Earlier this week, state lawmakers heard testimony from WHA Board Chair-elect and Prairie Ridge Health CEO John Russell, UW Health Director of Revenue Cycle Amy Armstrong and WHA Attorney Laura Leitch in support of Senate Bill 763. The legislation, which passed the state Assembly on a bipartisan voice vote, clarifies in Wisconsin law the ability for health care providers to offer promptpay discounts on cost-sharing amounts, such as coinsurance and deductibles owed to a provider.
State Sen. Dale Kooyenga (R-Brookfield) and Senator Jon Erpenbach (D-West Point) testified together in support of the legislation. Erpenbach discussed a constituent contact he received last March from a patient who was informed on a billing statement that the provider gives patients a 10% prompt-pay discount in other states where they operate, but not in Wisconsin. Erpenbach stated this legislation is intended to fix that discrepancy and “allow Wisconsinites to be able to have the same discounts offered in other states.”
“The intent of this bill is really quite simple. It’s a pro-consumer bill that also reduces collection costs for the provider,” said WHA’s Laura Leitch in opening remarks to the committee.
Leitch noted the federal statute that originally could have prohibited the discounts has been addressed over the years because the federal enforcement agency believed the statute could stand in the way of even beneficial arrangements, like a prompt-pay discount. The U.S. Department of Health and Human Services provided a safe harbor and then the HHS Office of Inspector General provided guidance recognizing specific safeguards that permitted a prompt pay discount program. This bill “aligns the state statute with the federal safeguards,” testified Leitch to the committee.
John Russell reminded the committee that out-of-pocket costs, like coinsurance and deductibles, are not a liability of the insurance company but become a responsibility and cost for the health care provider to collect.
“I think it’s important to note that once that process is done, those out-of-pocket costs are handed to [health care providers] and then we are working with the patients directly on collecting those dollars. The insurance companies are largely out of that process at that point,” Russell said. “It’s our financial counselors who are sitting down with patients, going through the process and coming up with a plan for how to pay.”
The Wisconsin Association of Health Plans testified “for information only” on the legislation but offered a list of state-specific amendments that do not align with federal guidance, including a requirement that discounts only be allowed after the patient hasn’t paid for 90 days. Other health insurance trade associations in Wisconsin have stayed neutral on the bill.
“Since this bill was heard in the Assembly, we reached out to providers on some of the proposals you have put forward and, specifically, the 90-day provision. The criticism that I’ve heard from providers is that this will actually encourage patients to pay late as opposed to promptly,” commented Sen. Pat Testin (R-Stevens Point), Chair of the Senate Health and Human Services Committee.
WEA Trust, a health insurance plan started by the Wisconsin Education Association Council in the 1970s, and Common Ground Cooperative, a health insurance cooperative started through federal taxpayer subsidies provided by the Affordable Care Act – and that reportedly has a 21.6% profit margin in the third quarter of 2019 and a medical loss ratio of 68% in 2018 – provided a litany of hypotheticals about their perceived impact of this legislation.
Lawmakers questioned their criticisms and assumptions.
“This doesn’t change the substance of the health insurance plan, like what the deductible is, what the amount charged is between the insurer and the provider, it really doesn’t change anything on the explanation of benefits,” responded Sen. Dale Kooyenga, lead author of the legislation.
Kooyenga went on to discuss the important balance Senate Bill 763 provides in creating appropriate safeguards that align with federal law, providing assurance to providers that, if the conditions are met, state law would not prohibit the discounts, and maintaining flexibility for providers and insurance companies to negotiate on terms of their contracts.
Kooyenga asked committee staff from the nonpartisan Legislative Council to inform the committee about whether provisions in the bill would limit the ability for a health insurance plan to negotiate terms in a contract regarding the health plan member’s ability to access prompt-pay discounts from providers.
“If this bill passes, and you [health insurers] decide it is not in your best interests your next contract says for our patients, even though it is allowed, you are not allowed to offer prompt pay discounts, would that still be allowed by individual plans if they felt it was in the plan’s best interest?” asked Kooyenga.
“The bill does not prohibit the plans from putting into future contracts that could dictate whether or not providers who participate in that plan would be able to. [Health plans] could essentially prohibit it,” said Legislative Council Attorney Steven McCarthy
“From an industry perspective, I think it is in your best interest to have a more flexible and more marketable approach to providing services. If you guys think this is in your best interest in your plans and not allow your customers to have these discounts, then put it in your contract the next time you contract with a provider. But meanwhile, let the rest of Wisconsin provide these discounts to individuals who need them and are in a tight spot,” said Kooyenga.