Hospital proposal is a bad deal for consumers

By Sara Rothstein and Lev Ginsburg | March 28, 2021

Imagine hiring a mechanic to fix your car but you have to pay before you even know what’s wrong with it or whether you actually need the part. You’d probably want an explanation of what needs to be replaced and how much it will cost before having to pay. Not many industries are able to force consumers to pay first and explain later.

However, that’s exactly what a new legislative proposal will make us all do. Hospital lobbyists are asking New York’s lawmakers to approve a policy in the state budget that would require that hospital claims be paid before hospitals submit information demonstrating that care was medically necessary. It’s called “pay and pursue” and it would make it more difficult for consumers to understand how their health care is covered; it would make hospital bills even more confusing; and it would be harder for patients to be sure the care they are receiving is medically necessary.

The proposal will make health care even more complex. It would create a new, lengthy and costly negotiation process for health plans and hospitals to go through before pursuing a refund from the hospital for any overpayments for care that wasn’t medically necessary and new and unnecessary administrative costs that provide no benefit to New Yorkers.  While many residents get their health insurance through their jobs, a large share are covered by employers and union benefit funds that are self-insured, which would be left to shoulder these additional costs.

Their proposal makes it much more difficult to ensure that care is clinically appropriate, is performed in the most appropriate clinical setting and that providers follow best practices. At worst, it creates an incentive for ordering unnecessary procedures and conducting duplicative tests that will drive up costs.  This will make healthcare more expensive for all New Yorkers and there is no policy basis or any data to support the hospitals’ position.

That’s why a broad group of organizations that includes employers and union health plans are asking state lawmakers to reject this effort.

New York’s health care costs already are among the nation’s highest. Employers and working people across New York have been hard hit by the pandemic and are struggling with the economic and social disruption it has caused. Affordability is one of the major challenges facing the health care system, the state shouldn’t adopt proposals that will make care more expensive. That will only exacerbate the problems COVID has created.

Giving anyone free reign to “get paid first and explain later” is always a recipe for higher costs. Passing this proposal would be a huge hidden tax on the state’s premium payers and working families.

Sara Rothstein is Director of the 32BJ Health Fund.  Lev Ginsburg is Senior Director of Government Affairs of the Business Council of New York State.