The latest details emerging on legislation to ban surprise medical billing includes nuggets meant to pacify payers and providers, but is not pleasing either.
The bill backed by a bipartisan group of Senate and House leadership would require insurers pay at least the median in-network negotiated rate for the area market for out-of-network services. Payers have been pushing for some type of provision like this.
It also includes the option for either party to elect arbitration if the payment is above $750. Providers have backed some type of arbitration, but are staunchly opposed to a set rate.
James Gelfand, senior vice president for health policy at the ERISA Industry Committee, told Healthcare Dive he didn't think employers would be "throwing any parades" over the bill, but sees how lawmakers are trying to find a middle ground.
"Congress is making a rather bold play of, 'Look, we're doing our best to address the concern of industry here'," he said, adding he didn't think any major players could say their top-tier concerns hadn't been met.
The legislation, known as the Lower Health Care Costs Act, also includes provisions pushing price transparency, promoting competition and attempting to rein in drug costs.
Leaders of the House Energy and Commerce Committee as well as the Republican chairman of the Senate health committee are on board with the act, but some key Democrats have not yet endorsed it. Noticeably absent is that panel's top Democrat, Sen. Patty Murray of Washington.
An aide for Murray told Healthcare Dive she "believes the overall agreement takes important steps forward on a number of issues impacting patients and families. She's working with some members of her caucus on concerns they still have and is very hopeful a final agreement can be reached."
Congress faces a fast-approaching deadline to get a ban passed this session and is still charged with funding the government by Dec. 20.
The American Hospitals Association opposed the draft, calling it particularly damaging for rural hospitals.
"An arbitrary rate gives insurers an incentive to remove hospitals from their networks and force artificially low reimbursement rates, which limits access," the group wrote. "Moreover, such proposals would provide a huge windfall to commercial insurance companies at the expense of the nation’s community hospitals. "
The American Association of Medical Colleges is against the draft bill because of its benchmark rate.
Powerful payer lobby America's Health Insurance Plans pointed to a statement from the payer/employer coalition it is a part of, which attacked the proposal's arbitration component.
The White House, which has previously opposed arbitration, said it was behind the plan, however. "This compromise reflects the input of doctors and hospitals and is the result of months of delicate work to reach a deal among congressional members and the White House that protects patients," according to a statement from the press secretary.
One element in the law's favor is its other components, like funding for community health centers, are key for the industry despite other complaints.
As the package is likely to be part of year-end government funding, it couldn't be picked apart with only some pieces advancing and still meet neutral funding requirements, Gelfand said.
Baseball style arbitration, air ambulance services
The independent dispute resolution process would be the so-called baseball style arbitration, where each party can submit one payment option to be decided on by an independent arbiter. That third-party would be required to consider factors like market-share, patient acuity, treatment complexity and a provider's training, education and experience. The party that initiated arbitration can't bring the same other party to a resolution process over the same item or service for 90 days after the decision.
In an addition to earlier drafts, there is also a section specifically targeting air ambulance services, with the same set payment rate and arbitration possible above $25,000. Air ambulance providers would also be required to provide HHS and the U.S Transportation Secretary with two years of cost data.
The bill also establishes an advisory committee focused on quality and patient safety.
Air ambulances slammed the proposal, saying it would threaten patient safety and lead to medical base closures.
"This threshold compromises the ability of air medical services to continue operations by eliminating any incentive for insurers to reach in-network agreements with air medical providers or pay the true cost of air medical care," according to the Save Our Air Medical Resources Campaign. "In addition, this federal government set rate only puts more pressure on air medical providers as Medicare and Medicaid already pay less than 40% of air medical costs."
The baseball style arbitration safety valve is an approach the state of New York used in its law banning surprise billing. Data the state released recently shows that the law, enacted in 2015, appears to have pushed prices higher as arbiters, who were told to consider the 80th percentile of billed charges, actually settled on payments higher than that 8% of the time.
Another state law, California's, provides a potential comparison. It also has a set rate with an arbitration backstop. Studies of that legislation have shown out-of-network services from affected specialties declined by 17% after it was enacted. Separate research showed stakeholders viewed the law as giving payers more leverage in contract negotiations.
In comments on an earlier version of the federal legislation being considered, USC-Brookings Schaeffer Initiative for Health Policy researchers said using median contracted rates to calculate payments would have the unintended consequences of locking in an unlevel playing field across payers and creating incentives for payers and providers to cancel contracts.
As for arbitration, the analysts wrote those "proposals have the same basic shortcomings, plus the arbitration process adds an additional layer of uncertainty and administrative cost."
The draft's $750 minimum benchmark for arbitration is key, as many high-volume but low-cost specialty services would rarely meet that trigger rate. Data from the Health Care Cost Institute show that in-network median amounts for radiology services, for example, don't reach above that threshold.
Emergency room services occasionally and anesthesia services frequently top $750.
Promoting price transparency, competition
The act includes a number of provisions also in a previous draft that seek to provide for more competition in the industry along with more clarity on healthcare pricing.
Those are highly likely to receive industry pushback, too, as CMS regulations pushing price transparency have been thoroughly decried. Hospitals have sued the Trump Administration over its latest attempt, claiming that forcing negotiated rates between payers and providers out into the public violates the First Amendment and would do nothing to hold down prices for consumers.
The draft would prevent plans from anti-steering contract clauses that restrict plans from pushing patients to see certain providers as well as clauses that require plans to contract with all of a system's providers or none of them.
Health plans would be required to have up-to-date directories and provide patients with good-faith estimates of out-of-pockets costs within two days of a request. The draft bans pharmacy benefit managers from engaging in spread pricing (charging a plan or patient more for a drug than the PBM paid) and forced them to pass on 100% of any rebates or discounts to plan sponsors.
It would also create an all-payer claims database, which researchers have said would provide important data to foster policymaking initiatives in the future.