Surprise medical billing legislation advances to the House floor


Legislation to end surprise medical billing cleared the House Energy and Commerce Committee and is headed to the House floor, but it contains a somewhat controversial arbitration mechanism that allows physicians and hospitals to seek higher payments within 30 days.

The bill, which was tacked on to H.R. 2328, passed the committee by voice vote on July 17. The amendment on arbitration also passed the committee via voice vote.

“Our most important task today is to protect patients from the unreasonable and unacceptable practice of surprise billing,” Rep. Frank Pallone (D-N.J.), chairman of the Energy and Commerce Committee, said just prior to the votes being taken by the committee. “Under the [legislation], providers would no longer be able to balance bill patients for out-of-network emergency services or for scheduled services from providers the patient was not aware would be in their treatment.”

Out-of-network providers would receive a benchmark payment for the services they provided under the legislation.

Rep. Pallone described the legislation as taking patients out of the middle of disputes between payers and providers.

He went on to describe the arbitration amendment, introduced by Rep. Raul Ruiz, MD, (D.-Calif.) and Rep. Larry Bucshon, MD, (R-Ind.), as creating an independent dispute resolution process for physicians and hospitals to file a claim in the event that they don’t think they were adequately paid for their services.

“The amendment would allow providers to have 30 days within which to file an appeal of the benchmark payment with the insurer,” Rep. Pallone said. “The insurer would then have 30 days to adjudicate the appeal, after which the provider could initiate independent dispute resolution.”

The amendment limits appeals to extenuating circumstances so that only complex cases would qualify, and it limits the variables that can be considered during arbitration to the quality of care that was provided to the patient, according to Rep. Pallone.

“Most importantly to me, it bars arbitrators from considering billed charges, which are unilaterally set by providers,” Rep. Pallone said. “Provider charges are often double or triple Medicare rates, and in some cases for some large physician staffing companies, it is around 500% of Medicare rates. If Congress sends this signal to arbiters that provider charges are to be considered, we would be creating a significantly higher standard for payment, decreasing incentives for providers to be in network and putting upward pressure on health care premiums.”

Rep. Michael Burgess, MD, (R-Texas) praised the inclusion of the arbitration amendment and said the surprise billing legislation would not be able to be passed without its inclusion.

Rep. Janice Schakowsky (D-Ill.) offered a dissenting voice to the amendment. “Arbitration, in my view, which is used as the backstop, will not lower the health care costs,” she said. “Arbitration actually comes with additional administrative costs and complexities, which could then be passed on to consumers in the form of higher premiums. Even as a backstop, I think that binding arbitration leaves a public interest, public health decision, up to an unaccountable private decision maker, and I don’t think that is a very progressive way to be dealing with the issue of pricing.”

The American Medical Association praised the inclusion of an appeals process for resolving out-of-network payment disputes. “This addition represents progress,” Patrice Harris, MD, president of the AMA, said in a statement. “While we continue to have concerns with elements of the legislation, we remain committed to working with all committee members to secure further improvements to protect patients, preserve access, and foster fair payments for out-of-network services.”

America’s Health Insurance Plans, which represents health insurers, voiced its opposition to the arbitration provision. “We strongly oppose the inclusion of arbitration because it does not solve the problem of surprise medical bills,” AHIP President and CEO Matt Eyles said in a statement. “It increases the financial burden on everyone with coverage, increasing patient premiums and driving up the cost of health care. The arbitration proposal allows private-equity firms and certain providers to price gouge patients and then shifts the final decision to a ‘third party.’ This process introduces new bureaucracy and red tape into the system, with costs to hardworking taxpayers exceeding $1 billion.”

Benedic Ippolito, research fellow in economic policy studies at the American Economic Institute, further criticized the use of arbitration in this process.

“This concept that arbitration is a backstop doesn’t really make a lot of sense,” he said during a July 17 panel discussion hosted by the Bipartisan Policy Center on surprise billing. “The arbiter has to do the same thing any sort of rate setter has to do.” He noted that if they are doing “baseball-style” arbitration, they have to choose between two offers placed in front of the arbiter, based on what the arbiter believes to be closer to whatever the reasonable rate is.

This process will eventually lead to either a system that favors the payer, the provider, or ends up being exactly what the benchmark is that has been set. “If it is better for one or the other, somebody is going to have an incentive to just trigger this thing the whole time,” Mr. Ippolito said.

Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, said during the panel discussion that “there is no policy reason to have arbitration. There is nothing it adds for policy value.”

Mr. Adler called the arbitration amendment “a provider giveaway bill,” adding that if there has to be an arbitration option, it should have a very high threshold to be triggered.

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