Providers get win in surprise billing compromise, but they're not happy

Capitol building in Washington
Major legislation to tackle surprise medical bills includes an arbitration backstop in a win for providers. (rarrarorro/iStock/Getty Images Plus/Getty Images)

Major bipartisan healthcare legislation to outlaw surprise medical bills will include an arbitration backstop for out-of-network charges in a massive win for the provider industry.

But hospital and provider groups are already signaling that the concession isn’t enough. Insurers are also livid with lawmakers for including the arbitration proposal.

The legislation would ban balance billing and use a benchmark rate for out-of-network costs. However, unlike some other legislation tackling surprise medical bills, the deal would include a “baseball-style” arbitration process for bills greater than $750.

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If a bill goes to arbitration, the arbiter must consider context that includes information on “training, education and experience of the provider, market share of the parties and other extenuating factors,” an explainer on the legislation said. A patient also is not obligated to pay a bill they receive 60 or more days after getting care.

The legislation would also ban surprise medical bills for air ambulance rides. A patient would only have to pay the in-network, cost-sharing amount for any out-of-network rides.

“Air ambulances are barred from sending patients ‘balance’ bills for more than the in-network cost-sharing amount,” the explainer said.

If the median in-network rate is more than $25,000, the air ambulance provider or insurer can go to arbitration.

RELATED: House committee chairman floats compromise to tackle surprise medical bills

The arbitration backstop is a major departure from legislation that passed out of the Senate Committee on Health, Education, Labor and Pensions (HELP) earlier this year. That bill only had a benchmark rate.

The House Energy and Commerce Committee included an arbitration backstop, but it only triggered if the out-of-network charge reaches $1,250.

Lawmakers on both committees were enthusiastic about the deal.

“I do not think it is possible to write a bill that has broader agreement than this among Senate and House Democrats and Republicans on Americans’ number one financial concern: what they pay out of their own pockets for healthcare,” said Sen. Lamar Alexander, chairman of the Senate HELP Committee, in a statement Sunday.

But provider groups that have been fighting surprise billing efforts in Congress weren’t as happy, despite the arbitration mechanism triggering at a lower amount.

“Unless this proposal is much improved over previous bills that rely on a benchmark rate, it remains highly problematic and would jeopardize patient access to hospital care, particularly in rural communities,” said Rick Pollack, president and CEO of the American Hospital Association, in a statement.

RELATED: Medicare charges spike for specialties most associated with surprise bills

The national hospital-based physician group Envision Healthcare also blasted the benchmark rate.

“While this proposal is an improvement, it continues to use a benchmark that would not apply to the majority of facility-based providers,” said Bob Kneeley, senior vice president of government affairs at Envision. “Without an arbitration mechanism that applies to a reasonable number of claims, the concerns raised by the provider community will persist.”

 On the other hand, some insurer groups were opposed to the inclusion of arbitration.

The Coalition Against Surprise Medical Billing, a constellation of insurers and business groups, said that an arbitration law in New York has been exploited by providers and private equity firms to increase out-of-pocket costs.

“The result of arbitration is that consumers, employers, unions and taxpayers pay the price,” the coalition said in a statement. “Lawmakers should continue to work to find real solutions that protect patients and save money for taxpayers.”

But some insurance groups were cautiously optimistic.

“We believe real progress has been made and this agreement appears to protect people from surprise medical bills, which has long been our goal,” said Justine Handelman, senior vice president of the Office of Policy and Representation for the Blue Cross Blue Shield Association.

The massive bipartisan support bodes well for the chances of the legislation getting out of Congress. The White House also voiced support for the deal on Monday.

In addition to surprise medical bills, the package would also:

  • Prevent “anti-tiering” and “anti-steering” clauses in insurer-provider contracts. The clauses restrict the health plan from directing or incentivizing providers to go with high-quality, lower-cost providers.
  • Stop “all-or-nothing” clauses in contracts between providers and health plans which require insurance plans to contract with all providers in a system or none of them, according to a summary of the bill.
  • Require health plans to have up-to-date directories on their in-network providers.
  • Require group healthcare sponsors to receive a semiannual report on costs, fees and rebates associated with pharmacy benefit manager contracts.
  • Incentivize healthcare entities to adopt strong cybersecurity practices through conducting audits and fines related to HIPAA’s security rule.
  • Reauthorize funding for 1,400 community health centers.

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