Surprise billing ban will constrain cash flow for radiology services providers, Moody’s predicts
The ban on surprise medical bills enacted by Congress in December could constrain cash flow for radiology services providers, according to research published by Moody’s on Thursday.
Any physician firm that bills patients directly for their work will have “some level of exposure,” the investor service noted. That includes physicians in imaging, alongside anesthesiologists and emergency medicine specialists, with the latter most vulnerable to these changes.
In addition, the No Surprises Act will have modest financial repercussions for hospitals that depend on staffing firms for outsourced radiology and other care.
“Many rated staffing companies carry leverage, cash flow and liquidity metrics that place them well into speculative-grade territory," Jonathan Kanarek, vice president and senior credit officer for agency, said in a statement. "As such, even a modest reduction in collections could negatively impact cash flow and liquidity, placing further pressures on their credit profiles.”
However, Moody’s believes negotiating leverage and the greater likelihood of being in a larger insurer’s network may help insulate some of the largest staffing companies from these effects. Those include investor-backed radiology provider Envision Healthcare, along with Team Health.
“Instead, it will be the smaller, independent and local or regional providers that are more likely to have considerably higher out-of-network exposure due to lack of scale,” Moody’s said.
Former President Donald Trump signed the legislation into law on Dec. 27, following months of wrangling on the matter and fierce lobbying from Envision and other provider groups. It will take effect on Jan. 1, 2022, requiring insurers and radiologists to first attempt to negotiate payment before an independent third party steps in.
On the plus side for physicians, Moody’s said the act is less onerous than previous surprise billing proposals that relied on median rates to help curb balanced billing. The final act also forbids arbiters from using Medicare and Medicaid rates in their deliberations, since they’re typically much lower than commercial payment.
“Healthcare providers generally favor the arbitration approach which preserves some of their negotiating leverage," Kailash Chhaya, vice president and senior analyst, said in the announcement.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.