Surprise Billing Compromise Could Soon Pass Congress

— Hospitals, physician groups not pleased

A shocked looking older woman reacts to bad news in the mail

WASHINGTON -- As Congress rushes to get out of town before the Christmas and New Year's holidays, some legislators are hoping that a compromise bill on surprise billing will be passed before they leave.

The House and Senate have long dithered over the best way to solve the problem of surprise billing, which occurs when a patient who thought he or she was receiving services inside their insurance plan's network gets a "surprise bill" for services rendered by out-of-network providers. This can happen when, for example, a surgeon at an in-network hospital is out-of-network, or they receive emergency services like an ambulance ride from an out-of-network provider.

A compromise announced on December 11 by several House and Senate committees is aimed at fixing the problem. Typically, solutions have involved either having the out-of-network providers agree to accept in-network rates, or having the insurer and the provider go to binding arbitration to settle on a payment. In either case, patients are held harmless and only pay their in-network copays and deductibles.

The compromise announced by the House Energy and Commerce Committee; the House Ways & Means Committee; the House Education and Labor Committee; and the Senate Health, Education, Labor, & Pensions (HELP) Committee, uses both negotiation and arbitration. The compromise process would, according to the press release:

  • Hold patients harmless from surprise medical bills, including from air ambulance providers, by ensuring they are only responsible for their in-network cost-sharing amounts, including deductibles, in both emergency situations and certain non-emergency situations where patients do not have the ability to choose an in-network provider.
  • Prohibit certain out-of-network providers from balance billing patients unless the provider gives the patient notice of their network status and an estimate of charges 72 hours prior to receiving out-of-network services, and the patient provides consent to receive out-of-network care.
  • Provide for a 30-day open negotiation period for providers and issuers to settle out-of-network claims. If the parties can't reach an agreement within that time, they can then enter an independent dispute resolution process. There is no minimum payment threshold to enter dispute resolution, and claims may be batched together to ease administrative burdens.

If the parties choose to utilize the dispute resolution process, each party would submit an offer to the independent arbiter. The arbiter is required to consider the median in-network rate, information related to the training and experience of the provider, the market share of the parties, previous contracting history between the parties, complexity of the services provided, and any other information submitted by the parties.

Timothy Epple, principal at Avalere, a healthcare consulting firm here, said the bill has a good chance of working, mainly because "this is the most support any of the surprise billing reforms have had to date. It's notable you had all four relevant committees in sort of a bipartisan approach who wanted to get this done, at a time when there is a vehicle to do it" -- namely, an omnibus budget bill that Congress needs to pass to fund the government. "And a lot of senators are specifically pushing forward on this," rather than just the committee chairs. The real linchpin on the bill, he said, is Senate Majority Leader Mitch McConnell (R-Ky.), who hasn't expressed his opinion yet.

When it comes to the interest groups, "This approach, like all good compromises, seems to have left no one happy," Epple said. For example, the American Medical Association dislikes the bill's reference to the median in-network rates, "and the American Hospital Association is wary ... that this is an arbitration-heavy approach that tends to swing toward benefitting providers," he said.

The bill -- unlike other surprise-billing proposals -- also doesn't include a dollar threshold below which claims are considered too small to submit to arbitration, "which is why it feels much more provider-friendly," Epple added. Previous bills included thresholds of $750 or $1,250, which "covers a lot of bills generated by providers."

In addition, Epple found it interesting that "the legislation only really singles out the air ambulance billing piece of this," whereas other bills have called out a variety of providers that tend to balance bill, such as emergency physicians, radiologists, and lab services. "It makes this a little interesting in that they didn't call out any of those provider types but included a section on air ambulances."

Doug Badger, visiting fellow at the Heritage Foundation, a right-leaning think tank here, said the bill presented several problems. "Congress is right to act on surprise medical bills but wrong to force non-contracting parties into binding arbitration, effectively outsourcing medical rate-setting on an ad hoc basis to a new class of government-contracted arbiters," he said in an email. "Providers and private equity groups have pushed this approach because they believe that doctors who refuse to join insurance networks will be paid more. That, in turn, will lead to higher premiums, which is why insurers and employers have opposed it."

"If ancillary physicians thought they would be paid less under arbitration, they wouldn't have lobbied so hard for it," he continued. "Congress should prohibit balance billing at network facilities. Once barred from gouging patients, the three powerful economic actors -- doctors, insurers, and hospital administrators -- would have to negotiate mutually acceptable arrangements. The government shouldn't take sides by forcing non-contracting physicians to accept contracted rates or forcing non-contracting parties into binding arbitration."

Rodney Whitlock, PhD, a health policy analyst at McDermott Plus here, said he was was optimistic about the bill's chances of passage -- as long as it can get attached to the omnibus bill. "As long as Congress is going to come together and get significant agreements done, the probability of getting it across the finish line is high," he said.

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