Network matching, benchmarking remain major sticking points to surprise billing solutions

Capitol building in Washington
As Senate lawmakers examined legislation aimed at curbing runaway healthcare costs Tuesday, solutions to surprise medical bills remained key points. (Photo by rarrarorro/iStock/Getty Images Plus/Getty Images)

As Senate lawmakers examined a sweeping piece of legislation aimed at curbing runaway healthcare and drug costs Tuesday, some of the solutions to addressing surprise medical bills remained key sticking points. 

In particular, the idea of network matching—which would require facility-based practitioners to contract with every plan for which every hospital has a contract—remained a nonstarter for the American Hospital Association (AHA). Likewise, the idea that disputes between insurers and providers should be resolved by referring to regional benchmark rates went over like a lead balloon. 

"Once the patient is protected, providers and payers should be able to determine fair and appropriate reimbursement," testified Tom Nickels, AHA executive vice president, at a hearing for the Senate Committee on Health, Education, Labor and Pensions (HELP). “We believe health plans should not be absolved of their core function of establishing provider networks and negotiating rates with providers.”

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RELATED: Experts on Capitol Hill: Solution to surprise billing should fall to hospitals, insurers—not patients

The measure at issue is part of a much bigger package known as the Lower Health Care Costs Act introduced by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., the chairman and ranking chair, respectively, of the committee. It also includes dozens of other proposals including eliminating gag clauses and anti-competitive terms in insurance contracts; it would designate a nonprofit to bring national transparency around insurance claims for employers; and it would address prescription drug competition. 

But in recent weeks, the dispute over how exactly to eliminate surprise billing without also stymieing negotiation in the market has become a dominant theme in Capitol Hill hearings on the issue of healthcare costs.

The AHA has favored proposals that call for a system of arbitration to settle disputes in the case of balance billing. Meanwhile, payers including America’s Health Insurance Plans and the Blue Cross Blue Shield Association have teamed up to form a coalition backing the idea of using a set rate for out-of-network services. The coalition estimates that reforms like rate setting and offering patient protections for out-of-network emergency care could save more than $25 billion over the next decade. 

During the hearing, president and CEO of the Pacific Business Group on Health Elizabeth Mitchell said her group supports the idea of using 125% of Medicare rates as payment benchmarks. It was a point Sen. Mitt Romney, R-Utah, returned to later in the hearing.

RELATED: Payer groups form coalition to push surprise billing reforms

"Wouldn’t it just be a lot easier just to tie into the Medicare rate one way or the other?” Romney asked, saying it seemed arbitration could become much more complex.

Nickels jumped in quickly.

"Our concern is—and it's well documented—that Congress' own advisory board MedPAC says that Medicare does not pay the cost of hospitals that are fair. To base anything on Medicare rates, I think is a mistake," Nickels said. "Secondly, there is no difference between that and Medicare for All which was just described earlier which we have real concerns about."

The problem with setting a rate, he said, is once it's out there, it becomes the default rate and undermines any negotiation.

"Why wouldn't an insurer just always go to the default rate?" he said. "There won't be a negotiation, they won't have broad networks which they need and I think we're coming back to the same thing as Medicare for All."

It's unclear exactly how the issue will ultimately be settled in light of competing proposals in the Senate HELP committee as well as in the House. Alexander said he was hopeful the committee would be able to schedule the package for a markup next week with the aim of getting it to the floor for a vote as quickly as possible.

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