House lawmakers add arbitration to surprise billing measure

Rep. Frank Pallone (D-N.J.)
House Energy and Commerce Committee Chairman Rep. Frank Pallone, D-New Jersey, said an amendment to add arbitration to a surprise bill legislation addresses concerns by lawmakers. (Ryan Kelly/Getty Images)

A House of Representatives panel passed legislation to address surprise medical bills that includes a last-minute compromise to install an arbitration process, handing healthcare providers a major win.

Wednesday, the House Energy and Commerce Committee unanimously advanced the No Surprises Act as part of a major package that reauthorizes funding for community health centers and delays implementation of cuts to disproportionate share hospitals. The legislation, which now heads to the full House, bans balance billing and requires insurers to pay the median in-network rate for out-of-network surprise bills.

However, lawmakers included a last-minute change to also add an arbitration process to resolve disputes when the in-network rate isn’t the most “proper reimbursement for a specific episode of care,” said Rep. Raul Ruiz, D-California, one of the amendment’s co-sponsors.

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“We believe this backstop strengthens this legislation,” he said.

The amendment helped garner support from some Republicans hesitant to support the legislation without it.

“I believe there was no way to move forward without a mechanism for an independent dispute mechanism,” said Rep. Michael Burgess, R-Texas.

The amendment gives providers 30 days to file an appeal to a benchmark payment rate with the insurer. Both parties have 30 days to hammer out an agreement, and if they can’t, the parties move to arbitration.

RELATED: Payer groups form coalition to push surprise billing reforms

The amendment also bars arbitrators from considering any bill charges that are unilaterally set by providers, said Rep. Frank Pallone, D-New Jersey, the committee chairman.

Healthcare providers have been pushing for Congress to add arbitration to any surprise billing legislation. Providers have argued for binding arbitration similar to the process used by Major League Baseball, where both parties submit to a neutral party their best offer and the arbiter must pick one.

Arbitration can “serve as a backdrop after a period of direct negotiation between payers and providers and could, as evidenced by the experience in New York State, both reduce the incidence of out-of-network billing and incentivize network participation,” a coalition of hospital groups told Energy and Commerce leaders back in May.

But insurers have vehemently opposed any addition of arbitration, because it could favor providers and would be expensive and cumbersome to implement.  

Insurers blasted the compromise ahead of the markup vote.

“The arbitration proposal allows private-equity firms and certain providers to price gouge patients and then shifts the final decision to a ‘third party,’” said Matt Eyles, president and CEO of insurance lobbying group America’s Health Insurance Plans, in a statement. “This process introduces new bureaucracy and red tape into the system, with costs to hardworking taxpayers exceeding $1 billion.”

RELATED: Hospitals, doctors raise alarm over surprise billing legislation advanced by Senate lawmakers

The committee also added an amendment from Rep. Ben Ray Lujan, D-New Mexico, that requires air ambulance providers to report cost data to the Department of Health and Human Services (HHS) for air ambulance rides. The amendment also requires insurers to submit claims data to HHS and calls for HHS and the Government Accountability Office to report to Congress on the data.

The panel’s embrace of arbitration is a break from the version of surprise billing legislation the Senate Health, Education, Labor and Pensions Committee advanced to the full Senate last month.

The Lower Health Care Costs Act of 2019, which includes measures to tackle drug prices, would set a payment rate for surprise bills at the median in-network rate an insurer pays. However, a separate bill sponsored by Sens. Bill Cassidy, R-Louisiana, and Maggie Hassan, D-New Hampshire, would include an arbitration process.

The Congressional Budget Office estimated Tuesday that the Lower Health Care Costs Act would save the federal government roughly $7 billion over the next decade, and the surprise billing portion would save $25 billion through 2029.

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