[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:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    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:]
    
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    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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