Last week, four Congressional committees struck a deal on legislation to end surprise medical billing. The legislation has earned the support of the Trump Administration, Speaker Nancy Pelosi, and Senate Minority Leader Chuck Schumer, which means it may be included in one of the last bills passing Congress before the end of the calendar year. Though Committee leaders should be commended for their hard work on this compromise legislation, the deal contains flaws that could magnify over time and, if enacted, will require vigorous oversight to ensure taxpayers, patients, and America’s robust private health sector are well served by the framework outlined here.
There are several meritorious aspects to this legislation, known as the “No Surprises Act,” that are worth applauding. This compromise, like any of the proposed solutions to surprise medical billing, takes patients out of the middle. This is, has been, and should be the north star for surprise billing proposals, especially since some patients recovering from a medical emergency can be unfairly hit with bills in the thousands or even tens of thousands of dollars. The compromise bill would prevent patients from paying out-of-network cost-sharing in three scenarios: 1) after receiving emergency medical care at an out-of-network facility, 2) after being unknowingly served by an out-of-network practitioner at an in-network facility, and 3) when being transported by air ambulance.
The legislation also includes several consumer protections from the original Ways & Means Committee proposal that we praised upon introduction:
- Requiring insurers and providers to give patients good-faith cost estimates ahead of scheduled services;
- Requiring insurers to maintain and regularly update an online provider directory so that beneficiaries know who is in network and out of network;
- Holding beneficiaries harmless when a provider that is no longer in an insurer’s network is mistakenly listed as in network; and
- Ensuring that providers send bills to patients within 90 days of a medical service.
While any government regulations in the health care space should be closely examined and scrutinized, it’s clear that patients and consumers often do not feel empowered or easily able to navigate a complex and expensive health care market (one that, indeed, has been made more complicated and expensive by decades of federal and state regulations). The compromise legislation includes several provisions that would make it easier for patients to know what they’re going to pay when they’re scheduling an elective procedure and whether or not the providers who care for them are in their insurance network.
The legislation offers a hybrid of the two dominant legislative approaches to addressing the inevitable payment disputes that will occur between health plans and providers when consumers are no longer on the hook for surprise medical bills: 1) a benchmark option that requires plans to pay the median in-network rate for services rendered by out-of-network providers, and 2) a government-monitored arbitration process (often called independent dispute resolution or IDR) where plans and providers submit offers for payment of disputed bills to a third-party mediator who then determines the payment rate. Insurers often prefer the benchmark, which reduces the leverage some providers have by going outside of an insurer’s network for payment and provides some certainty as to what insurers will have to pay for disputed bills. Providers generally prefer IDR, where it is believed they stand a better chance of being reimbursed for services at higher rates than they would receive from a benchmark and where providers retain some contracting leverage vis-a-vis insurers.
The “No Surprises Act” leans toward the IDR approach. It gives plans and providers 30 days to privately negotiate over a disputed medical bill (permanently taking patients out of the middle). If, after 30 days, the two parties cannot reach an agreement, then either party has 48 hours to submit the dispute to the Department of Health and Human Services (HHS) and enter an IDR process. This is where a nod to the benchmark comes in: third-party mediators in the IDR process must consider the median in-network rate when determining what a plan will pay a provider for a disputed bill. Mediators are prohibited from considering a provider’s billed charges, which are often much higher than the median in-network rate an insurer will pay. Mediators must choose either the plan’s final offer or the provider’s final offer, and may consider a number of other factors in determining payment such as the market share held by a provider or the provider’s level of experience.
NTU has long pointed out that there are flaws with both the “pure” benchmark and IDR proposals. The benchmark would lend health insurers significant leverage over providers in payment negotiations, whether the provider is in the insurer’s network or not. We fear a nationwide benchmark -- even one where payment rates differ by geographic area and the service provided -- would amount to the federal government putting its unwieldy thumb on the scale for health insurers at the expense of doctors and health care facilities. IDR, on the other hand, has clearly favored doctors in some states with an IDR process (like New York) and, as a result, has raised some health care costs. When governments set the terms of arbitration so that the game favors one party over another -- ‘working the refs,’ for lack of a better term -- they also risk unduly interfering with the broader health care market, beyond the surprise medical billing issue.
However, we have also long held that the benchmark is the worse of the two predominant options. In this regard, the compromise brokered by three House committees (Ways and Means (W&M), Education and Labor (E&L), and Energy and Commerce (E&C)) and the Senate Health, Education, Labor, and Pensions (HELP) Committee moves a potential surprise billing fix in the right direction, rejecting earlier E&C/E&L/HELP approaches that leaned more heavily into benchmarking.
Nevertheless, by requiring arbitrators to consider the median in-network rate and banning them from considering billed charges, the committee does indeed risk ‘working the refs.’ Though the intentions here -- to protect patients and reduce health care costs -- are good, the compromise could have market-distorting effects outside of the narrow slice of medical care that results in surprise bills. If this legislation passes into law, we eagerly await the required government watchdog reports on the bill’s various implications.
We also note that -- along with any government IDR proposal at the federal or state level -- this new mediation process will create additional costs for plans and providers that could be passed on to patients. We prefer alternative fixes to the surprise billing issue that rely on contract law reform or tougher Federal Trade Commission (FTC) enforcement because we believe such proposals would protect patients while providing the lowest amount of administrative burdens on private plans and providers.
This legislation may be included in a year-end package considered by Congress, a path which would unfortunately bypass the regular deliberative legislative process. To be clear, it is not NTU’s preferred solution to the surprise billing issue. If passed into law, though, stakeholders should be pleased with the consumer protections and the fact that patients will finally be taken out of the middle of these payment disputes between plans and providers.
Meanwhile, watchdogs inside and outside of government -- including NTU -- will be closely monitoring the implementation of the IDR process to ensure that this proposed solution does not have negative effects on the health care market (outside of the surprise billing concerns the legislation seeks to address). If evidence shows that the IDR process is adding significant administrative burdens on the private sector -- thereby raising health care costs -- or if IDR is clearly favoring one party over another, Congress may need to amend this legislation and pursue a more market-oriented approach.