of this.
        And so while we prefer the benchmark rate, when it comes to
    discussing an arbitration system, the devil is in the details.
    The bottom line for us is that billed charges, should not be
    considered in this.
        Ms. Castor. So how do we--how do we ensure that what we do
    to protect patients from surprise medical bills doesn't cause
    higher premiums?
        Ms. McAndrew. Well, I think that goes back to what's
    considered in the payment rate. So at the end of the day,
    whatever the system is as long as it's not based on billed
    charges I think that's what matters most because as some
    discussion has alluded to before, charges can be quite
    arbitrary. Sometimes I compare them to, like, the list price of
    a prescription drug. Nobody really pays it, as Mr. Nickels said
    before. So we wouldn't want to bake it into our system.
        Ms. Castor. Does anyone else want to comment on dispute
    resolution versus bench marking?
        Dr. Zaafran. I would. So, you know, we have data in New
    York already as to how this has been proven and the premium
    increase in New York has been actually very commensurate with
    the premium increase in California.
        So, you know, you have bench marking in one area. You have
    dispute resolution in the other, and the premium increases have
    not been any different.
        But you have a decrease in New York from the standpoint of
    how many out-of-network providers you have from 20.1 percent
    down to a 6.4 percent.
        What I do want to emphasize, though, because cost has come
    up here several times, in New York the average cost of a
    dispute resolution process is about $300. It takes an average
    of two weeks. It is all entered in electronically, and the
    resolution is adjudicated within those two weeks. It is a very
    seamless, quick, and easy process and it has worked.
        What I would say also from the standpoint of bench marking
    versus a dispute resolution is it is not a one-size-fits-all.
    My company invested a tremendous amount of resources to make
    sure that we do opioid-free anaesthesia so that we don't have
    folks who are on opioids a year later after they've had surgery
    or that they don't have surgical site infections that have them
    to be readmitted back into the hospital after they've been
    discharged. Those actually decrease the cost of care, and as
    referenced earlier, we have insurance carriers who are willing
    to pay us a premium because they understand; and they know that
    the overall cost of care does down.
        Ms. Eshoo. I thank you. Your time has concluded, Doctor.
        Ms. Castor. Thank you.
        Ms. Eshoo. I thank the gentlewoman yielding back.
        I now would like to recognize Dr. Bucshon from Indiana.
        Mr. Bucshon. Thank you, Madam Chairwoman, and I was a
    cardiovascular surgeon prior to coming to Congress and I think
    we can all agree it's about patients here.
        That said, the current draft of the No Surprises Act,
    although well intended, in my view is not completely the right
    solution.
        Again, we can all agree that we--the liability of surprise
    out-of-network bills should not be on the patient. We need a
    solution. However, in my view, the draft legislation would lead
    to a reimbursement race to the bottom.
        It would encourage narrow networks and lower provider
    reimbursement, limiting patient access, and ultimately is going
    to continue to result in further physician shortages.
        Since the late 1980s, physician provider reimbursement has
    continually been cut in an attempt to control healthcare
    costs--and you can see that hasn't worked--while other areas of
    the healthcare system including large publicly-held companies
    continue to earn record profits.
        The draft legislation would ultimately, I believe, ask
    again for providers to shoulder the financial responsibility of
    a healthcare system that costs too much. As long as we have a
    system that allows the business side of medicine to march on
    while cutting reimbursement to those who are actually providing
    patient care, our problem doesn't go away.
        An approach similar to the State of New York or a hybrid
    combination of bench marking and arbitration, in my view, could
    help solve the problem and not lead to a reimbursement race to
    the bottom.
        So with that said, Dr. Friedman, based on my experience,
    physicians who accept lower in-network payment rates may get
    additional benefits from the health plans, preferred--
    preferential referrals, things like that. Considering that
    there still could be an incentive to take a lower rate offered
    by an insurer, can you talk about what reasons a physician may
    not be part of an insurance network?
        Dr. Friedman. Well, I think, you know, from the standpoint
    of my members, we want to be in network. We actively try to
    contract with insurers. The only time that an emergency--most
    of the emergency physicians that I know and most of the groups
    that are part of my organization are out of network is when we
    cannot reach a reasonable negotiated rate with an insurance
    company or the example that I used before where I work in
    Florida and I take care of a lot of folks from out of State
    because those contracts are regional. They're not national,
    even for the ERISA plans.
        So I think that we want to--as providers, we want to be in
    network. We want to be in contract. We don't want to be sitting
    here talking about patients that have been harmed by out-of-
    network billing.
        Mr. Bucshon. Right, and that's the point I wanted to get at
    is that physicians--we want to be in network. We don't want
    patients to not be in network, and that's why my concern about
    setting a benchmark could lead to an incentive from the plan's
    perspective just to not renew contracts, and we have heard that
    from Dr. Zaafran today--and make everybody out of network and
    then we have this lower benchmark and then, of course, as the
    higher contract--reimbursement contracts all of a sudden go
    away, the benchmark lowers and then you get this race to the
    bottom in provider reimbursement, which is--which is, I think,
    the concern the State of New York had when they put in an
    arbitration model, which is working. We've heard from people
    from the State of New York.
        So that's my main concern. So that's what I wanted to get
    at. Providers want to be in network. We don't want people to be
    stuck with these bills.
        So in Indiana, in the largest group market last year the
    largest insurer had 65 percent of the market share. The next
    largest at 21 percent and the third only five percent.
    Considering the limited competition, what leverage do
    physicians have when negotiating reimbursement rates with
    insurers? And I guess, Dr. Zaafran, you might comment on that.
        Dr. Zaafran. Well, again, as Dr. Friedman said, we always
    try to negotiate and be in network. But in many instances when
    a large carrier does not necessarily need to because they're
    narrowing their networks, they just simply won't negotiate.
        And that's why, frankly, network adequacy standards are so
    important. I understand that some folks may not. But I can give
    you a very specific example in Texas where it was extremely
    important.
        We had one specific carrier a year ago between February and
    August essentially drop all the anaesthesia groups in the
    state--mainly, the five largest cities--out of network. These
    are all mid-contracts. These were not being in the midst of
    renegotiating contracts. They just dropped them.
        The medical associations and societies found this out. They
    realized it. They took it to the Texas Department of insurance
    and based on network adequacy laws, the Texas Department of
    Insurance brought this carrier in, found out that they were not
    meeting those standards, put a fine on them of $700,000 and a
    rule that within 90 days that they have to make sure that they
    bring back their network into adequacy, and it did.
        Mr. Bucshon. Thank you very much. My time has expired.
        Ms. Eshoo. The gentleman yields back.
        The gentleman from New Mexico, Mr. Lujan, is recognize for
    five minutes for his questions.
        Mr. Lujan. Thank you, Madam Chair, and I thank you and the
    ranking member for bringing us together today on an important
    issue facing our constituents all across America.
        Mr. Sherlock, can you explain to me what the average charge
    per air ambulance service is?
        Mr. Sherlock. Excuse me. Thank you for the question.
        According to a study conducted by Xcenda in 2017, the
    median charge for a helicopter or medical transport is $10,199.
        Mr. Lujan. So can I ask a follow-up there? In your
    testimony you described the $10,199 amount as the median cost.
    Is the median cost and the average charge the same thing?
        Mr. Sherlock. No, they're not. When you look at----
        Mr. Lujan. So the question that I ask you was what is the
    average charge today of an air ambulance.
        Mr. Sherlock. The charges are not--I don't know that there
    is an average charge.
        Mr. Lujan. So the----
        Mr. Sherlock. The charges--when you look at the fact that
    70 percent of our patients are covered by Medicare, Medicaid,
    or are uninsured and the fact that Medicare, according to the
    same study, reimburses at less than $0.60 of those charges--of
    those costs, rather--Medicaid is always less and the uninsured
    virtually pay, you know, $350. Yet that cost of uncompensated
    care is what needs to maintain network adequacy because----
        Mr. Lujan. So if I may, Mr. Sherlock, what the study is
    that you quoted in your report by Xcenda in 2017 states that
    the median cost of providing one helicopter transport is
    $10,199.
        What the Government Accountability Office found in 2017 is
    that the median price charged is $36,400. A study that was
    conducted in the State of New Mexico showed that in 2015 the
    average amount charged per flight was $45,000.
        I think it's an increase of about 300 percent from 2006 to
    2015 in the State of New Mexico alone. I am just trying to get
    my hands around why this is costing so much and why so many of
    my constituents are hit with surprise bills when it comes to
    air transport across the country.
        What is it that is--is it in fact that you agree that the
    average cost then is $10,199 for an air transport?
         Mr. Sherlock. The median cost. If you look at the fact
    that some----
        Mr. Lujan. Let me ask the question differently then. I
    apologize. We don't have so much time. What's the break-even
    point?
        Mr. Sherlock. The break-even point, depending on the--on
    the area of the country is based on the fact that you have
    Medicare that reimburses at less than $0.60 to the cost of
    providing the services, Medicaid that reimburses at less than
    $0.35 on the dollar to the cost of providing services, and
    uninsured.
        That cost of uncompensated care then raises the cost of
    transports in order to be able to maintain access to healthcare
    for millions of Americans who would not be able to get to a
    level 1 or level 2 trauma center in an hour or less----
        Mr. Lujan. Are you able to give me the cost breakdown,
    exclude Medicaid and Medicare, what the cost breakdown is for
    an hour transport for that aircraft? Could I submit that to
    you, and you get that to me?
        Mr. Sherlock. Yes. The transport is also based on the fact
    that our members, our programs, are ready to respond 24 hours a
    day 7 days a week.
        Mr. Lujan. Well, whatever it may be--whatever it may be,
    Mr. Sherlock, I just want you to give me that breakdown,
    because in your testimony you argue that there has not been a
    study looking at the breakdown of costs.
        I just would argue that when the median cost is $10,199,
    GAO says that the average charge is $36,000, in the State of
    New Mexico they say the average charge is almost $46,000,
    something is broken. There is something that's terribly off
    there.
        But I want to go to someone else. I think we need to rein
    this in and the concern that I have in this area is that the
    Airline Deregulation Act of 1978 pre-empts states' ability to
    regulate air ambulance services. We need to do something about
    this, and I hope the Act that we have does.
        My next question, though, is for Jeanette Thornton. Ms.
    Thornton, who gets to make decisions about medical necessity?
    Insurance companies or medical doctors? Who makes that
    decision?
        Ms. Thornton. Thanks for the question. It typically is a
    joint discussion between----
        Mr. Lujan. Shouldn't my medical doctor make the decision
    about what's medically necessary for me when I am in a hospital
    room as opposed to some insurance company say, I am sorry, but
    your doctor didn't mean to fix our heart--we are not going to
    cover that cost--they should have only fixed your toe?
        Ms. Thornton. Sure. We want our members to have really
    high-quality care and a lot of times things like medical
    necessity and prior authorization are really getting at safety
    issues related--opioid prescriptions is a great example of
    that. And so, you know, we welcome that conversation.
        Mr. Lujan. Madam Chair, as my time has expired, I would
    like to ask unanimous consent to submit into the record a few
    pieces of information, the first being a study by the New
    Mexico Superintendent of Insurance on air ambulance
    information, and the second an article by Larry Barker,
    published February 21st, 2019, about medical emergency could
    end in bankruptcy, which also talks about medical necessity and
    who's making those decisions.
        Ms. Eshoo. So ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Lujan. Thank you.
        Ms. Eshoo. The gentleman yields back.
        I would like to recognize the gentleman from Florida, Mr.
    Bilirakis, for five minutes for his questions.
        Mr. Bilirakis. Thank you. Thank you, Chairwoman. I
    appreciate it very much. Thanks for holding this hearing as
    well. Thanks to the ranking member.
        Ms. Thornton, I believe it's safe to say that we would all
    like to see patients held harmless in any final proposal on
    surprise and balance billing.
        A question--we have heard a lot about the merits of various
    proposals. Could you discuss the key differences between New
    York and California--their models?
        Ms. Thornton. Thank you. Happy to do so.
        So the different proposals out there are really aligned
    based on either having a payment benchmark. So in one of these
    situations where someone does see an out-of-network provider in
    an emergency where they're at an in-network facility, there
    would be a quick and easy way to determine what payment should
    be for that out-of-network provider.
        We want that to be fair and reasonable, based on what
    similar providers are paid in that geographic area. So that's
    sort of the benchmark approach and that's been implemented in
    California at the beginning of this year, as I mentioned.
        The contrasting approach that's been mentioned on our panel
    is arbitration and this is where different parties come to the
    table if they disagree with the payment that was made and
    produce information as to why they should be paid a different
    amount, and that goes to an independent person.
        Our concern with that--and this has been used in New York,
    as was mentioned--our concern with that is it gives equal
    weight to these excessive charges that have been talked about
    at the hearing today as well as information from the health
    plan and it adds unnecessary administrative costs to the
    system.
        Mr. Bilirakis. OK. Thank you.
        Dr. Zaafran, what could be the potential long-term
    consequences of reducing the number of physicians in network--
    if you could maybe describe what the consequences would be long
    term. I will give you some time to elaborate too because that's
    so important.
        Dr. Zaafran. Thank you. You know, access to care would be
    significantly affected. I mean, number one, first of all, when
    you're out of network, your cost sharing is much higher.
        So even though my charge or rate may be the same, the
    patient's responsibility for a deductible and co-pay is much
    higher in an out-of-network setting versus an in-network
    setting. So that right away would put the patient at a
    disadvantage.
        Again, there are costs to providing care, and if there is a
    race to the bottom, that access to care is going to be affected
    because if you have to have a physician open an office and be
    able to deliver that high-quality care that's going to be
    affected.
        And, again, from the standpoint of not a one-size-fits-all
    thing that I really want to talk about--we talked about opioids
    a second ago--and other types of things that provide high-
    quality care, if a physician is providing that high-quality
    care it has to be--it has to be taken into consideration.
        One thing that, like I said, we did in Texas, which I would
    call New York 2.0--New York's law was absolutely fantastic and
    we just tried to take it 1 step further, which, again, brought
    the health plans along and actually agreed to the bill, is that
    we wanted to reference previous history of in-network
    contracted rates in the arbitration criteria along with
    charges.
        So the arbitrator would be able to look at a contract that
    may have just been terminated and said, well, you know, you
    just terminated a contract that was in existence for the last
    10 years--at least give the contracted rate that was there for
    those last 10 years, and from that standpoint the score of the
    bill actually decreased significantly because what you're
    trying to do is preserve the 90 to 95 percent of the in-network
    market that already exists and not break that while at the same
    time addressing the 5 to 10 percent that is out of network and
    fix that and not have the unintended consequence of pushing
    those in-network providers into a situation where they're
    having to be paid less and not be able to deliver the kind of
    care that they expect to be able to deliver.
        Mr. Bilirakis. Very good. Again, you touched on this, but
    have any states tried to create standards for network adequacy
    and track plan performance? If so, what has the result been for
    patients in those states?
        Dr. Zaafran. So, again, I referenced earlier the State of
    Texas has excellent network adequacy laws. We strengthened it
    in this last legislative session by changing it from a self-
    reporting mechanism to an automatic audit by the Texas
    Department of Insurance every 2 years to make sure that they
    are actually able to look at the networks.
        I gave the example of a year ago where one particular
    carrier essentially took all the anaesthesia companies, and
    this is not 1 company. This is a variety of different
    companies--small groups, big groups--and put them out of
    network in existing contracts.
        And if it wasn't for that network adequacy law where the
    Texas Department of Insurance Commissioner was able to hold
    that carrier accountable, the conversation between that carrier
    and the providers would have never happened because,
    essentially, they just refused to talk to the providers and
    say, you're out of network--that's it--end of story. The
    network adequacy law basically forced them to create an
    adequate network again and those conversations happened.
        Mr. Bilirakis. Very good. OK. I yield back, Madam Chair.
    Thank you.
        Ms. Eshoo. The gentleman yields back.
        I now would like to recognize the gentleman from Oregon,
    Mr. Schrader, for his five minutes of questions.
        Mr. Schrader. Thank you, Madam Chair.
        Dr. Zaafran, curious about evidence with the frequency of
    surprise billing. I mean, is it a big chunk of the marketplace
    reimbursement or is it a small piece of the reimbursement
    puzzle, and does it--does it vary dramatically from network to
    network and does it vary geographically? We've heard some
    testimony.
        Dr. Zaafran. Thank you for that question and, you know,
    first of all, one out-of-network bill to Ms. Wilkes is one too
    many, and that's why we have to address that.
        But the overall incidence of out-of-network providers is
    actually fairly low. It is in the 5 to 10 percent range. I
    think nationally, if you look at all the different services
    provided, it's 80 to 95 percent. So there's a little bit of
    variation there.
        But, again, going back to the point of preserving the in-
    network providers or physicians that are already in network, we
    don't want a system that's going to disincentivize carriers or
    incentivize carriers not to continue those networks.
        Again, we started to anecdotally see that happen in
    California. We've seen the exact opposite happen in New York
    where you had 20 percent of emergency rooms physicians out of
    network and it went down to 6.4 percent.
        So the evidence that is out there shows that with a good
    arbitration style that is fair and expedited you actually can
    have the effect maintaining that in-network market but
    adjudicating out-of-network market in a fair manner.
        Mr. Schrader. Mr. Nickels, would you agree with those
    comments in the relative states and the results we are seeing?
        Mr. Nickels. Absolutely, and I would throw Oregon into the
    mix, too, which, as you know, the law is new there and also, I
    think it's reflective of what New York set up, what Texas have.
    They're all a little different.
        Ms. Eshoo. Could you bring your microphone closer?
        Mr. Nickels. Sorry. I keep doing that. So I think the
    arbitration model, again, the data coming out of New York is
    very persuasive that it works.
        I don't think it's going to be the situation where there is
    some, like, really high amount and some reasonable amount, and
    to think that the really high amount is going to win, no
    arbiter is going to pick the really high amount.
        The reason we have arbitration in New York that's
    successful is it brings people toward the middle. A lot of
    people settle them beforehand anyway. So I think those
    approaches are the best and I know our members were supportive
    of the Oregon law. I know its brand new. More data needs to
    be--you know, come--more data needs to come forward.
        Mr. Schrader. Ms. Thornton, Dr. Zaafran talked about the
    incidence of surprise billing and certainly one is too much. I
    get that. But I want to get a feel from an economics
    standpoint, you know, what percentage of the insurance
    industry's healthcare business is resulting in paying these
    surprise billing.
        Ms. Thornton. Sure, not a problem.
        And back to network adequacy, I just wanted to mention that
    Texas has one of the largest rates of surprise billing in the
    country, even though it has a robust network adequacy
    provision.
        But back to the economic impact, I included some data in
    our testimony that was put together by Avalere as New Jersey
    was considering what changes to make as part of its changes to
    its out-of-network billing law and it really shows there is
    quite a large economic impact.
        It could be as high as--and the study showed four percent
    of claims could be as a result of a benchmark that is based on
    billed charges and is a higher amount than some of the other
    proposals that are out there. So definitely hitting consumers
    in their pocketbook in terms of economic impact.
        Mr. Schrader. So it seems to me like there's this dynamic
    tension between making sure that we have a robust provider
    network, the insurers are encouraged, frankly, to reach out to
    providers, and at the same time make sure that providers don't
    get to raise rates so that the consumers at the end of the day
    end up paying higher.
        So there's going to be this dynamic tension because in the
    long run. The more robust provider network, in my opinion,
    market forces will driver those costs down. But we have got to
    make sure we don't injure the consumer here in the near term.
        The other big piece that's out there is transparency. I
    mean, it'd be interesting to get real good data, and I would
    ask you, Ms. Thornton, to talk with your insurance plans and
    get back to me and the committee on what percentage of, you
    know, your business is surprise billing--you know, are there
    different subsets. Some people testified that there may be
    certain specialties that is occurs more frequently with--some
    testimony would indicate that while, no, it's all pretty equal.
    It would very helpful for the committee, I think, to get that
    information so we can get perspective on that.
        My standpoint, I think the solution is pretty--a lot
    simpler than what we are making it out to be where you can
    encourage a robust network and make things happen.
        Take the patient out. Everyone agrees with that. Ms. Wilkes
    shouldn't have to deal with these issues. This is an insurer,
    you know, provider issue and, you know, I think it you just
    have the insurers providing a little extra--making sure that
    they have a robust network we are not going to have this
    problem at the end of the day.
        So appreciate everyone being here and I yield back.
        Ms. Eshoo. The gentleman yields back.
        I now would like to recognize the gentleman from Oklahoma,
    Mr. Mullin, for his five minutes of questioning.
        Mr. Mullin. Thank you, Madam Chair.
        I want to talk a little bit more about--Ms. Thornton, about
    the surprise billing. Can we get a little bit more specific
    about what the surprise billing ratio is in rural parts of the
    country, specifically, maybe in Oklahoma?
        And Ms. McAndrew, I saw you just kind of wiggle in your
    seat like you might have some of that information too. So I
    don't care which one wants to answer that.
        Ms. McAndrew. Thank you for the question.
        Yes, over 10 percent of in-patient admissions in Oklahoma
    result in a surprise bill and that's the case too for other
    rural states represented on the committee like North Carolina,
    like Kentucky. And so I think it is important to recognize that
    already there are instances in rural states where we have out-
    of-network providers.
        And I think, you know, we talked a little bit about how
    providers want to be in network. But there's not, you know, an
    equal incidence of surprise bills across----
        Mr. Mullin. What's the biggest issue with the out of
    network? I mean, we have seen this huge increase of out-of-
    network billing over the last years. One, what's caused that
    and what's the biggest issue on that?
        Ms. McAndrew. Well, I guess what I was going to say is that
    we have talked about how providers want to be in network, but I
    think for certain types of providers, people want to be in
    network but not as much as they want to get paid far more
    than----
        Mr. Mullin. Well, the point is people want to be in network
    only if the provider provides what I am asking for them to pay
    me back. And then they have another choice----
        Ms. McAndrew. Providers--certain providers want to be in
    network only if they can make very high rates.
        Mr. Mullin. Right, and then they have a choice, well, I
    don't have to be in network because I can still--I can still
    have access to the hospital. So why do we see that big increase
    now? Why are we seeing this big increase on surprise billing?
        Ms. McAndrew. So I would say that we haven't always had
    great data on surprise billing. So the data I have seen hasn't
    necessarily indicated an increase because the data we have on
    the surprise billing problem tends to be newer data in general.
        And as I indicated, this is a problem that we have been
    working on for many years, and so it has been a long-standing
    problem.
        Mr. Mullin. Well, let's talk about the data. You were
    talking about one size doesn't fit all and Mr. Nickels, you're
    kind of echoing that, too.
        I do agree with that to some degree. But I do also
    understand job costing and as small as my company is, I can
    still go back through it and find out what my average costs are
    on certain jobs, because some of them are repetitive.
        Is that information not out there? I am not a big--I am not
    big into arbitration for sure but there should be a fair road
    someplace.
        I think Ms. Thornton or, Mr. Nickels, you talked about in
    the middle with arbitration finding out where it is. Maybe
    that's the legislation that we are looking for that we can
    provide that data.
        If you can't provide the data, we can provide the data and
    say, I know what the average costs of a hip replacement is. I
    know what the average cost of getting two stents put in.
        I understand there's special circumstances that take place.
    I understand what the average costs of delivering a child is.
    I've got five of them.
        I can get those average costs, and is that the starting
    point of coming up to where the network and the provider should
    find? Somebody?
        Mr. Nickels. I will take a stab at that first. I think that
    there are some instances where getting the average cost is
    easier. Hip replacement--if there are no complications----
        Mr. Mullin. No, I get that. There're standard operations.
    There're nonstandard operations. There're standard jobs that my
    company does. There's standard jobs that they don't do. I get--
    I get the per hour costs and I also get the idea about bidding
    jobs.
        Mr. Nickels. Right.
        Mr. Mullin. And that is called flat pricing--up front
    pricing. You can't tell me we don't have an average cost of
    what it takes to do as many surgeries as we do inside this
    country on as many different parts of the body--you can't tell
    me we can't come up with an average cost on that.
        Mr. Nickels. Yes. In most instances, we can.
        Mr. Mullin. OK. Those are the most instances we are talking
    about. The special cases are special cases on themselves. We
    can solve the most cases, though.
        For instance, this finger right here--not that I am doing
    anything bad--all fingers are up--it just happened to be this
    finger right here.
        In Louisiana, I cut this finger. Eleven thousand dollars is
    what it cost me to get stitches put in that finger. This thumb
    right there, $150 at my local emergency room. Can somebody
    explain to me the differences in that? Both of them were, by
    the way, by a knife, which is why I don't carry one.
        Dr. Zaafran. Well, I can tell you that from the physician's
    standpoint--for emergency room physicians, for example, the
    average weighted cost of every visit is about $150. That's the
    average across the board for all services provided and as was
    indicated----
        Mr. Mullin. OK. There's our--then that's our starting
    point.
        Dr. Zaafran. So you had your----
        Mr. Mullin. So why is it that we can't find an average when
    we start negotiating prices?
        Dr. Zaafran. My point is, though, it is not--it's not as
    high as folks think it is.
        Mr. Mullin. Listen, your point I get. But the billing says
    it is. So your point--you can say whatever you want to about
    your point. The fact is the bills that come in our mailboxes
    say they are very expensive.
        So I think it was Dr. Burgess that said if you don't fix
    it, we will, and you guys probably won't like it, and that's
    the road that we are going down because we can get access to
    that data. We can find that average cost. And if you all don't
    want to solve it then we are going to. All we are saying is is
    do it. Solve it.
        With that, I yield back.
        Ms. Eshoo. The gentleman yields back.
        We have a vote that we need to go to the floor to take. But
    before we recess, I want to recognize the gentleman from
    California, Mr. Cardenas, for his five minutes of questions.
        Mr. Cardenas. Thank you very much, Madam Chair, and I
    appreciate the witnesses sharing your perspectives and, Ms.
    Wilkes, your personal story. Thank you so much. I am glad to
    hear that your son got the critical need that he needed in that
    very moment.
        I do have a question for you, Ms. Wilkes. When that
    provider group sent you that $50,000 bill, was it easy to
    understand what you were being charged for?
        Ms. Wilkes. No. As I mentioned earlier, it was just a
    dollar amount. There were no specifics as to what services were
    provided.
        Mr. Cardenas.T1 OK. And what was the process that you felt
    was available to you or how did you figure out how to deal with
    that and what options you had?
        Ms. Wilkes. So we called the billing--the person that was
    giving us the bill--the entity that was giving us the bill, and
    they were not willing to work with us on a payment plan. It
    was--it was an all or nothing situation, and as we began asking
    questions that's how we found out that they were a third-party
    provider that was out of network in the facility that was in
    network.
        So it really just was butting heads. We never could come to
    a solution to be able to even begin to think about paying that
    off.
        Mr. Cardenas.T1 OK. I mean, I have grandchildren and I
    still have children on my plan at home, and I was thinking
    maybe we need to make t-shirts that we need to put on our loved
    ones whenever they go to the emergency room or to the doctor or
    what have you and it says ``Only in-network provider! By the
    way, please don't let me die, happy face.''
        I am not trying to be funny. What I am saying is Americans
    should expect when they go see a provider, whether it's an
    emergency basis or not--I have a son who's on my plan and he
    went out of network. We knew it. I, as a policy maker, didn't
    know to ask more tertiary questions about how much each one
    would be.
        Luckily for me, it was associated--in this case, I think it
    had to do with associated with a local university that one of
    my fine colleagues had been to, et cetera, and, you know, it
    was another $500 here, another $500 there. Thank God there were
    no more zeroes on that. My son had already met the deductible
    for the year.
        So that was over and above what my plan had said, OK,
    you're doing with your deductible--every time you go in plan
    then you're going to be OK, family Cardenas.
        What bothers me, and you're hearing my colleagues,
    Republicans and Democrats, saying we need help to understand
    what's going on out there in the real world; otherwise, we are
    going to provide a solution and you're not going to like it.
        Legislators, collectively, aren't necessarily known--our
    track record isn't that great of hitting the nail on the head
    when it comes to fixing big problems, unless we get tremendous
    help from experts so that we can hopefully narrow it down and
    actually make good policy solutions.
        I have a question. My understanding is since the '80s--they
    may have called it something differently--since the '80s or so,
    there have been this surprise billing issue facing American
    families.
        This isn't just five and ten years old. Is that correct? I
    think, Ms. McAndrew, can you shed some light on that?
        Ms. McAndrew. That is correct. Networks, from our
    perspective, are a necessary function because they are--they
    have an ability to rein in costs for consumers.
        But, of course, if you have a network, which was part of
    the managed care revolution that we saw begin in the '80s and
    increase in the '90s, you can get either in-network care or you
    can get out-of-network care.
        So if you end up inadvertently going to an out-of-network
    provider you will get a surprise bill. And I mentioned that
    this issue is something that our organization, Families USA,
    has been working on for over 20 years.
        We've published on it in the early '90s. So this is
    absolutely not a new problem.
        Mr. Cardenas.T1 OK. So this has been doing on for decades?
        Ms. McAndrew. Absolutely.
        Mr. Cardenas.T1 And has anybody here been at the table
    before Congress to talk specifically about this issue over the
    last, you know, 40 or 50 years? Oh, you have, Dr. Zaafran?
        Dr. Zaafran. Well, not for 50 years. But since 2009
    actually we have been addressing it in Texas and it's been a
    progression. Of course, we addressed it in New York. But----
        Mr. Cardenas.T1 So at the State level. But at the Federal
    level?
        Dr. Zaafran. Not at the Federal level. Correct. Well,
    there's the greater of three standards that the Federal level
    has--actually had and has been in place since then and it's
    probably----
        Mr. Cardenas.T1 Since when? Since, roughly, when? Decades?
        Dr. Zaafran. It has been--it has been at least a decade.
        Mr. Cardenas.T1 OK. Got it.
        Dr. Zaafran. I wouldn't say decades. But at least about a
    decade.
        Mr. Cardenas.T1 OK. Right. OK.
        The reason why I want to point that out is because I hope
    that the dialogue doesn't get mired into, you know, what caused
    this. It's been going on long enough.
        We got to figure out how to remedy it, and I think that if
    we keep clear heads and we are able to focus on the common
    denominator--to me, the common denominator is the patient.
    That's the common denominator, and then try to figure out how
    do systems fulfil their obligation to stay afloat and provide
    services out there in the communities.
        I am sorry I overstepped my time. Sorry about that, Madam
    Chair. I yield back.
        Ms. Eshoo. Always nice to listen to you, Mr. Cardenas.
    You're wonderful.
        The gentleman----
        Mr. Burgess. Reserving the right to object.
        Ms. Eshoo. Now--the gentleman yields back.
        We have a vote on the floor, and I don't know if there will
    be any subsequent votes to the one that's on the floor. If
    there aren't, I think that we all have a 20-minute break at
    least and I hope we can just--that that's what the case will
    be. So we'll recess now. We'll go to the floor, take our vote,
    hoping, again, that it is one--to return. And but if it is
    longer you just have to be flexible. I ask you to be flexible.
    So the subcommittee will recess.
        [Recess.]
        Ms. Eshoo. All right. The subcommittee will come back to
    order. I would like to--the chair would like to now recognize
    the gentleman from California, Dr. Ruiz, for his five minutes
    of testimony, and one of our members that has worked very hard
    to come up with a solution to what we are grappling with.
        It's so ludicrous that this could ever be called balanced.
    It's not balanced. It's totally out of whack billing. But I
    want to attach that compliment to Dr. Ruiz's name because he's
    worked very hard since the beginning of this year on the
    subject matter.
        You're recognized for five minutes of questioning.
        Mr. Ruiz. Thank you, Madam Chair.
        And the reason why I worked so hard is because, as a
    physician, we try to eliminate the pain and suffering and
    anxiety from our patients, and then you find out that the
    patients are getting a surprise bill that is adding to the
    anxiety, which only makes their health worse. It only makes
    their health worse.
        In addition to being concerned, as Ms. Wilkes was about her
    son, she was also concerned to tears in the anxiety of going
    bankrupt or what do you do and how do you cut costs. That's an
    outrage. It's unconscionable that families are going through
    what they're going through, and that's the number 1, 2, and 3
    reasons why I set out to find this solution.
        We have to close every loophole imaginable so that patients
    are not stuck in the middle of this dispute--so that patients
    don't have to decide between, you know, staying in their house,
    renting an apartment, paying their bills, versus paying their
    medical bills because of a life-threatening situation for their
    child.
        We need to keep patients out of the middle and, quite
    honestly, those State models, even with arbitration, don't do
    enough. There's always a fine print.
        There's always a window that a patient has to go through to
    mail an envelope back or make a call and if they don't--if they
    don't understand and they're the ones that are not going to
    have those protections.
        And I am concerned with this current bill that there are--
    like you, Ms. McAndrew, that there are too many loopholes that
    still allow providers to find a way to say, no, it is your
    fault--you didn't see the sign, or it is your fault--you didn't
    make the effort to look at the online list, or it is your fault
    because you weren't aware that this hospital or these providers
    were out of network.
        In fact, asking an emergency department patient or an in-
    hospital patient if they consent to be seen by the on-call
    physician, if they are out of network doesn't work in the real
    world and it takes somebody who cares for patients who actually
    has cared for patients to understand that because those
    patients will most always choose yes because they're under
    duress or because their care will be delayed or because they
    will not understand the implications.
        And if they consent to yes in this bill, then yes, I will
    be seen by the anesthesiologist because I've been in the
    hospital too long, then that allows the physician to balance
    bill. It's not good for patients.
        And to expect that a physician who's on call that night,
    who doesn't deal with their bills or doesn't deal with being
    in-network or out-of-network that's a department--billing
    department issue and they've got 15 different people--to expect
    them to then just say, no, let me check right now to see if
    you're in network or out of network or if I am in network or
    out of network is not based in reality or in the real world.
        So creating a loophole where, quote, ``adequate information
    was provided,'' right, that somebody would say that gives a way
    to balance bill. It will put the responsibility on the patient
    to read the fine print or be aware of all the ways the
    providers can say they were made aware beforehand and it was
    patient's fault they didn't read it or understand it, and that
    needs to end.
        In the bill that I propose, Protecting People from Surprise
    Billing Act, has the most robust patient protections out there
    from any State model or any proposed bill, because that is my
    number one, number 2, and number 3 priority as someone who
    cares deeply, who has devoted my entire life during the arduous
    training to become a physician, to do everything possible to
    relieve pain and suffering and promote wellness in everyday
    Americans.
        So the second part is how are we going to solve this
    dispute, and we need to understand that we need to pick a
    system that is fair--that we are not picking winners or
    losers--that we address the underlying problem.
        The concern is cost. So, Dr. Zaafran, talk about cost--
    inflationary rates. What does the evidence show in terms of the
    models that are out there?
        Dr. Zaafran. Thank you, Dr. Ruiz, and thank you again for
    the effort that you have put into the bill that is out there.
        Well, again, if you look at the data that is out there on
    New York, which has been out there for many, many years, the
    inflationary costs with that dispute resolution process has
    simply not been any different than the inflationary cost data
    in California. I believe the number is somewhere along the
    lines of 6 to 7 percent, not 67--6 to 7 percent and it has been
    the same whether you have a benchmark process in California----
        Mr. Ruiz. So you're saying that there is absolute data
    showing that an arbitration does not increase inflationary
    costs? Because otherwise--if the data were otherwise----
        Ms. Eshoo. The gentleman's--excuse me. Excuse me. The
    gentleman's time has expired.
        Mr. Ruiz. Thank you so much for your patience.
        Ms. Eshoo. Yes. Thank you.
        Now I would like to recognize the gentlewoman from Indiana,
    Mrs. Brooks, for her five minutes of questioning.
        Mrs. Brooks. Thank you, Madam Chairwoman. I apologize. I've
    been going back and forth to other things as well, and at this
    point I yield my time to Dr. Burgess, the ranking member.
        Mr. Burgess. Thank you. We are so glad you came back.
        Ms. Wilkes, I would just like to ask you, if I could, there
    has been State legislation passed in Colorado, correct, dealing
    with this? How would that have impacted your situation when
    your son was born?
        Ms. Wilkes. Thank you. I actually am not aware if there has
    been legislation passed in Colorado, to be perfectly honest.
    But depending on what this legislation said, it maybe would
    have prevented us from having the bad credit rating that we
    had.
        Quite frankly, it is not just surprise billing in my
    family's case. It's billing overall. I mean, high cost
    dollars--we have gone to arbitration several times to deal with
    debt to the hospital. So it is not just this.
        Mr. Burgess. Because of that initial episode or subsequent?
        Ms. Wilkes. It's a chronic disorder. I mean, you know, we
    are not going to get rid of it. So there's going to be cost.
    He's about a million dollar a year kid.
        Mr. Burgess. Which is why the hope for the gene therapy
    is--and when we talk about how do we price that it does have to
    be in the context of what is it costing us to do nothing and,
    clearly, in your case the cost is almost intolerable.
        Dr. Zaafran, you were answering a question from Dr. Ruiz a
    minute ago and the clock ran out on you. While I am very
    sensitive to that because it runs out on me all the time, but
    you want to continue your discussion just a little bit?
        Dr. Zaafran. Yes. Thank you, Dr. Burgess.
        No, I was just reiterating that in New York, where they
    have had a New York arbitration process and dispute resolution
    process that is robust and expedited that there has not been
    any difference in the inflationary costs as compared to other
    states.
        It hasn't increased. It hasn't been any different than it
    has been before and it has resulted in a decrease in the out-
    of-network providers.
        Mr. Burgess. Mr. Gelfand, you kind of indicated that that
    was not an acceptable solution from your perspective--that data
    that now Dr. Zaafran has shared with us. Does that--is that
    good news from your perspective or news that is not--doesn't
    necessarily move the needle one way or the other?
        Mr. Gelfand. Dr. Burgess, many of the comments that you
    have heard today are without context of what the markets looked
    like before these State proposals were brought forward.
        So specifically in Texas and New York the question is could
    things have possibly gotten any worse. When we look at
    arbitration models, we know that outside counsel charges us
    $500 an hour on a good day and we know that the filing fees for
    many of these arbitration groups are $1,500 per party per
    claim, right. So we beg you spend healthcare dollars on
    healthcare, not on attorneys.
        Mr. Burgess. Can I just ask you about that? Because now,
    I've been told from my counterparts in the State House that the
    fact that arbitration is available means the parties move to an
    agreement before, prior to getting to that arbitration phase.
    Just the fact that it is out there means that they are going to
    talk. Is that something that you have seen?
        Mr. Gelfand. Dr. Burgess, we would defer to the
    Congressional Budget Office that has looked at several
    proposals and said that if you change to an arbitration model
    it increases costs by $5 billion. That money will be paid by
    patients.
        Mr. Burgess. The Congressional Budget Office isn't always
    high on my list of my favorite people.
        But, Dr. Zaafran, can you comment on that? And Dr.
    Friedman, I would like you to comment as well.
        Dr. Zaafran. Dr. Burgess, the cost of arbitration in New
    York is $300 for arbitration and it is split evenly between the
    insurer and the physician so--and it is a 2-week process. That
    is all entered electronically and it is adjudicated right away.
        So this cost of arbitration being excessive, again, the
    data in New York and the way it is going to be in Texas it is a
    very low cost. It's split between the insurer and the provider
    with very specific guardrails.
        And, again, in Texas what we did is we referenced the
    previous contracted rates, which is basically saying that you
    don't have to have just charges out there.
        There's a teleconference that happens before arbitration
    that allows for both sides to sit down at the table and try to
    come up with a fair payment that they both agree on.
        If they don't, that final offer is what goes to
    arbitration. That final offer could be your previous contracted
    rate before the insurance company dropped you out of a
    contract.
        And so that allowed in Texas the fiscal note, the score, to
    come down significantly.
        Mr. Burgess. I see.
        And Dr. Friedman, do you have a thought on that?
        Dr. Friedman. Yes. I just want to point out that in New
    York in seven million emergency department visits in the year
    849 cases went to this dispute resolution process, which is
    about .01 percent.
        So the process in New York, at least, has worked in that
    people are--the parties are resolving their dispute before they
    even utilize the dispute resolution process.
        Mr. Burgess. All right. Thank you. I yield back.
        Ms. Eshoo. The gentleman yields back.
        Now I would like to recognize the gentleman from Vermont,
    Mr. Welch, for his five minutes.
        Mr. Welch. Thank you, Madam Chair. Vermont does have a law.
    Since 1987 it has banned balance billing in the emergency
    department settings only. And while that addresses a major
    issue it still had a number of holes. It doesn't do anything to
    prevent surprise bills from anesthesiologists, pathologists, or
    radiologists.
        It doesn't protect Vermonters who seek care in other
    states, and many of our Vermonters get care at Dartmouth
    Hitchcock right across the Connecticut River, which is in New
    Hampshire.
        And finally, the bill doesn't set a rate of reimbursement.
    I want to ask a few questions, but first this whole surprise
    billing situation--I think of Dr. Bucshon--is reflective of how
    it is so opaque what the billing mechanisms are in the
    healthcare industry, and consumers have no power.
        And what it feels like on the outside is that all of the
    providers who are seeking to get reimbursement of the maximum
    rate and make their claim as to why they need that, the lack of
    transparency in fact works to their advantage, and this is just
    one manifestation of it.
        And the challenge for consumers they are totally
    powerless--totally powerless. So the question I have
    fundamentally is should the burden to bear the cost of this
    lack of transparency and opaque billing system be on the
    consumer, who shows up sick and powerless to affect anything,
    or should it be on, collectively, the delivery system?
        And that would take a lot of cooperation and probably a lot
    of legislation. But I don't believe it should fairly fall on
    the shoulders of a consumer who shows up and is absolutely
    powerless and had nothing to do with creating the mess in the
    first place.
        So just a few questions. I will start with you, Mr.
    Nickels. How do you see the proposed legislation--the Pallone-
    Walden bill--affecting our situation in Vermont?
        Mr. Nickels. Well, I think it would actually address one of
    the problems that you currently have in Vermont. It does
    address, of course, the emergency situation, which you have
    protection for.
        That bill also reaches into situations where a consumer
    goes into a facility that's in-network and they knew it was in-
    network and they did it all in good faith and they got a bill
    from an out-of-network physician.
        That situation which, apparently, is not taken care of in
    your State law, would be taken care of by the Pallone bill.
        Mr. Welch. OK.
        Mr. Nickels. That would be an improvement. Now, we have
    some concerns about the Pallone-Walden bill but on that case it
    would be better for consumers than what you have in Vermont.
        Mr. Welch. OK.
        Ms. McAndrew, what about the situation for Vermonters who
    get their care across the river in New Hampshire? And that's
    about 40 percent of people in the region of Vermont that I live
    in.
        Ms. McAndrew. Thank you for that question. One of the
    reasons we think a Federal solution is ideal is that we believe
    wherever you live, wherever you receive care, you should be
    fully protected. We shouldn't be relying on a patchwork state-
    by-state system for protection.
        Mr. Welch. OK. And while consumers are seeking specialized
    care, they're bombarded with an enormous amount of information
    dealing with being sick or injured, and how do we ensure that
    patients are informed in a clear and meaningful way but one
    that doesn't put an undue burden on providers? Do you have any
    thoughts on that, Ms. McAndrew?
         Ms. McAndrew. Yes. Well, I think one of the ways the
    legislation recognizes that consumers shouldn't be bearing this
    burden is that in facility-based provider situations the
    legislation actually doesn't rely on notice requirements. If
    you are getting care from a facility-based provider like an
    anesthesiologist or emergency provider, my understanding in the
    legislation that the protection actually is automatic.
        Mr. Welch. OK. Thank you.
        Ms. McAndrew. The 24-hour notice requirements, as I
    understand them, although I do believe longer notice should be
    required, are applying in nonemergency situations or
    nonfacility-based providers.
        Mr. Welch. Thank you.
        Ms. McAndrew. But I think that can be done to make it even
    more automatic, so we are getting rid of any phone calls, any
    emails, any going back and forth between insurers and providers
    is the ideal solution.
        Mr. Welch. Thank you for that. I want to yield my last
    minute to Dr. Ruiz, who's been a leader on this for us.
        Thank you.
        Mr. Ruiz. I appreciate it. Oftentimes, during negotiations
    insurance companies have a take-it-or-leave-it approach with no
    communication in any of--and no negotiation.
        Why, Dr. Zaafran--what makes baseball-style arbitration so
    appealing to states that want to impact a fair system?
        Dr. Zaafran. Thank you, Dr. Ruiz. Because in that baseball-
    style arbitration where you have a final offer you have some
    specific guardrails or specific criteria that the arbitrator is
    referencing, which is acuity, complexity, quality, previous
    contract rates, et cetera.
        But the key thing is that you have got two numbers. Those
    two numbers are one--you only have to choose one of them.
    You're not trying to pick a number somewhere in between, and it
    forces both sides to be fair.
        Mr. Ruiz. Another question, Dr. Friedman. When New York
    implemented their solution, many feared that it would allow
    providers to drive up prices exponentially. Has that been the
    case?
        Dr. Friedman. No, it has not. What we have seen in New York
    is that providers are charging reasonable rates when they go to
    arbitration or they go to negotiation and insurers in fact are
    paying at reasonable rates when those bills come in, for the
    most part.
        What's happened is, is that it has taken care of outliers--
    the extraordinary cases that where people--and there are folks
    on both sides abusing the system. It has taken care of those.
        Ms. Eshoo. The gentleman's time has expired.
        The gentleman from Virginia, Mr. Griffith, is recognized
    for five minutes for his questions.
        Mr. Griffith. Thank you very much, Madam Chair, and I
    apologize to the members of the committee. I've been bouncing
    between this one and the others.
        You have heard several other people say, and the other one
    is now over--but I did want to ask some questions and I have--
    during the time I have been in the room I have learned a
    tremendous amount. Appreciate you all being here.
        Mr. Sherlock, I want to ask you some questions about air
    transport, and it comes up and I don't know whether the person
    that told me this is accurate or not, but I had a child in my
    district recently that was hit and I know that they were
    airlifted to a hospital.
        About a week later, a constituent comes in with a whole
    laundry list of things and one of them was he says the family
    was charged $40,000. So that's where I start my questions with
    that just as a backdrop.
        But you opened your written testimony by referencing the
    Association of Air Medical Services support for the Air
    Ambulance Patient Billing Advisory Committee in the 2018 FAA
    reauthorization.
        Now, we don't have jurisdiction over that. But that means
    that a lot of our members of this committee may be less
    familiar with how that consensus language became law.
        Can you share with us the background of what led to the
    establishment of the advisory committee and while you're at it
    also tell us has it actually been established--because
    sometimes we put it into law and it doesn't happen--and have
    they started meeting?
        Mr. Sherlock. Thank you for the questions.
        First, the Air Ambulance Patient Advisory Committee was put
    into effect because there are--currently the Department of
    Transportation has a consumer protection division that has the
    ability to investigate and look at how charges were determined
    and hold patients harmless.
        We agree with Ms. Wilkes that the medical needs of a
    patient should be first and no patient should be in the middle
    of a discussion between payers and providers.
         That committee also includes a representative of Health
    and Human Services and so it is a joint committee. We would
    encourage Congress to urge them to get that committee seated
    and started. They have a requirement to investigate and
    recommend solutions to hold patients harmless as well as to
    look at the economics of the ambulance industry, and we think
    Congress would be well served by that.
        We also don't believe that--our industry doesn't believe
    that any patient should be caught in the middle. We have
    supported legislation that would increase 100 percent
    transparency of the industry by mandating 100 percent industry
    reporting of comprehensive cost data that would then be turned
    over to the Centers for Medicare and Medicaid, which would then
    be used and analyzed to actually rebase the Medicare rates for
    air ambulances at the cost of providing the services.
        That Medicare gap is the single largest driver in raising
    costs in the air ambulance industry and in balance bills. When
    you get those comprehensive data reported and they get analyzed
    and they become public data, then everybody will see where
    everybody falls out on the cost curve, and in addition to that
    quality of care where everybody will see where programs fall
    out on the quality of care curve.
        So when those become public data, that will increase both
    the transparency and the accountability of the industry, and we
    support--we support that legislation that was introduced and
    sponsored by Mr. Ruiz and Mr. Johnson and actually cosponsored
    by Chairwoman Eshoo in the previous Congress.
        Mr. Griffith. And my understanding is currently the
    Medicare and Medicare reimbursement is somewhere between $3,000
    and $6,000 but the average for somebody that's paying without
    that coverage is about $26,000. Is that accurate?
        Mr. Sherlock. The median cost of a helicopter air transport
    is $10,199 according to a study conducted in 2017. If you look
    at the cost of uncompensated care because Medicare pays less
    than $0.60 on the dollar of that $10,199--about $5,998.
    Medicaid pays significantly less than that, less than $3,500 on
    average, and the uninsured pay about $350. Those make up--those
    three groups make up 70 percent of air medical transports.
        So when you take that cost of uncompensated care and you
    add it to the median cost of $10,200, that's the average charge
    of $36,000 that the--that the representative from New Mexico
    referenced earlier.
        When you--when those kinds of situations happen, no one in
    our industry wants to see a patient or their family placed in
    jeopardy because they've just had a health emergency.
        Our members will sit down with each individual and their
    families and work out a solution tailored for them, and a
    comment that was made earlier today about a snake bite victim
    that was transported across State lines, in fact, that was
    resolved and that patient and their family received no balance
    billing in that because our programs will work with each
    patient to develop a solution tailored for them.
        Mr. Griffith. All right. I appreciate it and I yield back.
        Ms. Eshoo. The gentleman yields back.
        Now I would like to recognize the gentlewoman from
    Delaware, Ms. Blunt Rochester, five minutes of questioning.
        Ms. Blunt Rochester. Thank you. Thank you, Madam
    Chairwoman.
        And I think you have coined a new term--shock billing. I
    wrote that one down. I want to also thank the witnesses
    especially for your flexibility and your patience with all that
    we have--many of us have been through today. But thank you for
    your time.
        Investigative reporting by journalists like Sarah Kliff for
    Vox and Kaiser Health News and NPR's Bill of the Month series
    have really shed a light on how patients, often at their
    sickest and most vulnerable, get stuck in the middle of payment
    disputes between providers and insurers.
        We've heard countless times today that patients shouldn't
    serve as an intermediary between these two entities.
        Holding the patients harmless should be the crux of any
    legislative solution that Congress puts forward, and I was
    really encouraged today by the discussion, the fact that there
    seems to be bipartisan and across the panel support that
    something needs to be done and it needs to be done now, and
    this No Surprises Act also maintains that standard.
        In a May 2018 article by Sarah Kliff, a 34-year-old man
    received a surprise $7,924 medical bill from an emergency oral
    procedure after a violent attack the night before. Kliff noted
    that this bill was a case she saw regularly--patients who had
    large medical bills because they went to an in-network hospital
    but were seen by out-of-network doctors.
        The good news is that the entire bill was reversed. The bad
    news is that it was after the news article.
        So, Ms. McAndrew, I am sure I know the answer to this
    question, but should patients have to rely on news coverage of
    their surprise medical bill in order for them to negotiate a
    lower bill?
        Ms. McAndrew. Thank you very much for that question and, of
    course, the answer is absolutely not, and we, you know,
    indicated in our testimony that this problem has been going on
    for a very long time.
        But, unfortunately, before consumers had advocates like
    reporters or their members of Congress to reach out to, a lot
    of consumers don't know to take that recourse or are too sick
    to take that line of recourse and are sometimes paying these
    bills, going into bankruptcy, going into debt.
        And so there should be policy in place that automatically
    protects consumers, so they don't have to take these great
    lengths to get protection.
        Ms. Blunt Rochester. Thank you.
        I've also heard stories from emergency care physicians in
    my State where patients delay their care because of their
    concerns about surprise medical bills.
        Ms. McAndrew or any other member of the panel, have you
    seen this where people are afraid to get care because they're
    afraid that they might be--receive a shock bill?
        Ms. Wilkes. I would like to respond to that because it just
    happened within the last couple of months for my family.
        Thomas fell at school and broke his arm, and I legitimately
    did not know where to go. I didn't know whether to go to the
    urgent care or to the ER.
        So, ultimately, we went to urgent care, got an x-ray. Sure
    enough, the arm was broken, and ended up in the ER because of
    his chronic illness.
        That delayed his care. He was in pain for a number of hours
    while we were making that transfer.
        Ms. Blunt Rochester. Thank you.
        I want to transition to the question of transparency. Even
    when patients are diligent about making sure that they're
    receiving in-network care they can still end up with a surprise
    medical bill.
        Often, this is because they're unable to ultimately know if
    every physician involved in their episode of care is in-
    network, and I am going to ask--direct this to Dr. Zaafran.
        How can we increase transparency for consumers and make
    sure that they're able to easily find out what providers are
    in-network?
        Dr. Zaafran. Thank you.
        So the short answer to that is that the insurance industry
    has to have directories that are updated in a real-time
    fashion. Again, there is no such thing as an out-of-network
    provider. There is a provider who may happen to be out of
    network with that specific product.
        So the only one who knows what that product is is, of
    course, the patient and the insurance carrier and they're the
    only ones who really have the information as to whether they're
    in network or out of network.
        Ms. Blunt Rochester. I just want to close by saying I
    commend the committee and everybody who are involved with this.
    I recall when my husband passed away unexpectedly to receive
    bills not when I was living in Delaware. You're already going
    through a tough time, and then to be surprised with these kind
    of unexpected costs are unacceptable, and I am glad to see in
    this committee that we are looking at this, we are taking
    leadership and that there is a sense of urgency because people
    are counting on us.
        Thank you, and I yield back.
        Ms. Eshoo. The gentlewoman yields back.
        I now would like to recognize the gentleman from Georgia,
    Mr. Carter.
        Mr. Carter. Thank you, Madam Chair, and thank all of you
    for being here. I know it has been a long day. So you're almost
    home. Just hang in there.
        You know, this is a very complex issue. We all understand
    that. But it is a very important issue, and Ms. Wilkes, I want
    to thank you for being here today and for your testimony. It's
    certainly compelling and certainly something we have to work
    with.
        Full disclosure--currently, I am the only pharmacist
    serving in Congress and I have experienced the wrath, if you
    will, of the insurance companies.
        At the same time, I understand where they're coming from,
    too, and that's what makes it such a complex issue. One of the
    things that we deal with, and Dr. Zaafran and Dr. Friedman, I
    will tell you that we use the old adage that misery loves
    company. I am in misery with you.
        So, you know, it is tough. I deal with PBMs and, oh by the
    way, what we have in common with PBMs is that they're owned by
    the insurance companies.
        So, nevertheless, one of the things that we have in
    pharmacy, though, is, you know, we have any willing provider
    and that is if we're--you know, quite often we are shut out.
    Patients don't have a choice. If they come to me and I am out
    of network or I am not a member of that network, they can't get
    their prescription filled under their insurance. They'd have to
    pay for it out of pocket. But some states have laws that say if
    you're willing to accept what the insurance company is willing
    to pay, then you can participate.
        Well, the insurance companies don't want to do that because
    then they can't go out and build networks, is what they're
    telling me, because if anybody's going to accept it then the
    companies--the pharmacies that are agreeing to be in that
    network and bidding to be in that network--aren't going to get
    the volume that they are anticipating.
        It seems to me like this is just the opposite of what the
    economics are on why you would not want to be a part of that.
    Can you help me out, Dr. Zaafran, as far as the economics of
    how that works when you have--when you have the insurance
    company paying you out of network like that?
        Dr. Zaafran. So what I would first say is, again, in our
    organization, Physicians for Fair Coverage, 90 to 95 percent of
    us are in network.
        We want to be in network. We strive to be in network. We
    negotiate with insurance companies to be in network. In many
    instances the times we are out of network is when it is a
    patient coming from another State or, in some instances, we are
    in network with everybody but there may be one specific plan or
    one carrier that is not really negotiating with us in good
    faith.
        Typically, most of them are and we are in network with all
    of them. It is in our interest to be in network. The volume,
    the cost of providing that service, the cost of billing, the
    timeliness of payment from the insurance carrier--these are all
    factors that actually strive to make all of us as physicians
    want to be in network because it is so much easier.
        Mr. Carter. OK.
        Well, let me ask you, Dr. Friedman, and by the way, yours
    is somewhat of an unusual circumstance. Yours is kind of an
    outlier, if you will, because, as you say, you're in Orlando
    and you got a lot of people coming but, even more so, why we
    should be addressing it. Can you speak to the economics of it?
        Dr. Friedman. Well, I think for all emergency providers,
    whether you work in Orlando where I work or anywhere else in
    the country, we want, as Dr. Zaafran has mentioned and I have
    as well, we want to be in network. It is--we want to take care
    of patients.
        I became an emergency physician to take care of patients. I
    didn't take care of--go to medical school to do billing. I,
    frankly, didn't think I would ever be in Congress talking about
    anything like this. We want to take care of the patients and--
    --
        Mr. Carter. Right.
        Dr. Friedman [continuing]. We want the--we would like the
    back end, the business side, to take care of it as well. In
    emergency medicine, we have a unique circumstance in that I
    can't tell the patient what the cost is going to be.
        I don't even know if they have insurance when I take care
    of them. So everything happens afterwards. I can't identify the
    insurance product.
        Sometimes my billing company doesn't know if they're out of
    network for a couple of weeks because it is so difficult. I
    have a United Healthcare card. Nothing against United
    Healthcare, but all it says on there is what my co-pay is.
    That's it.
        Mr. Carter. Right. Right. And, oh by the way, United
    Healthcare owns their own PBM and they also own their own mail
    order pharmacy.
        Dr. Friedman. Right. But I don't know where I am in network
    with that card.
        Mr. Carter. Right.
        Dr. Friedman. And, you know, if I am in DC. if I try to
    find a doctor----
        Mr. Carter. Sure.
        Dr. Friedman [continuing]. I have no idea.
        Mr. Carter. Well, and thank you for that. Now, before--my
    time is about up, but Mr. Nickels, I have to tell you, out of
    all due respect, sir, the chairlady asked you a question at the
    first of this hearing that I thought you tried to dodge; and I
    will tell you that whereas I respect the Hospital Association I
    do think you have more of a responsibility to be a mediator, if
    you will, between the insurance companies and the providing
    physicians to try to help them to avoid the surprise billing
    that we are seeing.
        So I think that is a responsibility that I hope that you
    will take--that you all take seriously, and I hope that we can
    count on you to do just that.
        Mr. Nickels. Definitely. I know the time has expired but I
    totally agree with that. We do our best to work the insurers
    and the physicians----
        Mr. Carter. Well, as I say, I thought you avoided her
    question. But nevertheless----
        Mr. Nickels. Well, I could--I could try----
        Mr. Carter [continue]. And the last thing is one thing
    about the Pallone bill that I do like is that they would let
    states decide, because we do know that there are states where
    it's working what they're trying to do. I hear New York is
    working with arbitration, and I hope that we don't precede that
    with any legislation that we pass.
        And I yield back.
        Ms. Eshoo. I thank the gentleman and he yields back.
        I just would like to add something to Mr. Nickels. This
    business of anti-trust and what the hospital association keeps
    referring to it, I think that when you answer members' written
    questions that you take another look at this.
        I don't understand how anti-trust can be thrown around in
    this. But maybe it's because I don't know enough about it.
        Mr. Nickels. Be glad to answer that.
        Ms. Eshoo. We have--thank you.
        Mr. Nickels. I would be glad to answer it. Thank you.
        Ms. Eshoo. Is Mr. Sarbanes still here? No? He left? Anyone
    else?
        Mr. Burgess. Why don't we let Mr. Nickels--are you willing
    to speak to that now--the anti-trust issue?
        Ms. Eshoo. If he can in a succinct way.
        Mr. Nickels. I will do my best. The anti-trust concerns we
    raised goes along with so-called network matching where
    requirements which is not in the Pallone-Walden bill but I
    wanted to mention it because it's in other bills--where there's
    an attempt to put a requirement on hospitals to get--to make
    the doctors be in network with them, with us, and we believe
    that that would raise--I think a physician would be forced to
    adhere to a third party contract. Could very easily come after
    us on anti-trust grounds. We are more than willing to work with
    them to----
        Ms. Eshoo. I don't get that. I don't get that. I mean, I
    chaired a hospital board of directors. We had--it was our own
    county hospital. It was a public hospital. We had docs from the
    community that worked there and the contract that we had was
    for the ER and those docs. And so I don't know what you mean by
    you can't do this, you can't do that. You already have all
    these different groups that you contract with.
        Mr. Nickels. Right.
        Ms. Eshoo. I mean, the out-of-network starts when they're
    in your network.
        Mr. Nickels. If we employ the docs then that's not a
    problem. There is no anti-trust concern of any kind. The
    concern is, and again----
        Ms. Eshoo. What's the difference between employee and
    contract?
        Mr. Nickels. Well, if it's contracted then if they work for
    us one of the things we do is if we are in a network, you're in
    a network. That's required. The issue is we can persuade. We
    can try to work with the physicians to get them to do what I
    just described. But the issue that concerns us is what if we
    try to----
        Ms. Eshoo. When was the last time you tried really hard and
    it failed?
        Mr. Nickels. Say that again. I am sorry.
        Ms. Eshoo. When was the last time you tried really hard and
    it failed?
        Mr. Nickels. I could get you examples of people--my members
    who have tried to do that. Again, my view is--our view is we
    want those docs----
        Ms. Eshoo. And then was there--were there--was there the
    threat of anti-trust as a result of trying to work it out?
        Mr. Nickels. There have been--I can give you examples where
    there has been threatened litigation if you tried to do that. I
    can also give you examples of where it worked--where we were
    able to persuade the doctors----
        Ms. Eshoo. All right. Well, I am going to have several
    questions for you. I appreciate it, and now I would like to
    recognize the gentleman from Maryland, Mr. Sarbanes, for his
    five minutes of questioning.
        Mr. Sarbanes. Thank you very much, Madam Chair. Thank you
    all for being here much of the day.
        Your perspectives, obviously, on this issue are very
    valuable. You have got a lot of expertise you have brought to
    bear with respect to this issue of surprise billing, and it's
    incredible, I guess, but not totally surprising that it's
    affecting as many as 1 in 7 patients in America. We all hear
    stories from family members and friends of this kind of gotcha
    moment that they face.
        And the thing is even when patients are trying to
    anticipate a situation and do their homework to make sure
    they're getting the services in network and so forth, they can
    still get caught short and be surprised with medical bills and,
    you know, these can total tens of thousands of dollars and it
    can wipe somebody out, again, even though they're taking every
    precaution that they can--they can manage to do.
        And as we heard from Ms. Wilkes, the impact of those bills,
    the examples of how devastating it can be to patients and their
    families is very sobering.
        I am glad we are here talking about different kinds of
    responses to this problem and solutions. I am sort to attracted
    to the No Surprises Act right now because I think it achieves
    that balance in a way that works best for patients, which is
    the perspective I am bringing to bear for the most part here,
    and it would take them out of the middle of these out-of-
    network payment processes, set that benchmark rate for out-of-
    network payments, as you know, to resolve payment disputes
    between providers and insurers.
        Maryland, the State I represent, has chosen to address the
    surprise billing through this benchmark approach and in 2011
    implemented that system which requires out-of-network bills to
    be sent to insurers and not to patients and define a formula
    that could be used for those out-of-network payments.
        The goal was to reduce patients' financial burden while
    still paying providers at an adequate rate and maintaining
    network adequacy.
        To monitor the success of the benchmark plan, the Maryland
    Health Care Commission was looking at out-of-pocket costs,
    reimbursement rates before and after the implementation of the
    law to see what the effect would be.
        Ms. McAndrew, would you agree that the rates agreed to
    between providers and insurers for medical services are in fact
    a consumer issue and would setting a benchmark rate for out-of-
    pocket costs go a good way towards protecting patients from
    unexpected and exorbitant medical bills?
        Ms. McAndrew. Thank you very much for question. We
    absolutely do believe the rate between insurers and providers
    is a consumer issue. Consumers, of course, ultimately do bear
    the costs of healthcare and they bear them both out of pocket,
    which has been the crux of our discussion today, but they also
    bear them in their premiums.
        And so if the legislation to affect surprise bills
    ultimately inflates healthcare costs in the system, that will
    affect consumers' premiums.
        And so we do prefer a benchmark methodology. We believe
    that is what will ultimately lower costs the most for
    consumers. Other methods can be better than the status quo but
    they can have less of an effect on lowering costs for
    consumers, and costs are rising and rising. We see that voters
    care about that more than anything else about healthcare, and
    so it's important to us as patient advocates.
        Mr. Sarbanes. Well, that's certainly my perspective. As a
    matter of fact, the Maryland Health Care Commission from its
    study found that in three years after implementation of the
    benchmark system the total amount of out-of-network payments
    decreased from 20 percent to 11 percent, and those patients
    that had still had out-of-network charges saw their total
    spending decrease as well. So I think it shows the benefits of
    that.
        Some groups have expressed concerns that setting a
    benchmark rate could lead to providers leaving networks and the
    networks shrinking over time. Have you seen evidence of like a
    dramatic negative effect that way or not really?
        Ms. McAndrew. We have absolutely not seen evidence that
    benchmark rates will cause problems in networks. Our colleagues
    in California who have worked very deeply on the implementation
    of this law have not reported any such effects.
        I would caution making any conclusions about the California
    law since it's so early. But I think you have also presented
    very strong evidence from the State of Maryland, and I would
    also, you know, acknowledge that the reason this law is being
    implemented is because right now people can make very large
    amounts of money by going out of network through balance
    billing. And so once that's no longer possible that is a very
    big deterrent for remaining out of network. And so I think that
    will have a very positive effect on networks.
        Mr. Sarbanes. Well, I appreciate that and what you just
    said certainly aligns well with the experience in Maryland
    because, again, from the study that was done and the monitoring
    the Maryland Health Care Commission found that although out-of-
    network payments decreased, as you would expect, in the three
    years after a benchmark was set, overall provider participation
    in those networks did now show a decline. So I think there's a
    lot of promise there in terms of the response we need to see to
    this surprise billing issue.
        With that, I yield back my time. I thank the panel.
        Ms. Eshoo. The gentleman yields back, and I think that is
    it. I don't see any other members on either side.
        On behalf of all the members of the subcommittee, I want to
    thank the witnesses. You have been patient. You have been here
    since before 10:00. It is now--well, you have been here for
    four hours, and we are very grateful to you.
        You have had to field some tough questions but that makes
    for a good hearing. None of it is personal and we have to--I
    always first try to remind myself that there has to be a great
    deal of friction wave action to--for the sand in the shell to
    produce a pearl.
        Now, the pearl we are looking for is good solid legislation
    for consumers in the country. So that friction in terms of
    tough questions and testing each case the best we know how, the
    best we can, is to benefit the American people. So we all thank
    you.
        I want to remind members, whoever is left in the room, that
    pursuant to committee rules they have 10 business days to
    submit additional questions for the record to be answered by
    the witnesses who have appeared.
        I ask each witness to respond promptly--we need that in
    terms of our considerations here--to any such questions that
    you may receive. So I don't think any of you are going to
    purposely drag your feet, but I think it's worth underscoring
    that we would like a timely response.
        Now, I would like to ask unanimous consent to enter into
    the record the following: a statement from the National
    Observation Stays Coalition, statement from the American
    Medical Association, a statement from the College of American
    Pathologists, a statement from the Association of American
    Medical Colleges, a statement from the American College of
    Radiology, a statement from Blue Cross Blue Shield Association,
    from the Partnership for Employer-Sponsored Coverage, from the
    American Federation of State, County, and Municipal Employees,
    a statement from AARP, and from Business Group on Health, SEIU,
    United Healthcare Workers West, and Blue Shield of California.
        So I ask unanimous consent to enter this into the record. I
    hear no objections.
        Ms. Eshoo. And at this time, with your--with all of our
    thanks, the subcommittee is adjourned.
        [Whereupon, at 2:00 p.m., the committee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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