WASHINGTON -- As the House continues struggling with the issue of surprise billing, medical organizations and other interest groups are offering their own visions for solving this nagging problem.
Surprise billing occurs when patients undergoing procedures at in-network hospitals receive unexpectedly high bills because one or more of their clinicians was out of network. The dispute over the surprise billing issue hinges around how out-of-network providers should be paid in these situations: should they be forced to accept a "benchmark" payment rate based on what other providers in their area are getting, or should they be able to work out their own deals with payers through arbitration?
On Sunday, leaders in the House Energy & Commerce Committee and the Senate Health, Education, Labor & Pensions (HELP) Committee announced they had reached a compromise on legislation to tackle the problem. The compromise would allow for the setting of benchmark prices to be paid for services performed by out-of-network providers; however, it would also allow for arbitration in certain cases.
In particular, the measure "resolves payment between providers and insurers by requiring that the insurer pay at minimum the market-based median in-network negotiated rate for the service in the geographic area where the service was delivered. If the median in-network rate payment is above $750, the provider or insurer may elect to go to baseball-style, binding arbitration -- referred to as Independent Dispute Resolution (IDR)."
Another Committee Jumps In
Not to be outdone, the House Ways and Means Committee on Wednesday released an outline of its own surprise billing legislation. "Patients deserve honest out-of-pocket estimates in advance of scheduled procedures, and there needs to be a fair resolution process for providers and insurers. That is what our proposal achieves," committee chairman Richard Neal (D-Mass.) and ranking member Kevin Brady (R-Texas) said in a statement. "There are multiple good-faith proposals from other Committees, but given our jurisdiction, it is crucial that we get this right."
The Ways and Means proposal "respects the private market dynamics between insurance plans and providers and first allows them to work out differences without interference. If the parties cannot come to agreement on their own, the agreement provides for a robust, impartial, and structured process to settle payment." Details of how the process would work were not included in the outline, which said that the process would include "strong conflict-of-interest protections, timely decisions, clear criteria for payment resolution, [and] evidence [that would] include payments made to similar providers for similar services in similar areas."
The American Association of Neurological Surgeons favors an arbitration system such as that used in New York state, Katie Orrico, director of the association's Washington office, said in a phone interview. "We think the best idea is using the model New York has, which is to take an independent claims database and assess what's being paid in that geographic area for a given service" and incorporate those numbers into the arbitration process. "What we're trying to do is certainly not have Congress put their collective fingers on the scale one way or another, and [instead] continue to allow the marketplace to determine provider reimbursement while at the same time protecting patients from surprise medical bills."
Although an arbiter may look at other rates paid in the same geographic area, which sounds similar to a benchmark, "I'd view it as more of a range than a set benchmark," said Orrico. "The problem is setting in stone the parameters of what that benchmark should be, such as the 'mean contracted rates' for a similar service in a similar geographic area from that plan. That's a pretty limited definition of what the universe of payments will incorporate."
It's Not Just About the Payment Rate
In reality, "it's not just about the reimbursement rate -- there are also other elements like issues related to prompt payments, quality metrics, prior authorization" and other considerations, she continued. Other factors in a particular claim might include "the experience, education, and quality of the provider, and the complexity of the case or patient severity ... So we believe tying it to the contracted rate is really flawed because the rate includes so much more than the payment amount." Orrico noted that the out-of-network issue involves a very small proportion of neurosurgery revenues; one survey found that in 2018, only 3.61% of all neurosurgical reimbursement was out of network.
One advantage of the New York model is that the health plan "can make an initial payment ... provided there's an ability for the provider to dispute that payment -- if he or she believes it to be insufficient -- through an IDR process," Orrico continued. That way, "physicians don't have to worry about cash flow issues ... and if there's a one-sided balance in the marketplace with health plans dominating, they at least get some payment rendered and then have 30 days to work it out and they can then go to an IDR process."
For its part, the Medical Group Management Association (MGMA), which represents the interests of physician practices, also likes the New York state model, Anders Gilberg, senior vice president of government affairs at MGMA, said in a phone interview. "Our concern is that if the federal government comes in and sets the rate, whether it has a $750 threshold or not, and says that the practice needs to accept the median negotiated rate in the geographic area, then every single contract the practice has would be nullified because the plan would renegotiate rates to below the median, and as that plays out over a period of time, the rates will be compressed," he said. "We're already seeing in some places where the insurer is offering below-cost rates to the medical practice, and has shrunk its networks so small to [the point] where the practice can't be in-network."
He noted that since the passage of the Affordable Care Act, "some networks are 50% to 75% smaller than they were. We want to preserve the ability of providers to negotiate with health plans without government interference, and at the same time have patient protections so patients are not left holding an unreasonable bill." As for the two proposals, the one from the Energy & Commerce Committee "does set a rate ... any time the federal government sets a dollar amount, it creates a market imbalance," said Gilberg. "The Ways and Means outline speaks to a more balanced approach ... that would preserve that free market negotiating element with the health plans. We want to protect patients but don't want it to become a windfall for health plans."
An Alternative Approach
Doug Badger, a visiting fellow at the Heritage Foundation, a right-leaning think tank here, thinks both sides should take a different approach: disallow out-of-network providers at in-network facilities. Under this scenario, "if you call yourself an in-network facility but you allow balance billing, there would be penalties," he said in a phone interview. If the hospital can't figure out how to make all of its providers in-network, "it would be considered an out-of-network hospital."
"These are all big boys -- the anesthesiologists, the pathologists, the hospital CEOs, and the insurance folks," he said; anesthesiologists and pathologists are among the hospital-based specialties who have the biggest issues with balance billing. "They all have an interest in having their hospitals designated as being in-network, and they all have reasons to cooperate with each other in order to get that designation. There is no need for the government to dictate terms or have to settle after the fact. The hospital simply can't provide false or misleading information to the consumer about their network status -- either they have to work it out ahead of time or they can't be listed as being in-network."
Badger slightly differentiates his idea from a similar one proposed by the left-leaning Brookings Institution; in that plan, known as "network matching," bills from out-of-network providers are incorporated into the in-network hospital's facility fee. "This approach doesn't prescribe anything from that perspective; the only thing it says is that you can't lie to people and tell them the hospital is in-network when you're exposing them to surprise bills." Still, both approaches have many similarities, including prohibiting balance billing. "Even people coming at this from very different perspectives, when they look at this as a policy matter, the solution is quite obvious," he said.
As for dispute resolution, "it's not a market-based solution," he said. "That outsources rate-setting to government-certified individuals who are assumed to be impartial and wise. That's not how markets work," Badger added. And although Badger's proposal would require federal legislation, "it's legislation is in areas where Congress has clear authority and a long track record. Truth in advertising legislation has been around for generations ... So that's a very straightforward requirement."
Although the Energy & Commerce committee leaders said they were hoping to get surprise billing legislation passed before year's end, that scenario is looking more doubtful to observers. "Based on the fact that the Ways and Means Committee has exerted jurisdiction, we don't expect it to be resolved this year," said MGMA's Gilberg.