- A coalition of hospital groups sent a joint letter to the House Energy and Commerce committee Tuesday opposing rate setting in surprise billing draft legislation. Trade associations including the American Hospital Association, America's Essential Hospitals and the Federation of American Hospitals argued in favor of an independent dispute resolution processes such as arbitration or mediation in cases where insurers refuse to pay the full cost of medical bills.
- The bipartisan No Surprises Act released earlier this month proposes establishing a benchmark rate to resolve out-of-network payment disputes between payers and providers: the median in-network rate for whatever medical service is being debated.
- Providers generally don't like that idea, arguing it could cause insurers to narrow their networks. This week's letter noted they're "concerned that the rate-setting provision of the legislation is a plan-determined, non-transparent process that will upend private payment negotiation."
Surprise billing has been in the regulatory limelight in recent months, and healthcare players across the spectrum are furiously lobbying against fixes that could cut into their bottom lines.
Most common instances of surprise billing involve one of two situations: patients receive out-of-network tests or specialty care at an in-network facility, or patients have a health emergency and can't control whether their ambulance, clinician or hospital is in-network.
A Health Care Cost Institute analysis earlier this year found one in seven patients received a surprise medical bill after receiving care at an in-network facility, in line with previous estimates. Overall, a Kaiser Family Foundation report found roughly 40% of Americans said they'd received a surprise bill.
Colorado, Texas and Washington are all either considering or already have laws on the books meant to mitigate the practice, though most states don't have comprehensive consumer protections in place. In Congress, the Senate Bipartisan Working Group, Senate HELP Committee and House Energy and Commerce Committee have all introduced separate proposals taking aim at surprise billing through a variety of tactics.
The No Surprises Act draft was circulated by the House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., and ranking member Greg Walden, R-Ore., earlier this month and has 21 co-sponsors so far.
It would set rates at 100% of current median in-network rates. An analysis by the pro-business coalition Council for Affordable Health Coverage determined the plan would be roughly budget neutral and could reduce premiums across the board, at least a little.
However, health systems and other providers worry that, if rate setting is enacted, it will become the default payment for healthcare services and hurt their bottom lines at a time when they have little padding to spare.
Providers generally want to preserve private negotiation to lower the burden of surprise bills on patients, arguing setting a flat rate could remove incentives for payers to develop more comprehensive networks.
"If an insurer can pay the same rate to all out-of-network providers, why would they make the effort to develop robust in-network insurance products for their subscribers?" the letter reads.
However, the White House, along with payer groups like America's Health Insurance Plans, has explicitly opposed arbitration in favor of more stringent rate setting.
AHIP CEO Matt Eyles praised the No Surprises Act upon its release, saying it would ensure "patients are protected; that doctors are paid fairly; that networks are supported; and that the free market is permitted to work to ensure affordable, high-quality care."
One of the more popular proposed arbitration methods is so-called "baseball style," wherein both providers and payers submit their preferred service price to an independent party, who then chooses from the two offers without any modification. New York has seen some early success with this process, as consumer complaints about surprise billing have declined sharply since a ban went into effect in 2015.
Another proposed method is following a structured mediation process for disputed bills of $500 or more.
However, outside researchers generally agree arbitration chips away at the issue without being a comprehensive, long-term fix. Binding arbitration could decrease transparency, increase administrative costs and overhead and contribute to perverse market incentives, critics say.
"Arbitration adds relatively little value relative to the cost," Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy said at an industry panel this week on the issue. "There's reason to be cautious."