Surprise Billing Fight Escalates As Providers Win Arbitration Add To House Bill

Surprise BillingThe House Energy and Commerce Committee passed the No Surprises Act with a provider-backed amendment adding an arbitration clause Wednesday afternoon. It will now head to the full House for consideration.

Dive Brief:

The House Energy and Commerce Committee is planning to add third-party arbitration to its surprise billing legislation, the No Surprises Act, on Wednesday. The method, which allows hospitals and physicians to appeal the federal benchmark payment payers issue for out-of-network bills, is popular with providers.

  • The change comes from Rep. Raul Ruiz, D-Calif., and will let either providers or payers appeal to an independent arbiter in cases where the median in-network rate exceeds $1,250. Previously, the bill proposed establishing a benchmark payment rate to resolve any disputes.
  • Researchers from across the political spectrum generally call arbitration a bad idea, but a savvy diplomatic one to mollify providers. “It has no policy value,” Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, said at a Bipartisan Policy Center event Wednesday morning. “It has political value.”
Dive Insight:

Momentum behind legislation to tamp down on surprise billing has been building all year, with faster-than-normal Congressional movement for an issue that has captured lawmakers’ and the public’s attention: stopping patients from receiving unexpected and expensive out-of-network medical bills.

Though the final form of any legislation is still very much undetermined, it now looks likely to include some form of arbitration.

House Energy and Commerce marked up the No Surprises Act on Wednesday as part of 26 bills, including the surprise billing legislation and re-authorizations of a handful of public health and Medicare programs, including federal funding for community health centers.

Ruiz, an emergency room physician, introduced the controversial change. He also recently introduced his own legislative approach to tackle surprise billing that includes an arbitration process instructing mediators to consider the 80th percentile of billed charges for a service — an extremely high payment rate.

Brookings’ Adler on Wednesday slammed the proposal as a “provider’s dream.”

Ruiz’s bill, which would almost certainly result in higher premiums, patient costs and federal deficits, is unlikely to get anywhere though it has garnered 52 cosponsors so far. However it seems to have attracted this compromise and brought arbitration back on the table, Adler said.

Large employer advocacy group the ERISA Industry Committee withdrew its support for the No Surprises Act following news of the amendment Wednesday morning.

“We have asked Congress for one key assurance — protect us, and our employees, from being locked into government-mandated binding arbitration, which is being pushed by Wall Street-owned doctor groups,” ERIC CEO Annette Guarisco Fildes said in a statement. “Disappointingly, the House Energy and Commerce Committee is set to report out legislation that locks employers into exactly such a mandate.”

Payer lobby America’s Health Insurance Plans and The Council for Affordable Health Coverage also opposed the change, with the latter noting the White House opposes binding arbitration and the Senate HELP Committee has already passed the Lower Health Care Costs Act, which holds patients harmless for surprise bills and has insurers pay providers the local median in-network rate for a specific service in that geographic region.

The Senate HELP proposal, which was advanced to the full Senate earlier this month, would save the federal government roughly $7.6 billion over the next decade, according to a Congressional Budget Office analysis released Tuesday. That rosy estimate is good news for co-sponsors Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., and could oil the wheels for the bill’s passage.

CBO did not report on potential savings from fixes including arbitration, such as the No Surprises and a handful of other bills introduced over the past year.

Still, there is some support for arbitration on the Senate side.  A bipartisan working group led by Sens. Bill Cassidy, R-La., and Michael Bennet, D-Colo., would enact “baseball-style” arbitration on appeal where the provider and payer each submit a single monetary offer, and a third-party arbiter chooses one solution without modification.

States have also taken a swing at surprise billing, with 27 enacting some form of patient protections, according to the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute. However, states can’t protect patients covered by large employer and union self-funded plans due to a 1974 federal law called ERISA that doesn’t prohibit balance billing.

“Federal action really is critical,” Georgetown’s Sabrina Corlette said.

Provider groups like the American Hospital Association and the Federation of American Hospitals strongly support arbitration, baseball or otherwise. The lobbies argue tying payment rates to a benchmark is akin to rate-setting and would remove payer incentives to build wide, comprehensive networks.

FAH President and CEO Chip Gahns cheered the amendment’s passage Wednesday, saying the group appreciates “the significance of the Energy and Commerce Committee’s surprise bill measure that now recognizes the need to protect patient access to care by offering an arbitration option.”

But insurers are dead set against the method, saying arbitration would lead to bad actors gaming the system, providers receiving higher payments and unsustainable administrative burden on the system.

“Arbitration really perpetuates the status quo,” Kris Haltmeyer, vice president of legislative and regulatory policy at the Blue Cross Blue Shield Association, said at the BPC event Wednesday.

Surprise billing situations vary, but could include an unavoidable emergency room visit, an ambulance ride to an in-network hospital or after a patient receives care at an in-network facility from an out-of-network specialist, such as an anesthesiologist or radiologist.

An estimated 40% of patients were hit by a surprise bill in 2018, and the scope and severity of the problem have left Americans and lawmakers thirsting for a solution.

“Arbitration is something that’s been added to get the bill over the finish line,” Corlette said. “And if that’s what it takes to protect patients, fine.”

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